China aims to realize the aspiration of sustainable development using the Circular Economy (CE) policy which, apart from other objectives, aims to minimize raw material extraction and preserve natural resources. While CE can be an important policy tool to promote more sustainable development trajectories, in practice it does not always avoid or mitigate adverse impacts on biodiversity and ecosystem services caused by resource extraction and infrastructure development. Here we review the current status of biodiversity protection and CE policy in China, highlighting some of their challenges. We then explore the prospects for market-based biodiversity offsets to address the current shortcomings in existing CE policy. Finally, we propose a conceptual model that incorporates a commitment to no-net-loss mitigation into the overall CE strategy to expand the use of biodiversity offsets in China and to remove some of the deficiencies by involving private enterprises in conservation efforts. This model can be used to analyze a set of parameters for comparing different offsets against one another. We propose that such an integrative framework can help CE policy achieve the intended goal of decoupling economic growth from impacts on biodiversity and ecosystem services in China. Important next steps are the implementation of case studies for target industries and ecosystems to demonstrate the synergy between CE and biodiversity offsets and evaluate on-the-ground effectiveness of the proposed integration by adapting our framework.