In this study, the neutral gas distribution and steady-state discharge under different discharge channel lengths were studied via numerical simulations. The results show that the channel with a length of 22 mm has the advantage of comprehensive discharge performance. At this time, the magnetic field intensity at the anode surface is 10% of the peak magnetic field intensity. Further analysis shows that the high-gas-density zone moves outward due to the shortening of the channel length, which optimizes the matching between the gas flow field and the magnetic field, and thus increases the ionization rate. The outward movement of the main ionization zone also reduces the ion loss on the wall surface. Thus, the propellant utilization efficiency can reach a maximum of 96.8%. Moreover, the plasma potential in the main ionization zone will decrease with the shortening of the channel. The excessively short channel will greatly reduce the voltage utilization efficiency. The thrust is reduced to a minimum of 46.1 mN. Meanwhile, because the anode surface is excessively close to the main ionization zone, the discharge reliability is also difficult to guarantee. It was proved that the performance of Hall thrusters can be optimized by shortening the discharge channel appropriately, and the specific design scheme of short channel of HEP-1350PM was defined, which serves as a reference for the optimization design of Hall thruster with large height-radius ratio. The short-channel design also helps to reduce the thruster axial dimension, further consolidating the advantages of lightweight and large thrust-to-weight ratio of the Hall thruster with large height-radius ratio.