The Chinese government last week pledged to spend $3bn on slashing its carbon output through its new state-owned China Clean Development Mechanism (CDM) fund.

Beijing leaders said they would agree to plunge the money into the newly launched fund if the United Nations gave approval to a pipeline of 885 carbon-cutting Chinese business projects.

Should the projects get the go-ahead, China's greenhouse gas emissions will be cut by around 1.5bn tonnes, reaping an estimated $15bn (£7.3bn) in carbon credits for the government through carbon trading.

"The CDM is a win-win mechanism for the world community," said Xie Zhenhua, a vice minister with the country's National Reform and Development Commission in announcing the initiative.

The money would pave the way for a range of green projects - including reforestation and wind farms - which are expected to significantly reduce China's growing pollution output.

So far around 125 out of the proposed 885 projects have received approval to issue credits into the Kyoto Protocol's CDM - its carbon credit trading arm that allows industrialised countries to invest in projects that cut emissions in developing countries and then buy the resulting credits to help meet their own emission reduction targets.

Should all the projects be approved, the windfall would be substantial for China. The carbon credit market has tripled in size during the past year to be worth around $37bn.

However, the CDM has also been criticised as a means of allowing polluters in First World nations to 'buy out' of their environmental responsibilities rather than reducing their own fossil fuel reliance.