China may have a carbon trading system in place as early as 2013, according to Richard Sandor, who helped found the London-based Climate Exchange. “Irony of ironies, there’s a better understanding of cap and trade in Beijing than in Washington,” Sandor told a climate change forum in Hong Kong on Thursday, Bloomberg reported. “In a Communist economy, the need to do it is very, very high.” Under a cap-and-trade system, companies whose carbon emissions cross a certain threshold can offset these excess emissions by purchasing credits from companies that reduce carbon by more than a set amount. A Chinese official said last month that the country is discussing rules to implement a domestic carbon-trading market. Sandor also defended Europe’s carbon trading system, arguing that the system works and emissions are declining. Climate Exchange, which owns emissions markets in London and Chicago, said its first-half loss narrowed as average daily volumes on the European Climate Exchange more than doubled.