Central Bank’s Top Economist Says Xiong’an Needs $150bn in Green Finance

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The chief economist for the People’s Bank of China says that Xiong’an New Area situated 100 kilometres southwest of Beijing will require nearly 1 trillion yuan (USD$149.95 billion) in green financing.

At the 2nd Tianjin Green Finance Platform, jointly held by the China Finance 40 Forum and the Northern Finance Institute, PBOC chief economist Ma Jun outlined the huge amount of investment required for environmental undertakings in relation to the Xiong’an New Area.

“Management of the Baiyang Lake wetland area will need 100 billion yuan, underground piping will require 140 billion yuan, green construction over a five year period will involve 500 billion yuan, thermal heating will involve 10 billion yuan, while various forms of clean energy will require 100 billion or even several hundred billion.”

According to Xu Lin, the chairman of the China Center for Urban Development, however, even the figure of 1 trillion yuan in green investment is likely to be insufficient for the Xiong’an project, given the grand scale of ambitions for the new city, whose population is slated to rise to 1 million in the short term.

Unveiled abruptly on the first of April this year, the Xiong’an New Area is intended by the Chinese central government to serve as a new development area for the Beijing-Tianjin-Hebei economic triangle, as well as house “non-core” government agencies and state-owned enterprises that currently take up space in the capital.

Xu Lin notes that while the development target for Xiong’an at present covers 100 square kilometres, the project will eventually involve a total of 1000 square kilometres, which means that the 1 trillion yuan of green investment currently outlined don’t be enough.

Ma Jun points out, however, that the existing loans of local banking sector financial institutions are just over 15 billion yuan, which is “a drop in the ocean” compared to the green financing requirements of the Xiong’an project.

“It’s estimated that 90% of the investment will come from other places outside of Xiong’an,” said Ma.

As a consequence Ma Jun has mooted three concepts to meet these financing requirements – one centre, one demonstration and one system, in order to draw funds from outside the region.

“One centre” refers to plans to transform Xiong’an into a “green tech innovation investment centre,” “one demonstration” involves the establishment of a “demonstration zone” for green infrastructure and green development investment, while “one system” will see the creation of a “green financing system possessing unique local features.”

 

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