Publication Date

April 2016


Richard Adelstein, John Bonin


College of Social Studies


English (United States)


In order to promote marketization at a national level, the Chinese government established special economic zones in some coastal cities at the early stage of the Chinese Economic Reform. This learning-by-doing process helped the Chinese government to gain fruitful experience in designing market-based economic policies that are adaptable to China’s political and economic institutions. Thanks to the market reforms, China has enjoyed rapid economic growth and social development since 1980s. However, this economic achievement greatly contributes to some serious environmental issues, including climate change. As the world’s largest developing country, China has surpassed the United States and become the largest greenhouse gas (GHG) emitter. Facing increasing pressure on carbon reduction from both international and domestic levels, the Chinese government finally decided to conduct a market-based instrument to control CO2 emissions with another learning-by-doing process. This thesis aims to examine China’s recent experiment on carbon trade, in preparation for the framework design of a national emission trading system (ETS). After explaining China’s preference to emissions trade rather than carbon taxes at the current stage, this thesis compares and discusses the seven pilot ETS programs, the key features and market performances of which are further evaluated. Finally, this thesis provides institutional recommendations on the evolution from the experimental emissions trading systems to a national ETS program.



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