This article intends to shed light on key legal issues that emerged from the recently released WTO Appellate Body’s adjudication over China — Rare Earths dispute, exploring possible policy options for China to reach its environmental goals on natural resources in a WTO-consistent manner. The article first spotlights positive variations in the Appellate Body’s interpretative approach regarding the applicability of GATT general exceptions to defend the violation of WTO-Plus commitments under China’s Accession Protocol; second, given the fact that the Appellate Body, pursuant to the elements inscribed in GATT Article XX(g), confirmed the Panel’s objective assessment based on the design and structure of the challenged measures of GATT, this paper provides reflections and recommendations on China’s domestic environmental legislation. The third part probes into the interface between the principle of permanent sovereignty over natural resources and the WTO legal regime, with an attempt to offer thought-provoking ideas on how to reconcile potential conflicts between the two.