The schemes will aim to halt the nation's spiralling greenhouse gas emissions, while the international carbon market is reeling from huge over-supply and record low prices.
European permits have lost 80% of their value since mid-2008 and 50% in the last 12 months, spurring claims that the carbon market is becoming irrelevant in the EU's efforts to cut emissions.
The Beijing municipal government, which will host one of China's seven pilot schemes from 2013 or 2014, plans to implement minimum and maximum prices in the capital's CO2 market, a move it hopes will prevent the same market volatility as the EU ETS.
"China will consider introducing both a price ceiling and a price floor to prevent the dramatic price fluctuation seen in the EU ETS," said Chen Jianpeng of the State Council's Development Research Centre, which is involved in studying the impact of a future Chinese ETS.
China, which accounts for almost one-third of global CO2 emissions, plans to use the experiences from its pilot schemes to set up a national CO2 market later this decade.
Volatility is just one of many challenges the EU market has faced since its launch in 2005.
Tax evasion, theft of permits and re-usage of credits have also damaged the reputation of the world's biggest carbon market.
China, which is generally sceptical about financial markets, is planning to keep its CO2 scheme under tight control.
Emissions trading will take place on government-approved exchanges, and recently announced regulations by the State Council means only spot trading with a five-day delay on delivery will be allowed.
Some observers said it would be beneficial to keep the market simple, at least initially, as Chinese compliance traders lack experience in emissions markets.
"The market is not ready to have carbon derivatives, green bonds and green funds in the pilot phase," said Shi Minjun, deputy director at the China Academy of Science's Research Centre on Fictitious Economy and Data Science.
'European' carbon levels
The news of a Chinese carbon trading scheme follows an 18 July statement by the European Commission's joint research centre that average CO2 emissions in China increased by 9% to 7.2 tonnes per capita last year.
The country is now within the range of six to 19 tonnes per capita emissions of the "major industrialised countries", the statement read.
By contrast, European Union CO2 levels dropped by 3% to 7.5 tonnes per capita.
In the United Nations Framework Convention on Climate Change negotiations, China argues that it should judged as a developing country - and have less stringent emissions reductions target as part of the 'Common But Differentiated Responsibilities' principle enshrined in the original Kyoto agreement.
China has also used that principle as justification for its airlines' non-compliance with the EU ETS.