Yi Gang, the governor of China’s PBoC, stated at the Singapore FinTech Festival that the country is considering introducing mandatory requirements for state-backed financial institutions to disclose green finance-related information, as reported by South China Morning Post on December 9. As Yi Gang stated, the PBoC will continue monitoring the potential impact of environmental and climate risks on financial stability, and lower the barrier for international investors to access China’s green finance market. Also, the central bank is currently revising its eligible catalog for green bonds, to remove traditional fossil fuel production and consumption projects and to facilitate more climate-friendly projects across the nation.

These moves are in line with Chinese President Xi Jinping’s pledge in September to peak carbon dioxide emissions in the country by 2030 and to achieve carbon neutrality by 2060. This means, China will have to cut its carbon intensity by at least 65% compared to 2005 levels. According to an estimate from the Climate Bonds Initiative, China will need approximately RMB3tr to RMB4tr in green investment per year by 2030, suggesting ample room for development in the country’s green finance sector.

So far this year, the Chinese government has announced a list of green finance-related policies to meet its climate goal, including project subsidies, financing support, tax incentives, and more. In July, the country introduced a national green development fund, with the first closing at RMB88.5bn, to speed up China’s transition to low-carbon production and consumption. In the same month, the PBoC said that it would start reviewing the green finance performance of Chinese financial institutions on a quarterly basis, starting from 2021, covering a range of indexes such as the ratio of green finance products in the total business mix. So far, China has established green finance pilot zones in six provinces and nine regions across the country, to test out green loans, securities, trusts, and other products. As of the end of 3Q20, the total volume of green loans issued by Chinese banks surged to RMB11.55tr, ranking the country first globally in issued green loans. Its overall stock of green bonds came to RMB1.2tr by June, the second-highest in the world. Moreover, the country is also considering rolling out mandatory sustainability information disclosure requirements for all listed firms in China, scheduled to be announced before the end of this year. Notably, the country will also make full use of financial technologies to support green finance development, including big data, artificial intelligence, blockchain, and more, according to PBoC.

Reference:

https://www.scmp.com/business/banking-finance/article/3113211/chinas-central-bank-plans-finance-xi-jinpings-goal-carbon

http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/4141550/index.html

https://www.scmp.com/business/article/3113737/china-pledges-cut-carbon-footprint-65-cent-2030

https://www.bloomberg.com/news/articles/2020-10-12/china-aims-to-cut-all-greenhouses-gases-by-2060-researcher-says

http://www.xinhuanet.com/money/2020-07/16/c_1126243764.htm

https://global.chinadaily.com.cn/a/202012/12/WS5fd46962a31024ad0ba9b72e.html

https://www.climatebonds.net/resources/reports/china_gbio_cn