[JCA] China’s Climate Policy: Transition, Governance, and Market
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Source: Journal of Contemporary Asia | Published: 2026-09-20
Category: 아시아 정치경제 | Keywords: china, governance, policy, transition
China's approach to climate governance has become one of the defining variables in global efforts to manage the transition away from fossil fuels, and the question of how Beijing balances state control with market mechanisms in pursuit of its "dual carbon" targets—peaking emissions before 2030 and achieving carbon neutrality by 2060—now sits at the center of debates over the future of the international climate regime. As the world's largest emitter and largest manufacturer of renewable energy technology simultaneously, China occupies a paradoxical position: it is both the greatest obstacle to and the greatest enabler of a rapid global energy transition. Understanding the internal governance architecture that shapes Chinese climate policy is therefore not a narrow domestic question but a matter of first-order importance for anyone assessing the trajectory of global decarbonization, supply chains for clean technology, and the geopolitics of energy security. The article in Journal of Contemporary Asia addressing China's climate policy through the lenses of transition, governance, and market mechanisms speaks directly to this urgency, offering a framework for understanding how Beijing's hybrid model of state direction and market instruments actually functions in practice.
The core contribution of this line of scholarship lies in moving past the simplistic dichotomy that frequently structures Western commentary on Chinese climate policy—namely, whether China is a top-down authoritarian planner or a market-driven economy converging toward liberal norms. Instead, the more persuasive analytical move, and one this article appears to advance, is to treat Chinese climate governance as a distinctly hybrid system in which central planning targets, administrative mandates on provincial governments and state-owned enterprises, and market-based instruments such as the national carbon emissions trading scheme coexist and interact, sometimes in tension. This matters because it reframes the debate: rather than asking whether China's system will "liberalize" toward carbon pricing as the primary mechanism, the more productive question is how state-directed industrial policy and nascent market mechanisms are being sequenced and calibrated together. The rapid scale-up of solar, wind, and battery manufacturing capacity in China was achieved overwhelmingly through state-guided investment, subsidized credit, and local government competition for green industrial projects—not through carbon pricing—while market instruments like the emissions trading system have so far played a comparatively modest role, covering primarily the power sector and operating with relatively low carbon prices compared to the European Union's scheme. Any serious account of transition governance in China needs to explain this sequencing logic rather than treating market mechanisms as the natural end-state toward which policy is converging.
This governance pattern also illuminates broader trends across Asian political economy that IOCSS's regional research agenda has tracked for years: the persistence of developmental-state institutions well into a post-industrial, climate-constrained era. China's climate policy machinery draws heavily on institutional templates inherited from its earlier industrial catch-up strategy—five-year planning cycles, target responsibility systems that hold local officials accountable for meeting quotas, and preferential financing channeled through state banks and policy funds. What is notable is that these same tools, once used to drive heavy industrialization and infrastructure buildout, have been redirected toward decarbonization objectives, producing what some scholars term "green developmentalism." This has implications well beyond China's borders. Countries across Southeast Asia, as well as recipients of Chinese-financed infrastructure under the Belt and Road Initiative, are increasingly exposed to a version of green industrial policy that blends state guidance with selective market opening, and this hybrid model is being actively exported through technology transfer, project finance, and diplomatic engagement at forums like COP negotiations, where China has positioned itself as a champion of the developing world's right to a differentiated, less market-orthodox pathway to net zero.
For ODA and development finance practitioners, the policy implications are substantial. Traditional donor and multilateral frameworks for supporting climate transitions in the Global South have often been built around market-based instruments—carbon pricing, results-based financing, private-sector leverage mechanisms championed by institutions like the World Bank and the Green Climate Fund. China's demonstrated success in scaling renewable capacity through state-directed rather than market-first approaches offers an alternative template that is increasingly attractive to developing-country governments skeptical of the pace and equity of market-based transitions. This creates both opportunities and risks for the international development community: opportunities insofar as hybrid governance models may prove more effective at rapidly deploying capital-intensive green infrastructure in contexts with weak carbon markets or thin private capital markets, but risks insofar as state-directed models can also entrench opaque subsidy regimes, overcapacity problems (as seen in China's own solar and electric vehicle sectors), and governance structures less amenable to civil society oversight and environmental accountability mechanisms that Western donors have historically prioritized. Civil society organizations working on environmental governance and anti-corruption in recipient countries will need to develop new monitoring frameworks attuned to this hybrid model rather than relying solely on transparency metrics designed for market-based systems.
Looking forward, researchers and practitioners should watch closely how China's own emissions trading scheme evolves—whether it expands beyond the power sector into steel, cement, and chemicals, and whether carbon prices rise enough to meaningfully alter investment incentives, or whether administrative targets continue to do the heavy lifting while the market mechanism remains largely symbolic. Equally important will be how China's provincial governments, which have historically shown significant variation in enforcement capacity and political will, manage the tension between growth imperatives and binding carbon targets as the 2030 peaking deadline approaches. For the broader field of political economy scholarship, this case offers a valuable corrective to teleological assumptions that all climate governance systems converge toward carbon pricing as the presumptively efficient instrument; China's trajectory suggests instead that state capacity, industrial policy legacies, and geopolitical positioning will continue to shape highly differentiated national pathways to decarbonization. For IOCSS's own research agenda on ODA and civil society, this underscores the need to develop analytical tools capable of evaluating environmental and governance outcomes across genuinely plural models of climate transition, rather than measuring all cases against a single market-liberal benchmark that increasingly fails to describe how the world's largest emitter is actually organizing its response to the climate crisis.