As a market-based instrument，the Emissions Trading System （ETS） has been used by multiple countries or regions. China plans to initiate its national unified ETS in 2017 on the basis of seven ETS pilots. This paper analyzes the main design features of the national ETS and its formation reasons，identifying key issues and challenges that still need to be addressed. The national ETS adopts the two-stage management system between the central and provincial government，which not only emphasizes the uniformity of the rules，but also gives the provincial authorities a certain degree of autonomy. The national ETS mainly uses the carbon intensity target，using the benchmarking method based on real production to allocate free allowances. The national ETS calculates the indirect emissions and chooses corporate legal persons as the accounting boundary. At present，the main problems and challenges in the construction and operation of national ETS include the low legal status of the rules，the inconsistency between the MRV requirements and the benchmarking allocation method，and the effective coordination mechanism of national ETS with other energy and climate policies has not yet been developed. Chinese government should promote advanced legislation for national ETS as soon as possible，promulgate operational rules to guide the allowance allocation，MRV，quality supervision on verification agencies，compliance，trading and other important elements，coordinate national ETS with the regulation of financial industry and government finance budget，and develop the coordination mechanism for ETS and other energy and climate policies.