Land-use changes in coastal wetlands have led to a worldwide degradation of marine coastal ecosystems and a loss of the ecological services they provide. Ecological offsetting is a popular strategy and an effective mitigation measure for ecosystems that have been degraded, damaged, or destroyed and is critical for habitats where natural recovery is hindered. However, the current understanding of the theory and practice of ecological offsetting for coastal wetlands is extremely limited in many developing countries. We conducted a review of ecological offsetting for coastal wetlands projects and studies in China in 1979–2017 to explore the application and limitations of ecological offsetting theory. It was found that China's coastal ecological offsetting regime has recently entered a rapidly developing stage, with an increasing number of different types of offsetting projects conducted, but theoretical research lags behind practical applications. Considerable governmental, social, technological and ethical challenges remain to resolve. Coastal ecological offsetting schemes have been inconsistent in meeting conservation objectives or preventing net losses because of the challenges of ensuring they are fully consistent in practice(mainly in-kind offsets) and theory(mainly out-of-kind offsets). Ecological offsetting projects were primarily implemented by government, developers, and non-profit organizations. The available funding of coastal ecological offsetting projects is insufficient, which makes ecological offsetting a risky operation. Therefore, we propose strategies for improvement that integrate the consideration of theoretical and practical challenges in the offsetting process, while providing a scientific basis and directional guidance for the future practice of biodiversity conservation and environmental management.