This paper analyze the development and problems of the software industry in China. The software industry has grown rapidly in 2000-2012, the operating income has grown nearly 42 times, and forecasted that the market scale will grow two times from 2012 to 2015. China central government support the development of software industry, the Central Committee and State Council, Ministry of Science and Technology, Ministry of Information Industry and so on. This paper summarize the problems of the software industry in China. First, the industry development depended on the government policies, that is the Top-down strategy. Second, the most sector concentrated in low and middle value added sectors. Third, the regional disparity very serious. Fourth, the software piracy problem also serious. Fifth, the software industry mainly depended on the domestic market. Sixth, the software industry lacked the competent person that has expertises.