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Because China has emerged as the largest greenhouse gas (GHG) emitter in total annual emissions, to accelerate the pace of GHG emission reduction in China is important to the success of global efforts in addressing climate change. Carbon trading is a market mechanism and key instrument in the mitigation of climate change. This paper explores the policy process and development state to date of China׳s carbon-trade market to understand the emergence and development of that market and to understand what barriers are hampering China׳s carbon-trade market development. To achieve this goal, this paper introduces and analyzes China׳s status in the international market, examines the factors driving carbon-market launching by the Chinese government, and traces the development of mandatory carbon-emission trading and voluntary emission trading. It is argued that China׳s carbon-trading market is confronted with challenges such as the absence of a functional carbon-trading market, inaccuracy of the quota allocation, an imperfect trading mechanism, and lagging legislation. At the present stage, shortcomings such as having no real-time carbon price and dominated spot transactions differentiate China׳s trade market substantially from a functional system. A quick market integration of China׳s carbon market appears remote. It is suggested that specific measures be taken to promote the development of the Chinese carbon-trading market. [ABSTRACT FROM AUTHOR]

Abstract: Nowadays, one of the urgent issues regarding global climate change is to discuss the future of the second period of the Kyoto Protocol. However, the divergence of views and opinions among parties in the last Conference of the Parties of the United Nations Framework Convention on Climate Change, held in Durban in December 2011, is still large. One of the bones of contention is whether the emerging developing countries, like China, should make commitments and legally bind themselves to a Green House Gas (GHG) reduction target in near future. As the largest GHG emitting country, China and its energy and climate policies will play an important role in global climate change and will also significantly influence the other countries’ policies and the global climate negotiation. In this paper, we review the current differences among parties in the Durban Conference, and we analyze the recent situation, barriers, and future policies in China. Finally we highlight the impact and potential effect of Clean Development Mechanisms in avoiding China''s barriers regarding climate change. Results show that China is making a great effort to mitigate climate change by establishing and reforming its energy and climate policies in order to achieve a low-carbon development. At the same time, more innovation and international collaboration is needed in China to achieve this goal. [Copyright &y& Elsevier]