Although China is the world's largest emitter of carbon pollution, it is also the biggest manufacturer of solar technology.
China produces half of the world's solar cells with exports worth $A35.8 billion in 2011.
Speaking at the World Chinese Economic Forum in Melbourne yesterday, the Parliamentary Secretary for Climate Change, Mark Dreyfus, said China has been quick to embrace the opportunity of a clean energy future.
China has the highest clean-tech sales in absolute terms of any country in the world, worth $74 billion.
He said China has also developed significant capacity in producing wind energy, with four of the ten largest wind power manufacturers now located in the country.
It is the first time China has ever staged its economic forum outside of Malaysia.
Australia is working with China to pursue strong climate action through policy exchange and research collaboration under the Australia-China Bilateral Climate Change Partnership.
Work is also being done on the development of an Asian Pacific carbon market. In July, Australia and China held the first Australia-China Emissions Trading Experts Dialogue in Beijing, which brought together national and provincial officials and academics to discuss emissions trading design issues, including the underpinning systems to measure and report emissions.
Dreyfus said China has clearly signalled its intent to cut carbon pollution and create an economy that is more productive, efficient and innovative.
"Over the past five years China has already made significant improvements in energy efficiency, closing many inefficient coal power plants and removing over 70 gigawatt of thermal energy, which is larger than the entire Australian grid," he said.
"China is also exploring carbon pricing to further reduce emissions through the trialling of emissions trading in seven cities and provinces, with the intention of scaling to a national scheme."
China's Climate Changer Minister Vice Chairman Xie said the country will focus on the trial implementation of carbon trading by 2015, and then expand the scope of pilot sites and gradually build a nationwide carbon market between 2015 and 2020.
These pilot schemes will cover around one-third of China's Gross Domestic Product and one-fifth of its energy use and will set a price on carbon emissions that creates an incentive to reduce pollution.
Draft plans for the scheme in Guangdong Province, home to over 100 million people, will cover over 800 companies and 60 per cent of industrial power consumption.