Abstract: This paper focused on the pollution problems in the wood-based panels industry in China. From the point of economics, it analyzed the causes of negative external economic activities from wood-based panel factories and pointed out the importance of controlling pollution through government regulation. In the end, it proposed some suggestions on controlling pollution such as setting up related national standards and strict monitoring by the state, adopting appropriate environmental protection laws and governmental subsidy in order to encourage factories to apply advanced techniques and technologies to minimize emissions that cause pollution.