China launched its Clean Development Mechanism (CDM) fund, with a potential funding of $3 billion, on Friday to finance the country's efforts to tackle climate change.

The CDM fund, managed by the Ministry of Finance, will pool money by taking part of the proceeds from the country's carbon trade with developed countries, said Xie Zhenhua, vice-minister of the National Development and Reform Commission (NDRC).

Established under the 1997 Kyoto Protocol, CDM allows developed countries to fulfill their obligations in greenhouse gas emission reduction by buying carbon credits from developing countries or investing in their clean energy projects in a market-based manner.