From Made in China in The Age.

Yu says [Chinese] policymakers are beginning work on a new five-year plan beginning from 2011 that will intensify the country’s current energy, pollution and climate-change efforts. But he says China is sticking to the levers of administrative edict rather than considering a domestic carbon-trading scheme.

“In my view, if there’s a huge polluting factory next door, then the best option is to shut it down, rather than allow it to buy credits so it can keep polluting and then pass the higher costs on to consumers,” says Yu.

Brilliant. None of this mucking about with this ‘market solutions’, ‘flexible mechanisms’ or ‘public consultation’ stuff, just the all-powerful arm of big government.