This report intends to act as a starting point for those wishing to better understand why and how China is slowly changing to adopt progressive policy instruments to tackle growing environmental concerns. Sandbag is particularly interested in the proposal to develop pilot emissions trading schemes as a precursor to establishing a national emissions trading scheme (ETS). It is becoming increasingly clear that China is taking climate change seriously and is in the process of developing Chinese solutions to the problem. Patience is, however, crucial, in particular for the international community watching eagerly for significant developments. Given the size and complexity of China, as well as the mounting scale of the problems, it will be some time before any environmental policy can be heralded as a success.