A Review of the Carbon Trading Market and Influencing Factors of Pricing in China

Abstract

This paper presents a comprehensive analysis of the development and pricing mechanisms of China’s carbon trading market, exploring their interconnections with multiple influencing factors to address the need for a holistic understanding of carbon market dynamics. It begins by reviewing fundamental theories of carbon trading and examines the practical evolution of China’s carbon market through segmented time-series analysis. Employing a systematic literature review, the study identifies critical determinants of carbon pricing—such as national policy frameworks, shifts in energy structure, and significant international events including the U.S. withdrawal from the Paris Agreement—and assesses their individual and interactive impacts. The results underscore that carbon market behavior is governed by a complex, multi-dimensional logic, which cannot be adequately captured through single-factor explanations. By integrating theoretical foundations, empirical observations, and multi-factor interactions, this study offers novel insights into carbon price formation and contributes to a more nuanced understanding of the complexities inherent in China’s carbon trading system.