06 February 2012
Chinese airlines have been banned from joining the European Union's Emissions Trading Scheme.
The country"s authorities have also banned the airlines from increasing their fares or adding new charges for the scheme, which aims to cut carbon emissions.
China"s airlines had already indicated that they would refuse to pay the tax, but payment has now been officially banned by the State Council.
The move leaves the EU with a difficult decision about how to react to the ban.
Industry observers fear the situation could escalate into a trade war.
American and Canada have also voiced their opposition to the scheme.