Source: Journal of Contemporary Asia | Published: 2026-06-18
Category: 아시아 정치경제 | Keywords: china, governance, policy, transition
The global imperative to address climate change has placed China at the center of an unprecedented policy experiment. As the world's largest emitter of carbon dioxide — responsible for approximately 28 percent of global annual emissions — China's domestic climate trajectory carries consequences that extend far beyond its borders. The announcement of the "dual carbon" goals in September 2020, committing China to peak emissions before 2030 and achieve carbon neutrality by 2060, elevated the country's climate agenda from a secondary policy concern to a defining feature of national governance. Yet the translation of these ambitious pledges into enforceable, effective, and market-compatible mechanisms has proven to be a far more complex undertaking than the rhetorical ambition suggests. The article published in the Journal of Contemporary Asia under the title "China's Climate Policy: Transition, Governance, and Market" arrives at a critical juncture, engaging directly with the structural tensions that sit at the heart of this challenge: how a Leninist party-state with a deep tradition of administrative hierarchy and growth-oriented governance can credibly construct a functioning carbon market while managing the distributional costs of green transition across a vast and highly uneven national economy.
The analytical framework implied by the article's title — transition, governance, and market — reflects a sophisticated understanding of climate policy as simultaneously a technological, political, and institutional challenge. China's National Emissions Trading System (National ETS), which became operational in 2021 and initially covered only the power sector, represents the most concrete institutional expression of the market-based approach to emissions reduction. By 2025, the system had expanded to include steel, cement, and aluminum smelting — adding approximately 1,300 key emitting entities and raising overall ETS coverage to over 60 percent of China's total carbon dioxide emissions. This expansion is significant not merely in quantitative terms, but because it signals the state's willingness to extend carbon pricing into sectors where economic and political resistance is considerably stronger than in electricity generation. The governance architecture underpinning this expansion remains, however, deeply contested. The Ministry of Ecology and Environment has issued progressively more detailed regulations, but enforcement capacity at the local level remains uneven, data quality problems persist, and the allowance allocation methodology — still predominantly intensity-based rather than capped in absolute terms — means that aggregate emissions can continue to rise even as covered entities nominally comply. The landmark August 2025 guidelines issued jointly by the General Office of the CPC Central Committee and the General Office of the State Council, which announced the transition to absolute cap controls by 2027, represent a decisive policy signal; but signals alone do not resolve the deeper institutional deficits the article's framework invites scrutiny of.
The governance dimension of China's climate policy is inseparable from the structural features of the Chinese political system. The extreme concentration of authority under Xi Jinping has paradoxically produced both ambition and fragility in climate governance. On the one hand, the top-level political endorsement of the dual carbon goals injected an urgency into the five-year planning process that had previously been absent — the 14th Five-Year Plan (2021–2025) was the first to formally incorporate climate targets. On the other hand, the same hyper-centralization that enables rapid target-setting also creates distortions in implementation. Local governments, facing competing mandates to promote economic growth, maintain employment, and meet fiscal obligations — many of which have deteriorated significantly since the property sector contraction — routinely deprioritize climate commitments that impose short-term costs. Research on China's intergovernmental climate dynamics consistently finds that coordination mechanisms between central and local actors are ad hoc, that professional capacity in subnational climate agencies is limited, and that the repression of independent environmental civil society has removed an important accountability mechanism. The result is a governance system in which ambitious central targets are not reliably transmitted into local action, creating what scholars of Chinese environmental politics have called a "policy-implementation gap" of considerable depth.
The market dimension of the article's inquiry connects to one of the most consequential policy questions in contemporary development economics: can carbon pricing, a mechanism designed and proven in the context of liberal market economies with robust regulatory institutions, function effectively in a state-capitalist system where price signals are routinely overridden by administrative direction? China's National ETS has accumulated important operational experience over its first four compliance cycles, but its performance as a genuine price-discovery mechanism remains limited. Carbon prices in China's national market have remained well below 100 yuan per tonne — far below the shadow price of carbon that credible net-zero pathways require — and trading volumes are heavily concentrated around compliance deadlines rather than distributed throughout the year in ways that would reflect continuous market learning. The design choice to maintain intensity-based rather than absolute caps until 2027 has meant that periods of strong industrial output growth can generate net emissions increases while formal compliance metrics remain satisfied. International pressure is beginning to change the calculus. The European Union's Carbon Border Adjustment Mechanism, fully operational from 2026, creates a powerful external incentive for China to strengthen its domestic carbon pricing: exports of steel, cement, and aluminum to the EU will face carbon tariffs calibrated to the gap between EU and Chinese carbon prices, meaning that weak domestic pricing translates directly into revenue transferred from Chinese industry to European fiscal authorities. This external disciplinary mechanism may prove more effective at accelerating market reform than years of domestic advocacy.
The policy implications of the analytical terrain the article navigates are substantial for scholars of ODA, development finance, and the political economy of the green transition in the Global South. China's experience is not simply a story about one country's domestic regulatory development; it is a test case for the broader proposition that the world's major developing economies can construct credible, market-compatible climate governance systems without first completing the institutional transitions — rule of law, independent regulators, transparent property rights — that underpinned the development of carbon markets in Europe and North America. The outcomes of this test will have direct consequences for climate finance flows, for the design of international climate agreements, and for the development strategies of the dozens of lower-income countries for which China serves as the primary model and principal creditor. If China's transition to absolute-cap carbon trading proceeds credibly and produces observable emissions reductions in covered sectors, it will substantially strengthen the case for carbon pricing as a development-compatible climate tool. If it falters — due to governance fragmentation, political resistance from energy-intensive industries, or the fundamental tension between growth imperatives and emissions caps — it will reinforce the arguments of those who contend that climate-effective governance requires institutional conditions that cannot be shortcut.
Looking forward, the research agenda opened by the Journal of Contemporary Asia article extends in several important directions that practitioners and scholars of Asian political economy would do well to pursue. The relationship between China's evolving domestic carbon governance and its overseas lending and investment practices through Belt and Road Initiative corridors remains underexamined; as China strengthens domestic carbon pricing, the question of whether — and through what mechanisms — climate standards are exported or withheld from partner countries becomes increasingly consequential for global emissions trajectories. The distributional politics of China's just transition also demand deeper analysis: the regional fiscal disparities created by decarbonization, the displacement of workers in coal and energy-intensive industries, and the financing mechanisms available to subnational governments managing these adjustments are all areas where the gap between high-level policy rhetoric and ground-level social reality is likely to widen over the coming decade. Finally, the interaction between China's national climate market and the emerging architecture of voluntary carbon crediting — including the CCER (China Certified Emission Reductions) mechanism and its relationship to international Article 6 frameworks under the Paris Agreement — will shape the fungibility of Chinese carbon assets in global markets and determine whether China's market-building effort integrates into or diverges from the international climate finance ecosystem. These questions place scholarship on China's climate policy firmly at the intersection of development studies, comparative political economy, and international relations — precisely the interdisciplinary terrain that the Journal of Contemporary Asia is uniquely positioned to cultivate.