Chinese green finance has seen surging growth in 2021 following the unveiling of ambitious carbon mitigation targets the year previously.
China’s domestic and foreign currency green loan balance grew 3.86 trillion yuan in 2021 to hit 15.9 trillion yuan by the end of the year, for a year-on-year (YoY) rise of 33%, according to data from the Chinese central bank in its “2021 Financial Institution Loan Direction Statistical Report” (2021年金融机构贷款投向统计报告).
This growth rate in the green loan balance marks an acceleration of 12.7 percentage points compared to the end of 2020, and was higher than the rate of growth in all lending by 21.7 percentage points.
10.66 trillion yuan of China’s 2021 green loan balance was directly or indirectly related to carbon emissions reduction projects, accounting for 67% of the total green loan balance.
The big state-owned banks have emerged as key drivers of growth in green lending. As of the end of 2021 the Agricultural Bank of China’s (ABC) green loan balance was close to 2 trillion yuan, for YoY growth of over 30%, while China Construction Bank’s (CCB) green loan balance was 1.95 trillion yuan, for growth of 45.67%.
The surge in green finance comes after Beijing unveiled the ambitious carbon mitigation targets in 2020, followed by push from PBOC at the start of 2021 for growth in related credit-extension.
Beijing’s current schedule is for China to achieve peak carbon by 2030, and carbon neutrality by 2060.