China is planning to roll out a national greenhouse gas emissions trading market by 2017, creating the world's largest market for carbon. For the program to be effective, however, a greater focus on the creation of a market economy and a deeper political commitment to the environment will be essential. In particular, the government must wean highly polluting industries off state subsidies.
The establishment of a carbon market is widely viewed as confirmation that China is moving toward greater use of market-oriented approaches in national policy. The move is welcomed by the carbon trading industry as a much-needed vote of confidence in emissions trading in the face of flagging carbon prices in the European Union, currently the world's largest carbon market. The international community is also counting on China's pledges under the Paris climate agreement -- signed by 195 nations in 2015 -- to help spur greater international efforts to reduce emissions.