THE HAND OF THE MARKET, THE WAY OF GOVERNANCE: PARADIGM INNOVATION OF PUBLIC GOVERNANCE IN CHINA’S GREEN FUTURES PRACTICE

Abstract

Using the innovative practice of China’s green futures market as a “small incision,” this paper explores the “big question” of how financial markets can be used as tools for public governance from both theoretical and practical perspectives. Against the backdrop of the global sustainable development transition, traditional “command-and-control” environmental regulation tools face efficiency bottlenecks and weak incentives. This paper argues that futures contracts are evolving from purely economic tools into “governance contracts” that carry public policy objectives. Through three core mechanisms—price discovery, risk management, and standard embedding—futures markets can internalize environmental externalities and provide dynamic, forward-looking incentive signals for sustainable development. The article conducts an in-depth analysis of concrete practices in fields such as new energy metals, green agricultural products, and the circular economy at the Guangzhou Futures Exchange, Zhengzhou Commodity Exchange, and Shanghai Futures Exchange, revealing their multi-dimensional governance value in serving China’s “dual-carbon” goals, safeguarding industrial chain security, and promoting common prosperity. The study finds that this practice vividly embodies China’s theory of combining an “effective market” with a “proactive government,” forming a new paradigm of collaborative governance among top-level national design, market intermediary institutions, and micro-level market entities. Finally, the paper discusses the governance challenges facing this model—including data infrastructure, regulatory coordination, and participation equity—and proposes corresponding optimization pathways. The goal is to provide theoretical references and policy insights for improving the sustainable financial governance system with Chinese characteristics and for building an autonomous knowledge system in public administration.