Realizing the goal of the Paris Agreement to limit global warming to 2 °C by the end of this century will require most likely deployment of carbon-negative technologies. It is particularly important that China, as the world’s top carbon emitter, avoids being locked into carbon-intensive coal-fired power generation technologies and undertakes a smooth transition from high- to negative- carbon electricity production. We focus here on deploying a combination of coal and biomass energy to produce electricity in China using an integrated gasification combined cycle system with carbon capture and storage (CBECCS). Such a system will also reduce air pollutant emissions, thus contributing to China’s near-term goal of improving air quality. We evaluate the bus-bar electricity-generation prices for CBECCS with mixing ratios of crop residues varying from 0% to 100%, as well as associated costs for carbon mitigation and co-benefits for air quality. We find that CBECCS systems employing a crop residue ratio of 35% could produce electricity with net-zero life-cycle emissions of greenhouse gases (GHGs), with a levelized cost of electricity (LCOE) of no more than 9.2 US cents per kWh. A carbon price of approximately $52.0/ton would make CBECCS cost-competitive with pulverized coal power plants. Therefore, our results provide critical insights for designing CBECCS strategy in China to harness near-term air quality co-benefits while laying the foundation for achieving negative carbon emissions in the long run.