China has launched a new pilot program to encourage green foreign debt financing, aimed at accelerating the country’s transition to a low-carbon economy while boosting access to international capital. The initiative, announced in August 2025, allows non-financial enterprises to raise funds from overseas and invest in qualified green and low-carbon projects.

The program is being implemented across 16 key regions and cities, including Beijing, Shanghai, Guangdong, and Sichuan. It promotes the use of foreign debt for sustainable development by expanding borrowing quotas for green projects and simplifying cross-border financing procedures. Projects that meet the standards of China’s central financial regulators will be eligible for more favorable policy treatment, including lighter restrictions on risk-weighted debt quotas.

One of the standout features of the pilot is that green and low-carbon investments will take up a smaller share of a company’s risk-weighted quota. This approach effectively gives businesses more room to borrow for sustainable purposes, enhancing their capacity to finance environmental innovation and infrastructure.

Regulators emphasized that the pilot aims to strike a balance between financial openness and national security, supporting the real economy while maintaining regulatory oversight. The goal is not only to advance domestic green goals but also to position China as a key player in global sustainable finance.

By opening its doors wider to foreign green capital, China is signaling a commitment to environmental responsibility and international cooperation in addressing climate change. This move aligns with the country’s broader strategy to peak carbon emissions before 2030 and achieve carbon neutrality by 2060.

Source:

https://esgnews.com/china-launches-green-foreign-debt-financing-to-boost-global-capital-flows/