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China has become the world largest paper and paperboard producer. However, pulp and paper industry has involved high resource consumption and severe pollution especially for water. This research has assessed the eco-efficiency of China's pulp and paper industry at the national level and provincial level. An overview regarding the cleaner production of China's pulp and paper industry was presented to reveal the measures for reducing environmental impact in the last two decades. Slacks-based measure was used to analyze the efficiency levels of 16 provinces' pulp and paper industries. To uncover the underlying causes of eco-efficiency performance, Malmquist–Luenberger index was calculated to discover the drivers of productivity growth of pulp and paper industries. Our results showed that the pollution treatment of China's pulp and paper industry has made progress in terms of water consumption and water pollution, although the absolute amount of pollution discharge is still large. Chemical oxygen demand emissions are still the first critical influencing factor of pulp and paper industry's inefficiency. Furthermore, efficiency progress was the dominating contribution of the industry's productivity growth between 2010 and 2013. The policies for adjusting the industrial structure of pulp and paper industry have resulted in the scale effects through eliminating backward production capacity and accelerating merger and acquisitions. Moreover, the productivity of pulp and paper industry was underestimated when the undesirable outputs were ignored. It indicates that the stricter environmental regulations have positive effects on paper companies to internalize environmental pressures in the production activities through environmental management. In the future, pulp and paper companies should further internalize the cost of pollution treatment through scale effects and technology improvement. [ABSTRACT FROM AUTHOR]