One of the top priorities of the Chinese government's oversight is to address the conflicts between economic growth and resource consumption and between economic development and ecological damage. In this regard, the advocacy and compilation of the natural resources balance sheet can boost the efficiency of the government's oversight and improve the quality of resource management. However, China's natural resources balance sheet is still at an exploratory stage, lacking the theoretical framework of balance sheet preparation, preparatory ideas, and a reporting system, which must be established urgently. First, the study states the purpose of compiling the natural resources balance sheet, and, subsequently, analyzes the theoretical basis, framework system, preparatory ideas, and sample sheet format, thereby offering theoretical and methodological support for its preparation. Moreover, the development, functions, deficits, and future development of the balance sheet are analyzed in the context of the Chinese system, which provides theoretical and methodological support for the preparation of the natural resources balance sheet and government oversight. •National resources balance sheet has information disclosure function.•National resources balance sheet can enhance management and supervision.•National resources balance sheet can reverse ecological damage.