China’s emissions trading system applies a two-stage emissions intensity-based compliance quota allocation scheme different from the cap-and-trade systems prevalent in developed economies. It was designed to accommodate the country’s socioeconomic complexities and implemented following a learning-by-doing approach. Compliance firms significantly expanded green investment and production workforce. Their climate decisions are influenced by state ownership and regional heterogeneity. State-owned enterprises (SOEs) and less liberal market firms increased hiring, but not investment; non-SOEs and more liberal market firms grew investment. There are mixed welfare effects: compliance firms maintained productivity and efficiency; however, ordinary workers’ real wages were reduced, more prominent in SOEs.