What is Clean Development Mechanism

China has been one of the largest global emitters of carbon dioxide (CO2). As a result, the country is committing itself to implement the 2030 Agenda for Sustainable Development. The attention that is being paid to the serious problem of climate change has increased manifold. Corresponding policies are introduced in relation to the financing of carbon. In particular, in the wake of the announcement that China would be going carbon neutral before 2060, concrete efforts are being consistently made towards carbon emission reduction. Policies and measures related to carbon finance are being continuously promulgated, and a national carbon emission trading market too has been established on July 16, 2021. This chapter gives a brief overview of the carbon market, carbon finance, and its policies in the context of sustainable development. It also examines the approach towards the future development of the carbon finance market by discussing in detail the existing deficiencies and areas of improvement.