No country in the world produces more carbon dioxide than China. On a per-person basis, the nation trails the United States, and is about equivalent with Europe. But overall? There’s no contest. China is often used as a cudgel in American politics: Why should our industries slash carbon emissions, the argument goes, when our output pales in comparison to theirs?

Here’s an answer: Because China is working to cut its emissions. With support from the European Union, China will, among other projects, develop its own emissions trading schemes (ETSs). Or, in other words: cap-and-trade. From Reuters:

China, the world’s biggest carbon dioxide emitter, has struck a deal to work with the European Union to cut greenhouse gases through projects including the development of Chinese emissions trading schemes, the European Commission said on Thursday. …

The European Union will contribute 25 million euros ($33 million) and technical assistance over a four-year period to three carbon-reduction projects.

Apart from helping with the design and implementation of emissions trading schemes in China, the other projects are to assist Chinese cities to be resource-efficient and to cut water and heavy-metal pollution and implement sustainable waste treatment policies.

Particularly interesting is the E.U.’s ongoing push for a linked, international ETS.

The Commission wants partnerships with other emissions schemes as part of efforts to boost its own ETS, on which the price of carbon has sunk far below the levels required to spur green investments.

Last month, it agreed to link its ETS with Australia’s scheme by 2018.

EU Climate Commissioner Connie Hedegaard said on Thursday the Chinese financing deal was “an important step for an ever closer cooperation towards a robust international carbon market”.

The creation of an exchange including China, the E.U., and Australia could not only drastically reduce emissions, but also provide a much stronger counterpoint to the argument that cutting domestic emissions would put American businesses at a disadvantage.

The most ironic aspect of this announcement is that cap-and-trade, a market-based solution for CO2 emissions developed by American conservatives, will be embraced by a country that is technically socialist before being implemented in the United States.