Over the past five years, China has adopted increasingly ambitious reforms aimed at mitigating its greenhouse gases (GHGs). These reforms stand in sharp contrast to the view that China would struggle to craft a comprehensive climate policy due to conflicts with national interests and fragmented policymaking institutions. This paper argues that this view pays insufficient attention to 1) how domestic institutional reforms influence national interests; and 2) how the diffusion of ideas can strengthen interactions between institutions and interests. This paper attributes China recent reforms to these two omitted dynamics. It demonstrates that institutional reforms that granted the National Development and Reform Commission (NDRC) the climate portfolio and forged linkages between subnational promotional incentives and energy efficiency targets helped China recognize climate change can complement its national interests. It also contends that leadership embrace of the concept of scientific development and repeated interactions in climate-related fora enabled these reforms by demonstrating mutually reinforcing synergies between climate change and development goals. Thanks to the interplay between interests, institutions and ideas, the paper argues, China has moved from a fragmented and reactive negotiating position to a more coherent and proactive climate policy.