Green zones to help fund fight against pol­lu­tion

China Daily (Hong Kong) - - BUSINESS - By CAI XIAO in Bei­jing and YANG JUN in Guiyang caix­iao@chi­nadaily.com.cn

China’s cen­tral bank said it is work­ing to­gether with lo­cal gov­ern­ments to de­velop five new green fi­nance pi­lot zones, an ini­tia­tive that will help fund the coun­try’s fight against pol­lu­tion — which some an­a­lysts have es­ti­mated will cost over 3 tril­lion yuan ($440 bil­lion) an­nu­ally in in­vest­ment.

The cen­tral bank said a State Coun­cil ex­ec­u­tive meet­ing ear­lier in the month ap­proved a plan for set­ting up the five green fi­nance pi­lot zones in Zhe­jiang, Guang­dong, Guizhou and Jiangxi prov­inces, as well as in the Xin­jiang Uygur au­ton­o­mous re­gion. The zones are des­ig­nated re­gions where fi­nan­cial in­sti­tu­tions will be given in­cen­tives to is­sue loans to and fund en­vi­ron­men­tally-friendly in­dus­try.

Peo­ple’s Bank of China Vice-Gover­nor Chen Yulu said they were con­sid­er­ing two new meth­ods to en­cour­age fi­nan­cial in­sti­tu­tions to par­tic­i­pate in the con­struc­tion of the new pi­lot zones.

“We will re­gard green credit as­sets with qual­i­fied rat­ings as col­lat­eral, a move to en­cour­age banks to is­sue green loans,” Chen said.

“The other method is to put fi­nan­cial in­sti­tu­tions’ green credit per­for­mance eval­u­a­tions into the Macro Pru­den­tial As­sess­ment sys­tem, which is also an im­por­tant stim­u­lus for fi­nan­cial in­sti­tu­tions.”

Chen added that the PBOC will sup­port and en­cour­age green fi­nance prod­ucts and ser­vice in­no­va­tion in the pi­lot zones. Short-term green in­vest­ment projects can rely on credit, and medium and long-term ones with steady cash flow can con­sider is­su­ing bonds, he said.

The bank will also step up the pace of per­fect­ing a green fi­nance mech­a­nism, in­clud­ing set­ting up stan­dards for green credit and green bonds as well as build­ing a green credit sys­tem.

Chen said the pi­lot zones have been se­lected in east­ern, cen­tral and west­ern ar­eas that are at dif­fer­ent stages of eco­nomic and so­cial development.

“The cities of Huzhou and Quzhou in Zhe­jiang prov­ince, for ex­am­ple, will fo­cus on in­dus­trial trans­for­ma­tion,” said Chen.

“Guizhou prov­ince will take ad­van­tage of its green re­sources to de­velop green fi­nance in key ar­eas of mod­ern agri­cul­ture, clean en­ergy and big data,” the vice-gover­nor added.

Guizhou is ac­tive in the process and its govern­ment put for­ward a plan for de­vel­op­ing green fi­nance and pro­mot­ing green re­source cap­i­tal­iza­tion at the start of 2016.

In April last year, Gui’an New Dis­trict in Guizhou prov­ince ap­plied tor be a green fi­nance pi­lot area. In Novem­ber, the Guizhou govern­ment re­leased a guide­line to sup­port fi­nan­cial in­sti­tu­tions de­vel­op­ing their green fi­nance business and en­cour­ag­ing green com­pa­nies to go pub­lic.

By the end of last year, Guizhou prov­ince had sup­ported 836 en­ergy con­ser­va­tion and en­vi­ron­men­tal pro­tec­tion projects and the loan bal­ance to­taled 140.1 bil­lion yuan ($20.6 bil­lion). Among them, the Guiyang branch of the In­dus­trial Bank is­sued green loans to­tal­ing 12 bil­lion yuan.

Li Yao, di­rec­tor of Guizhou govern­ment’s fi­nance of­fice, said they will largely pro­mote green com­pa­nies go­ing pub­lic, is­su­ing green bonds and de­vel­op­ing green in­dus­try funds.

Lu Zheng­wei, chief econ­o­mist of the In­dus­trial Bank Co Ltd, said each of the five re­gions has its own con­di­tions while build­ing a green fi­nance sys­tem. Lo­cal gov­ern­ments can work with fi­nan­cial in­sti­tu­tions to ex­plore in­no­va­tive mech­a­nisms in the pi­lot zones.

“China’s green fi­nance will pro­ceed more eas­ily with ex­pe­ri­ence in in­no­va­tion learned in pi­lot zones,” he said.

to­tal loan bal­ance in Guizhou prov­ince to help the projects

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