• air pollution;
  • cap-and-trade;
  • Guangdong;
  • Hong Kong;
  • policy coordination

The Pearl River Delta, after pell-mell industrialization, suffers air pollution. Two-thirds of the pollutants come from Hong Kong–owned factories in Guangdong. Direct 2011 medical costs in Hong Kong are reliably estimated at US$513 million, and annual excess Hong Kong deaths from air pollution exceed 3,000. Dirty air hurts quality of life, recruitment of professionals, tourism, and other desiderata—including government legitimacy. This article surveys the relevant politics, medicine, economics, and air chemistry, recommending cap-and-trade policies that are acceptable where markets now rule in both “systems” of Hong Kong-Guangdong. It stresses the need for official enforcement of caps. Although local governments have cooperated to establish air-monitoring stations, they have yet to leverage Hong Kong's expertise in regulation and Guangdong's potential for manufacture of air-cleansing equipment. They need a regional emissions trading scheme (ETS). With Beijing's plans to have a nationwide ETS by 2015, this severe problem could be solved sooner rather than later.