China’s leadership is pushing a national emissions-trading system (ETS) as one of several policy tools for reducing greenhouse-gas emissions. Policy implementation at subnational levels presents challenges and opportunities: proactive subnational efforts in provinces and cities (such as pilot ETS cities) can be used to push policy implementation and raise targets and goals. One critical area for successfully implementing an ETS in China is the establishment of a legal basis to ensure effective implementation and potential punishment of non-compliance.