This article reviews China’s mental-health-related policies that have been made in the past decade. By doing so，it discloses the upsetting trend of institutionalization in this area，i.e. increasingly building and enlarging huge segregated mental hospitals，restricting the development of community-based mental health services，and providing higher allowances for institutionalized persons with mental disabilities than those who live in the communities. It further analyzes the hazards caused by this trend according to the Convention on the Rights of Persons with Disabilities （CRPD），both from the perspectives of respecting state responsibilities and the actual or perceived adverse social effects of such policy，e.g. unchecked human rights violations against people with disabilities and long-term financial burden upon the government. As a conclusion，this article suggests that stakeholders （including but not limited to policy-makers） reform all mental-health-related policies and practices to uphold every person’s right to “independent living and being included in the community”.