Establishing China’s Green Financial System: Progress Report

The report Establishing China’s Green Financial System: Progress Report finds that China – which put green finance on the G20 agenda during its 2016 presidency – is following through on its political commitment to boost the financing required to do this. The report looks particularly at progress since the State Council in August 2016 approved a set of recommendations for action on greening China’s financial system.

The report identifies many specific advances, including:

• China has become a new growth driver in the global green bonds market. In the first half of 2017, China issued 36 green bonds worth RMB77.67 billion (US$11.7 billion).
• Many provinces and cities have established regional green development funds. By the end of 2016, 265 green funds were registered of which 215 were green industry funds. Some 121 of these were established in 2016.
• By the end of June 2017, 7,826 green and low-carbon projects, with a total investment of US$0.96 trillion, were included in the national public-private partnerships projects catalogue, accounting for 57.7 per cent of the projects.

The report also identifies key issues that need to be addressed to move forward faster, and issues recommendations to tackle them, including:

• Clearly define the term “green”, thus lowering the identification costs of green projects and preventing rising “greenwashing”.
• Set up statistical systems for green finance, and construct performance evaluation systems for local green development.
• Relevant authorities could clarify lenders’ responsibilities, litigation eligibility, and liabilities by improving laws and regulations on environment protection, thus urging commercial banks to incorporate environmental risk analysis into the loan application process.
• Efforts should be made to improve the green finance database and expand channels for international investors to access information about China’s green finance market to help boost their confidence.