Green Finance in China Sees Roaring Growth, Beijing Flags Further Standardisation Efforts


China’s ongoing push for expansion of the domestic green finance sector is proving successful according to official data.

Chen Yulu (陈雨露), vice-governor of the People’s Bank of China (PBOC), said that China issued over 280 billion yuan in green bonds in 2018, with outstanding green bonds approaching 600 billion, making the Chinese green finance market one of the world’s largest.

Chen made the remarks on 18 May at the China Green Finance Forum (中国绿色金融论坛).

PBOC data further indicates that as of the end of 2018 the green loan balance of China’s 21 leading banks had reached over 8 trillion yuan, for a YoY increase of 16%.

The growth in China’s green finance sector arrives following the release of the “Guidance Opinions Concerning the Establishment of a Green Finance System” (关于构建绿色金融体系的指导意见) by Beijing in 2016, setting out a high-level policy framework.

In 2017 China’s State Council also outlined the establishment of green finance reform innovation trial zones in five province-level administrative entities, including Zhejiang, Jiangxi, Guangdong, Guizhou and Xinjiang, in order to support regional growth in green finance.

PBOC also recently unveiled the “People’s Bank of China Notification on Supporting Green Finance Reform Innovation Trial Zone Issuance of Green Bond Financing Tools” (中国人民银行关于支持绿色金融改革创新试验区发行绿色债务融资工具的通知), to support the registered issuance of green bonds by enterprises in trial zones and further expand China’s green finance market.

The “2019 China Green Finance Development Research Report” (2019中国绿色金融发展研究报告) released at the forum forecasts that in 2019 total green finance demand will be 2.5 trillion yuan, as compared to demand of 2.1 trillion yuan in 2018.

The report points out however, that total green finance supply in 2018 was just 1.3 trillion yuan, for a supply-demand gap of 800 billion yuan.

Renewable energy was the green sector with the greatestfunds demand at 697.6 billion yuan, yet the funds supply was just 258.6 billion yuan, for a gap of around 438 billion yuan.

In order to further drive green finance development, Chen Yulu said that policy efforts would focus on four key areas:

  1. Strengthening theoretical research into green finance and setting firm and solid theoretical foundations for the development of green finance;
  2. Vigorously establishing a standardisation system to ensure the standardised and healthy development of green finance;
  3. Deepening green finance product and services innovation, and driving the sustainable development of green finance;
  4. Strengthening international cooperation in the area of green finance, and continually increasing the leadership role of China in the green finance sector.

According to Chen clear standards for green finance are the current focal point for ongoing development of China’s green finance policy system, with the official launch of the National Finance Standardisation Technical Commission’s Green Finance Standards Work Team (全国金融标准化技术委员会绿色金融标准工作组) in September last year.