In the City of London, Chinese officials warned the British: China will become the world’s number one economy—seize these five opportunities.

Here are several forward-looking cases of China–UK cooperation: In 2025, China added over 430 million kilowatts of new installed capacity in wind and photovoltaic power generation (120 million kW from wind, 318 million kW from solar), a 22.0% year-on-year increase—another record high. In March 2026, the UK government announced that, effective 1 April, it would reduce import tariffs to zero—or significantly lower them—for 33 categories of industrial goods used in offshore wind power manufacturing, under a new authorized use measure. This move is expected to unlock £22 billion in investment and accelerate the overseas expansion of Chinese wind power products. China and the UK are jointly building a green, low-carbon demonstration zone in the Guangdong–Hong Kong–Macao Greater Bay Area, with UK enterprises participating across the full value chain—from carbon trading and green finance to energy-efficiency retrofits. In June 2025, the China–UK Green Finance Working Group launched the “Nature and Biodiversity Finance Cooperation Mechanism” in London, co-led by Bank of China’s London branch and Standard Chartered Bank, aiming to mobilize Chinese and UK financial institutions to scale up investments linked to nature and biodiversity conservation. The fourth opportunity lies in China’s status as the world’s most dynamic financial market—the strategic high ground for UK financial services. China will fully lift foreign ownership caps on financial institutions and further open up its securities, insurance, asset management, and wealth management markets. UK financial firms may establish wholly foreign-owned entities and fully participate in business operations—tapping into the super-sized dividends offered by China’s 1.4-billion-strong population and its RMB 120-trillion asset management market. As of the end of Q4 2025, total assets of China’s banking institutions (in both RMB and foreign currencies) reached RMB 480 trillion, up 8.0% year-on-year—the largest in the world; cross-border RMB settlement volume in 2025 stood at RMB 17.86 trillion, reflecting accelerated RMB internationalization. Opportunities for China–UK financial cooperation include: 1. London is the world’s largest offshore RMB center. In February 2026, Bank of China’s London branch became the second RMB clearing bank in the UK, following China Construction Bank (London); the China–UK Financial Working Group was formally established in May 2025. 2. As of 2025, UK financial institutions’ assets under management (AUM) in China totaled several hundred billion RMB; the Chinese market has become a vital source of business for UK financial institutions—HSBC’s pre-tax profits from Hong Kong and mainland China accounted for approximately 47% of its group-wide total in 2025. The fifth opportunity is China’s globally most stable business environment—a long-term fertile ground for UK enterprises. China will strengthen protection of foreign investors’ rights, intellectual property, and dispute resolution mechanisms—providing UK businesses with a market-oriented, law-based, and internationally aligned long-term development environment. The China–UK Joint Economic and Trade Commission and the China–UK Economic and Financial Dialogue have been fully reinstated, eliminating policy barriers and ensuring smooth cooperation channels. China’s comprehensive opening-up to foreign investment includes: reduction of the nationwide negative list for foreign investment access—from 190 items in 2013 to just 29 in 2024; the pilot free trade zone version shrank to 27 items in 2021; and pilot programs for opening up the services sector have been expanded nationwide, with foreign investment liberalized across value-added telecommunications, healthcare, education, culture, and other fields. The foundation of China–UK cooperation rests on robust bilateral ties: in 2025, bilateral merchandise trade reached USD 103.7 billion, and two-way investment stock neared USD 68 billion. China ranks as the UK’s third-largest trading partner (after the US and Germany), while the UK remains one of China’s largest investment destinations outside the EU. Returns on investment for UK enterprises in China are substantial.

The UK officially recognizes China’s carbon market—does this mean UK-bound exports no longer face carbon tariffs?

→ This is the 2,142nd original article published by Global Zero Carbon. The UK’s Carbon Border Adjustment Mechanism (CBAM)—commonly known as the “carbon tariff”—is set to enter into force on 1 January 2027. That leaves less than four months to go. At this critical juncture, HM Revenue & Customs (HMRC) released a list of “Qualifying Carbon Pricing Systems” (QCPS), covering carbon markets in 16 countries and regions—including China’s national carbon emissions trading scheme. The UK’s QCPS assessment focuses on several key criteria: whether the mechanism is administered by a government or supranational authority; whether participation by relevant sectors is legally mandatory; whether rules, coverage scope, and publicly disclosed carbon prices are transparent; and whether the system genuinely imposes economic costs on covered emissions. Since its official launch in 2021, China’s national carbon market has progressively matured and improved—and fully satisfies all these institutional requirements. Consequently, it has received formal recognition under the UK’s CBAM framework. Upon hearing the news, many UK-bound exporters immediately took notice: Does this mean steel, aluminum, and cement exported to the UK could avoid paying carbon tariffs? However, “recognition” does not equate to “full exemption.” The reality is far more complex than it appears. In 2024, the UK government announced the establishment of its own UK CBAM and confirmed its formal implementation starting 1 January 2027. The initial scope covers five high-carbon sectors: aluminum, cement, fertilizers, hydrogen, and steel. Importers meeting certain thresholds must register; the current minimum registration threshold is set at GBP 50,000 in the value of covered CBAM goods. On 9 September 2026, the UK government updated its policy documents—signaling a rapid transition from earlier policy design and technical consultation phases into active preparation for formal implementation. This newly published QCPS list includes China’s national carbon market alongside the EU ETS and Korea’s ETS—marking a major breakthrough in international recognition of China’s carbon market institutional capacity. This means that, when Chinese-produced steel, cement, aluminum, and other CBAM-covered goods have already borne carbon costs compliant with UK rules within China’s national carbon market, UK importers may—in principle—apply for “carbon price reduction” (CPR) to lower their final UK CBAM liability. Yet such recognition does not mean “exemption for Chinese exports from UK CBAM,” nor does it mean “100% offset of UK CBAM liability using China’s carbon market price.” UK CBAM’s carbon price offset follows strict boundary rules—starting with the concept of “effective carbon price.” What the UK recognizes is not the listed price of Chinese carbon allowances multiplied by total emissions—but rather the “effective carbon price” actually borne by enterprises. Only carbon allowance costs that enterprises incur through trading or auction purchases—i.e., real out-of-pocket payments—are eligible for offset. This distinction makes the allocation of free allowances the pivotal factor in the entire calculation. Per HMRC’s detailed calculation rules published on 16 July, the process begins by determining the installation’s total emissions, then classifying those emissions according to the different carbon prices they bear under the pricing mechanism. Emissions subject to actual carbon pricing are multiplied by their respective carbon prices; emissions covered by free allowances or exempted under de minimis thresholds are priced at zero.

UK Climate Envoy: Broad Potential for China-UK Carbon Market Cooperation

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UK Climate Envoy Rachel Kyte praised China's carbon market growth, noting its expansion to steel, cement, and aluminum sectors covers over 65% of national emissions with substantial trading volume.

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2026-09-24

UK Climate Envoy: Broad Potential for China-UK Carbon Market Cooperation

UK Climate Envoy: Broad Potential for China-UK Carbon Market Cooperation

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