Terrestrial ecosystems are vital for achieving carbon neutrality, yet the distinction between their biophysical limits and realizable potential remains unclear. Here, we developed an integrated framework to quantify China's terrestrial theoretical carbon sequestration potential (CSP) and actual CSP under diverse climate and management scenarios, incorporating vegetation dynamics and soil carbon stocks through 2100. We estimated current terrestrial carbon stock at 95.3 Pg C, with a theoretical CSP of 166.4 Pg C. By the 2060s, afforestation could expand by 77.5 Mha, representing 8% of China’s land area. For actual CSP, peak CSP is projected to reach 0.35 Pg C yr