中 国 社 会 科学 院 世 界 经 济 与政 治 研究 所

Institute of World Economics and Politics(IWEP)

Chinese Academy of Social Sciences(CASS)

China’s green finance: achievements and challenges

Feb.21, 2019
Huifang Tian

The views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of the Asian
Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI
does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology
used may not necessarily be consistent with ADB official terms.
China’s Green investment need during 2015-2020

Source: People’s Bank of China (PBOC), green finance task force report
 Achievements in green finance
• The initiative of commercial Banks to participate in green credit has been
significantly improved, with an average annual growth rate of 13.14%,
accounting for 9% of the total credit balance in 2018. The overall non-
performing loan rate is about 1.69%, indicating good asset quality.
• The primary market for domestic green bond issuance has expanded
rapidly in the past years.
• The green stock index system continues to expand and improve.
• Mandatory and semi-mandatory environmental information disclosure
systems of listed companies were gradually established.
• Green bonds have become increasingly diversified and the market has
become more innovative.
• Green development fund and green PPP: 178 green funds set up in 2018.
• Green insurance: The development of the compulsory environmental
pollution liability insurance system has made steady progress. In 2017,
environmental pollution liability insurance provided 30.6 billion yuan of
risk protection for more than 16,000 enterprises.
• Environmental equity market: The national unified carbon emission
trading market was launched.
• Risk prevention: relevant regulatory mechanisms have been gradually
improved, and environmental risk management policies have yielded
initial results.
• International cooperation: multilateral frameworks such as the G20,
TCFD, the green finance cooperation network (NGFS) between central
Banks and regulators, and the SBN supported by the international finance
corporation (IFC).
 Challenges
• The incentive of green finance is not strong enough to promote Banks
and other financial institutions to play a key role in promoting green
development.
• Lack of capacity, training and knowledge in finical institutions on E&S
issues and it is difficult to effectively identify green projects and develop
corresponding products and services.
• The inconsistency of green standard is easy to form a kind of confusion
and obstruction at home and abroad.
• Third party services and other supporting systems are not perfect.
• Lack of financial guarantees and insurance for private financing
• Green finance is faced with the problem of insufficient and asymmetric
information. The enterprise environmental information disclosure system
has just started.
 Policy Achievements
• The top design: Green finance has been included in the report of the 19th
national congress of the communist party of China.
• Four major structure adjustments being the focus of green development:
industrial structure, energy structure, transportation structure and
agricultural input structure.
• “Top-down" design +"bottom-up" regional exploration to promote the
implementation and formulation of policy incentives : Five Pilot Regional
green finance innovation was officially launched
• To promote the standardization of green finance as one of the key tasks in
financial industry during the 13th five-year plan period. Green credit
statistics system is improving day by day.
• The people's bank of China has introduced a mechanism to evaluate the
performance of green credit, as incentives for Banks to increase their green
credit and green bonds.
• The people's bank of China launched green refinancing policy.
Commercial Banks can use individual collateral, such as green credit and
bonds, to borrow relatively cheap money from the people's bank of China
to carry out green credit business.
• The green enterprise is divided into various levels: dark green, green and
light green. In deep green, the state-owned assets supervision and
administration commission offers a 12 percent discount to green credit
projects
• Strengthen the environmental information disclosure of listed
companies. By 2020, all listed companies will have to disclose their
management system compulsorily without any reason
 The way forward
• Promote the implementation and formulation of green financial
incentive policies, and maintain policy stability.
• Promote the standardization of green finance
• Improve laws and regulations and clarify the scope of supervision.
• Strengthen innovation in green financial products
• Increase the application of science and technology to facilitate product
research and development, and provide high-quality and more
comprehensive data support for innovative research and development of
green financial products.
• Strengthen risk prevention and control and environmental information
• Strengthen oversight of third-party institutions and effectively prevent
various types of "greenwashing“, create a healthy and fair environment for
the development of green finance.
• Promote the unified development of ESG rating system, improve the
green investment related database statistics, green investment
performance evaluation work.
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