The historic flooding in Southwest China recently is a grim reminder of the risks of extreme weather events and the need for China to assume global leadership in climate change mitigation. It is in China’s interest to do so whether independently or in coalition with others. This self interest lies in the acute national security risk inherent in runaway climate change coupled with the cost-effectiveness of taking immediate action.

The national security impact is reflected in what President Xi Jinping refers to as the gray rhino risk. The evidence of a mounting calamity is clear, but the solution is not automatic and needs concerted action. The melting of glaciers in the Qinghai-Tibetan plateau threatens the Yangtze and Yellow River deltas which sustain about 64 percent of the Chinese economy and the livelihoods of 600 million people. Over four-fifths of the glaciers in China have retreated or disappeared since the 1960s.

Moreover, climate change accounted for 40 percent reduction in river runoff in the Yellow River, 15 percent in Haihe and 18 percent in the Liao watersheds. Prolonged droughts in the rural areas can lead to a second wave of mass migration to cities, leaving them unable to provide jobs and social services, increasing the risk of social unrest. Droughts have also increased since the 1980s with 23 provinces and autonomous regions experiencing “severe” droughts, and five regions experiencing it for the first time.

According to government reports, extreme flooding in the Pearl River basin increased significantly during the 1981-2015 period. Shanghai is sinking and cities in the coastal regions are highly vulnerable to rising sea levels and super typhoons. Tianjin, Beijing, Zhejiang and Shanghai with power, transport, telecommunications, water and finance concentrations are vulnerable to disruptions from climate change. China’s food security is also at heightened risk. From 1961 to 2010, the size of farms affected by diseases increased eight times and those ravaged by pests increased nearly six times. Climate-induced pandemics are not far away.

But there is good news. It is increasingly clear that climate-smart growth can encourage more efficient modes of production, promote energy efficiency, create millions of new jobs, generate new sources of revenue and provide environmental and health benefits. In the last 15 years, China has shown the capacity to transition to a climate-smart model. This can be seen in the efficiency improvements and productivity gains of State-owned enterprises, energy use, transportation, agriculture, heavy industries and digital transformation. But more needs to be done to accelerate this transition in a post-COVID-19 world. China’s leadership is needed more than ever because major economies are distracted by domestic political, economic, and COVID-19 concerns.

Here is a game plan. First, China should accelerate the national rollout of domestic carbon taxes and trading. The pilot projects have been successful and now is the time to roll them out aggressively, nationwide. Second, China should use its global monopsony power (power of a large buyer in international trade) to impose a transnational carbon tariff. Third, China should use its powers — monopsony, diplomacy, financial — to build a climate coalition with its Asian trading partners via the Regional Comprehensive Economic Partnership, especially with Southeast Asia, Japan and Australia to adopt a regime of carbon prices and impose a transnational carbon tariff to encourage non-members to join.

In support of this three-part approach of China, the Asian Infrastructure Investment Bank, the Belt and Road Initiative and the Asian Development Bank could promote climate-resilient infrastructure investment, move away from carbon projects, promote carbon capture and energy efficiency investments and eschew traditional infrastructure lending.

The gains to China could be enormous. Based on pilot experiments, the initial price of carbon could start at US$40 per metric ton. At this price, China could generate an estimated 14 percent additional revenues to help its local governments finance this shift towards a climate-smart growth model and alleviate an already tight fiscal space. This new growth and financing model will help the country overcome the middle-income trap and remain on track to achieve a prosperous society and an ecological civilization by 2049.

The current global regime of climate mitigation has failed, and the gray rhino risk is increasing. Major economies are just too distracted by domestic concerns. This is an opportunity for China to take unilateral action while inviting others to join the fight against climate change.

Eduardo Araral is Associate Professor and Director, and Vinod Thomas Visiting Professor, at the Lee Kuan Yew School of Public Policy, National University of Singapore.