Source: Journal of Contemporary Asia | Published: 2026-06-04
Category: 아시아 정치경제 | Keywords: china, governance, policy, transition
The question of how the world's largest emitter of greenhouse gases manages its transition to a low-carbon economy has emerged as one of the defining issues of contemporary global governance. China accounts for roughly 30 percent of global carbon dioxide emissions, and the trajectory of its climate policy will determine, more than any other single national variable, whether the Paris Agreement's temperature targets remain achievable. Against this backdrop, the growing body of scholarship on China's climate governance — including the research represented in the Journal of Contemporary Asia — performs a vital intellectual function: it situates the technocratic language of carbon markets and emission targets within the broader frameworks of political economy, state-society relations, and the contested project of governance reform. At a moment when geopolitical rivalries are fragmenting multilateral climate cooperation and global development finance is being redirected toward green objectives, understanding how China navigates the intersection of state authority, market mechanism, and social transition is not merely an academic exercise but a matter of profound practical consequence.
The core contribution of this line of inquiry lies in its refusal to treat China's climate policy as either a straightforward technocratic success story or a simple case of authoritarian greenwashing. Instead, scholars such as Alex Lo and Cheng Xiang, whose work on "transition, governance, and market" has set the terms for this debate, insist on examining how China's decarbonization agenda is embedded in and conditioned by a distinctive political-economic model. China's state-led approach — encapsulated in the governing phrase "market-driven, government-guided" (shichang zhudao, zhengfu yindao) — reflects the broader logic of Xi Jinping-era economic governance, in which market mechanisms are deliberately cultivated not as alternatives to state direction but as instruments of it. The National Emissions Trading System (ETS), launched in 2021 and now covering over 60 percent of China's carbon dioxide emissions following its 2025 expansion to the steel, cement, and aluminum sectors, exemplifies this hybrid architecture. Allowances are allocated administratively through an intensity-based benchmarking method, compliance is managed through a Target Responsibility System linking subnational governments to central mandates, and price discovery is allowed to operate within parameters set by regulatory design. The resulting market is neither fully autonomous nor purely administrative; it is, rather, a governance technology calibrated to pursue the "dual carbon" goals — peak emissions before 2030 and carbon neutrality before 2060 — while preserving sufficient policy flexibility to manage competing priorities of energy security, industrial employment, and economic growth.
The governance tensions that structure this framework have been illuminated with particular clarity by recent empirical research. Studies drawing on interviews with policymakers, market participants, and local officials reveal a persistent principal-agent problem at the heart of China's carbon governance. Local governments, whose performance continues to be partially evaluated on the basis of GDP growth metrics, retain structural incentives to treat the ETS as a compliance burden rather than a genuine instrument of decarbonization. State-owned enterprises, which dominate market participation, tend to fulfil their compliance obligations through political alignment with central directives rather than through economically rational abatement decisions, thereby distorting price signals and marginalizing the private sector actors whose participation would deepen market liquidity and credibility. Data opacity and ritualistic compliance — where regulated entities prioritize the appearance of adherence over substantive emissions reduction — have also been identified as systemic weaknesses. The average allowance price in the Chinese national carbon market remained around CNY 70–80 per tonne in 2025, a fraction of the USD 80 per tonne prevailing in the EU ETS, suggesting that the current price signal is insufficient to drive the scale of abatement investment that China's 2060 neutrality target demands. These findings do not invalidate the ambition of China's climate governance project, but they do underscore the gap between institutional design and institutional performance — a gap that has direct implications for the credibility of China's international climate commitments.
These domestic governance dynamics connect directly to broader regional and global trends in development finance, civil society, and political economy that scholars at institutions such as IOCSS are well positioned to analyze. China's climate transition is inseparable from its evolving role in the global development order. As Chinese enterprises expand their overseas presence and the Belt and Road Initiative continues to shape infrastructure investment patterns across Asia, Africa, and Latin America, the carbon intensity of China-led development finance carries direct implications for developing countries' own emission trajectories. The European Union's Carbon Border Adjustment Mechanism (CBAM), which imposes a carbon price on imports from sectors where domestic carbon pricing is deemed inadequate, creates a direct and increasingly urgent financial incentive for Chinese exporters in energy-intensive industries to internalize higher carbon costs — a dynamic that is already reshaping the political economy of the ETS expansion. At the same time, China's emergence as the world's leading installer of solar and wind capacity, and as the dominant manufacturer of electric vehicles and battery technology, has repositioned it as a potential provider of green technology transfer to developing countries — a role that both complements and complicates the traditional ODA paradigm, in which technology flows predominantly from OECD donors to Global South recipients. This reordering of green development finance deserves far more sustained analytical attention from civil society scholars and development researchers than it has so far received.
The policy implications of this body of research are substantial for both domestic regulators and international observers. Within China, the most pressing governance challenge is the transition from an intensity-based allowance allocation system to an absolute cap, which the authorities have signalled will be introduced as the National ETS matures after 2027. This transition will require confronting the structural tensions between central ambition and local implementation that have characterized the market's first phase, and will demand significantly strengthened enforcement mechanisms, greater market transparency, and a more robust role for price discovery in driving genuine abatement. The gradual introduction of auctioned allowances, as foreshadowed by the August 2025 guidance document from the CPC Central Committee and State Council, represents a critical juncture: it will test whether the "market-driven, government-guided" principle can deliver a carbon price that is both credible to investors and politically acceptable to industrial incumbents. For international development institutions and bilateral donors, the research underscores the importance of engaging with China's carbon governance evolution not merely as a matter of competitive diplomacy but as a source of policy learning about how large, structurally complex economies can design and iteratively reform market-based instruments within political systems where administrative priorities frequently override market signals.
Looking forward, the trajectory of China's climate governance will be shaped by at least three intersecting forces that researchers and practitioners must track closely. First, the ongoing reconfiguration of global geopolitics — marked by US-China strategic competition, the selective disengagement of major donors from multilateral climate commitments, and the deepening of South-South development cooperation — will condition the external incentives that China faces to accelerate or moderate its decarbonisation ambitions. Second, the rapid growth of China's renewable energy sector, now deploying solar and wind at a pace that consistently exceeds official projections, is generating structural pressure on the energy system that may accelerate the peaking of emissions ahead of the 2030 deadline, potentially reshaping the political economy of the transition in ways that current governance models do not fully anticipate. Third, the role of civil society — historically constrained in China's environmental governance but increasingly present through corporate sustainability disclosure requirements, academic climate research networks, and internationally engaged non-governmental actors — deserves closer scholarly attention as a potential driver of institutional accountability and market credibility. The framework offered by serious scholarship on China's climate policy, at the intersection of transition theory, governance analysis, and political economy, provides researchers and practitioners with precisely the conceptual tools needed to navigate this complexity, and to contribute meaningfully to the global conversation about what a just, effective, and institutionally durable low-carbon transition can look like in practice.