Policies always have strong impacts on land-use and land-cover change (LUCC), and thus indirectly affect the terrestrial carbon balance. In this paper, land use change from 2010 to 2025 in China was simulated with the Dynamics Land System (DLS) under an environmental conservation policy scenario, and the projected effect of this policy scenario on Chinese terrestrial carbon storage was evaluated. Under the simulation, forest coverage will increase by 23% while cropland and grassland will decrease by 37% and 11% respectively. Due to the large expansion of forest coverage, the forest carbon storage will have an accumulation of 66.0 Tg C y ^-1. This will take place mainly in central China in a band from the northeast to southwest. Grasslands, however, will be a carbon source of 5.7 Tg C y^-1 in the same period as a result of the transformation of grassland to woodlands or deserts. As the carbon storage capacity of forest soil is considerably higher than that of grassland and cropland, such LUCC will eventually result in a soil carbon accumulation of 13.3 Tg C y^-1. From 2000 to 2025, the carbon storage of Chinese terrestrial ecosystem is likely to increase by 1.8 Pg C, and thus the terrestrial ecosystem will be a carbon sink of 0.074 Pg C y^-1, 89.6% of which will result from an increase in forest carbon storage.