This report takes a first look at China’s domestic coastal shipping sector and provides recommendations for actionable long-term decarbonization pathways designed to avoid exceeding its current share of transportation-sector CO2. It uses the sector’s 2019 activities, energy consumption, and CO2 emissions as a baseline and projects those out to 2060 under three scenarios: a) Business-as-usual (BAU), which assumes that the sector’s energy consumption will be governed only by adopted policies, with no new policies proposed and implemented after 2019; b) a 2°C-aligned scenario, which assumes coastal shipping maintains its 2019 share of a 2°C transportation sector CO2 budget in future years; and c) a 1.5°C-aligned scenario, which assumes that the sector maintains its 2019 share of the 1.5°C CO2 budget for the transportation sector. The 2°C-aligned and 1.5°C-aligned scenarios require 44%, and 83% reductions, respectively, in CO2 emissions in 2060 compared with the 2019 baseline.