Over the past three decades, China has implemented extensive reforestation programs, primarily utilizing Chinese fir (Cunninghamia lanceolata (Lamb.) Hook) in southern China, to mitigate greenhouse gas emissions and counter extreme climate events. However, the effects of drought on the carbon sequestration capacity of these forests, particularly during the trunk wood stage, remain unclear. This study, conducted in Huitong, Hunan, China, from 2008 to 2013, employed the eddy covariance method to measure carbon dioxide (CO2) and water fluxes in Chinese fir forests, covering a severe drought year in 2011. The purpose was to elucidate the dynamics of carbon and water fluxes during a drought year and across multi-normal year averages. The results showed that changes in soil water content (-8.00%), precipitation (-18.45%), and relative humidity (-5.10%), decreases in air temperature (-0.09 °C) and soil temperature (-0.79 °C), and increases in vapor pressure deficit (19.18%) and net radiation (8.39%) were found in the drought year compared to the normal years. These changes in environmental factors led to considerable decreases in net ecosystem exchange (-40.00%), ecosystem respiration (-13.09%), and gross ecosystem productivity (-18.52%), evapotranspiration (-12.50%), and water use efficiency (-5.83%) in the studied forests in the drought year. In this study, the occurrence of seasonal drought due to uneven precipitation distribution led to a decrease in gross ecosystem productivity (GEP) and evapotranspiration (ET). However, the impact of drought on GEP was greater than its effect on ET, resulting in a reduced water use efficiency (WUE). This study emphasized the crucial role of water availability in determining forest productivity and suggested the need for adjusting vegetation management strategies under severe drought conditions. Our results contributed to improving management practices for Chinese fir plantations in response to changing climate conditions.