Green Finance in China

In recent years, China has made significant progress in developing Green Finance by introducing Green Finance standards and disclosure requirements, innovating Green Finance products, and carrying out regional pilot programs. China’s Green Finance market continues to expand, and green credit maintains steady growth. Under the vision of “peak carbon dioxide emissions & carbon neutrality,” China’s financial sector is taking Green Finance as a starting point to play a more prominent role in facilitating low-carbon transition and promoting sustainable development.

Establishing the national green financial reform and innovation pilot zone is an important measure to promote the comprehensive development of green finance in China, and it is an organic combination of “top-down” policy promotion and “bottom-up” reform and innovation. In June 2017, the 176th Executive Meeting of the State Council approved the establishment of green financial reform and innovation pilot zones in five provinces, including Zhejiang, Guangdong, Guizhou, Jiangxi, and Xinjiang. In recent years, the green financial reform in ten cities of seven provinces (autonomous regions), has formed a series of experiences that can be replicated and popularized. The valuable reform experience of all regions not only supported the development of local green industries and economic transformation and upgrading but also enhanced the green finance business of financial institutions and drove the rapid development of the national green financial market.

Under a strong global push for green finance, China’s green building, energy, and transport industries will see new development opportunities. This chapter introduces the development ideas of China’s green building, new energy vehicles, and energy industries, the current status of these industry developments, future development trends, and how finance can support the development of the new energy industry.

The rapid development and widespread application of digital technology such as the Internet, big data, and distributed technology greatly benefit expanding the scope of financial services and improving the availability of financial services, making financial services more targeted and providing more efficient financing services for various economic entities. This chapter focuses on the theoretical foundations of digital technology to promote green finance, summarizes the international experience of digital technology to support green and low-carbon development, introduces China’s practice of digital technology to support the development of green finance, discusses the problems that may be brought about by digital technology to promote the development of green finance, and gives relevant policy recommendations.

In recent years, the international practice in the field of ecological protection finance in China has developed rapidly, and green finance has become an important domain for China to carry out economic and financial cooperation with the international community. It is notable that China and the world's leading countries are engaged in green financial cooperation based on the framework of economic, financial, and fiscal dialogue at the national level. China has taken international cooperation in green finance to the national level, thereby drawing sufficient attention from governments and financial institutions at all levels to put the cooperation measures into practice and to urge international cooperation in green finance to achieve effective results. At the same time, international green financial cooperation has also become an important platform for deepening Sino-foreign economic, fiscal, and financial cooperation and an important bridge and link for further consolidating Sino-foreign economic relations. In addition, China also actively participates in and leads multilateral international green financial cooperation, strengthening the exchange of experiences in green financial development, initiating or taking part in several green financial international cooperation mechanisms, and actively promoting the global green financial development agenda.

The development of green finance in China must integrate green development factors into all business work and operation processes, accelerate the cultivation of new advantages in green finance, and build a carbon-peaking strategy system for financial institutions from the six aspects ranging from organizational structure, policy system, process management, risk management, capacity building to information disclosure, etc., to create a carbon neutrality operation system in all aspects. In particular, it is necessary to take advantage of the new opportunities for the development of green finance under the carbon peaking and carbon neutrality targets, accelerate client marketing, strengthen client reserve, increase credit investment, continue to promote the green transformation of asset structure, fully rely on fintech, implant green elements in strategic businesses such as inclusive finance, housing leasing and other traditional advantageous fields such as infrastructure construction, and build green financial institutions to create unique advantageous features and enhance social influence.