China Deepens Market-Based Environmental Reform and ASEAN Economic Integration

On May 29, two major policy developments underscored China’s commitment to sustainable development and regional economic cooperation. First, the General Office of the CPC Central Committee and the General Office of the State Council issued the Opinions on Improving the Market-Based Allocation System of Resource and Environmental Elements. According to Xinhua, the document outlines a comprehensive plan to deepen reforms in resource and environmental markets. Key measures include improving quota allocation, expanding trading scope, strengthening institutional frameworks, and enhancing foundational infrastructure for resource and environmental element transactions.

The Opinions aim to promote the efficient allocation and free flow of carbon emission rights, water use rights, and pollution discharge rights by 2027. They also advocate increasing the proportion of paid allocations and developing green financial instruments such as green credit, insurance, and bonds. Local pilot programs will be streamlined to support the establishment of unified national markets, particularly for water use rights. Experts, including Tian Lihui from Nankai University, emphasize that the new policies will transition environmental governance from administrative control to market-driven mechanisms.

On the same day, Ministry of Commerce spokesperson He Yadong announced that China and the ten ASEAN countries had officially concluded negotiations on Version 3.0 of the China-ASEAN Free Trade Area (CAFTA). The upgraded agreement adds nine new chapters, covering the digital economy, green economy, supply chain connectivity, and standardization processes. This development marks a significant achievement following more than two years of intensive consultations.

The finalized CAFTA 3.0 framework aims to facilitate broader and deeper integration between China and ASEAN in emerging sectors, support supply chain cooperation, and build a large-scale regional market. In the face of rising unilateralism and protectionist measures globally, the implementation of CAFTA 3.0 is expected to inject greater certainty into regional and global trade and provide new momentum for economic growth and openness.

Together, these policy initiatives reflect China’s strategic focus on green development and high-quality economic integration, both domestically and across the ASEAN region.