Based　on　the　panel　data　from　283　prefecture-level　cities　in　China　between　2009　and　2019,　this　study　examines　the　impact　of　China＇s　carbon　emissions　trading　system　on　reducing　carbon　emissions　and　its　mechanisms,　using　the　PSM-DID　method.　The　findings　demonstrate　that　the　carbon　emissions　trading　system　can　effectively　decrease　the　total　carbon　emissions　in　pilot　cities　in　China,　and　has　a　positive　spatial　spillover　effect　on　neighboring　cities　of　the　pilot　areas.　The　carbon　emission　trading　system　primarily　reduces　carbon　emission　by　incentivizing　businesses　to　implement　eco-friendly　practices　and　improve　the　industrial　structure　of　pilot　cities.　Increased　financial　marketisation　can　promote　the　carbon　emission　reduction　effects　of　the　trading　system.　The　impact　of　the　carbon　emission　trading　system　on　old　industrial　base　cities　and　inland　cities　is　more　significant　than　those　on　non-old　industrial　base　cities　and　coastal　cities.