This article reviews recent studies on the politics of climate change in China. We explain the evolution of policy‐making and implementation processes and mechanisms over the past two decades, and discuss how they have eventuated in contemporary trends and challenges. Within the unitary hierarchy of the Chinese political system, the central government is responsible for making major policies, and subnational and local governments are responsible for the implementation. The policy‐making process is characterized by a consensus building at the center, in contrast to the open public and partisan debate in Western democracies. Climate policy implementation has been based on a so‐called ‘target responsibility system’, which disaggregates targets amongst all levels of local governments and related enterprises. While this system has proven effective in achieving the national targets set by the central government, the high costs associated with it have been a source of concern. The key challenge in making and implementing climate policy is to balance economic growth and environmental protection. This challenge is of critical importance in central–local political interactions. Clean energy development has been proposed as a ‘win–win’ solution to help balance economic development and climate change mitigation, and to satisfy both central and local government prerogatives, but the sustainability of such a model is questioned when the global and domestic economy experience difficulties. The central government is trying to translate its consensus in climate change and green development into priorities for local governments through policy pilots and market instruments; the real results will soon be seen. WIREs Clim Change 2013, 4:301–313. doi: 10.1002/wcc.221 Conflict of interest: The authors have declared no conflicts of interest for this article. For further resources related to this article, please visit the WIREs website.