Abstract: As a policy tool for achieving low-cost emission reduction through market mechanisms, carbon markets have been widely applied and developing rapidly across the globe. Currently, 38 carbon markets are in operation worldwide and another 20 are under development, covering nearly one-third of the global population and 58% of the global GDP, and regulating approximately 12 billion tons of greenhouse gas (GHG) emissions, accounting for 23% of the global total. As many as 78% of the signatories to the Paris Agreement have explicitly identified carbon markets as an emission reduction tool in their latest round of Nationally Determined Contributions (NDCs). By the end of 2025, China’s national carbon market had completed the quota compliance for three compliance cycles, with the cumulative trading volume of allowances reaching 865 million tons and the total transaction value hitting 57.633 billion yuan. In 2025, China’s national carbon market achieved leapfrog development, including the first expansion of covered industries which significantly raised its scale and policy influence; the issuance of programmatic documents to strengthen top-level institutional design and market development expectations; and the centralized release of 14 methodologies for China Certified Emission Reductions (CCER). However, it is worth noting that against the backdrop of the rising global carbon prices, the price of China’s national carbon market continues to weaken. Meanwhile, CCER is confronted with constraints in terms of authenticity verification of emission reductions and project supply in segmented sectors. These phenomena reflect problems such as limited market regulation tools, unclear goals and paths for institutional construction, and insufficient connection with global carbon markets. Facing the new situation of the accelerating evolution of the global climate governance landscape, China’s national carbon market is in urgent need of boosting market vitality, stabilizing development expectations, strengthening alignment with global carbon pricing mechanisms and cross-border emission reduction rules, and continuously improving its functions.