The booming Chinese construction market has created both economic growth and environmental problems. Some 65 000 buildings in Europe have been constructed in accordance with the voluntary construction standard called Passive House that aims for energy efficiency. In China, however, by 2015, only twenty such projects were planned and only two Passive House projects were completed. In this paper we identify and describe the barriers to the diffusion and adoption of Passive House construction in China. We review the relevant literature (Chinese and Western) and conduct two case studies of Passive House construction in China. Two broad groups of barriers the bounded rationality of construction developers/managers and the high transaction costs of green innovation are found to be most responsible for the slow diffusion and adoption of the Passive House concept in China. Unless these barriers are overcome, prospects for the advance of green technology in the Chinese construction market are unfavourable. © 2017 Inderscience Enterprises Ltd.