China China to to help help cul­ti­vate cul­ti­vate green green fi­nanc­ing fi­nanc­ing sec­tor sec­tor

Cen­tral bank takes pioneer­ing step for­ward to at­tract more pri­vate cap­i­tal to en­vi­ron­men­tal in­dus­try

China Daily (USA) - - BUSINESS - By XIN­HUA

China will es­tab­lish a green fi­nanc­ing mech­a­nism to fa­cil­i­tate the econ­omy’s tran­si­tion to sus­tain­able growth, be­com­ing the first coun­try world­wide to make such a move.

The de­ci­sion aims to en­cour­age more pri­vate cap­i­tal into green sec­tors and stem in­vest­ment that might pol­lute the en­vi­ron­ment, ac­cord­ing to the guide­lines re­leased on Wed­nes­day by the Peo­ple’s Bank of China, the na­tion’s cen­tral bank, and six other cen­tral au­thor­i­ties.

“Green growth is now part of China’s de­vel­op­ment strat­egy and the de­mands for green fi­nanc­ing keep grow­ing as China en­ters a crit­i­cal pe­riod for eco­nomic re­struc­tur­ing,” Chen Yulu, cen­tral bank’s deputy gov­er­nor told Xin­hua in an ex­clu­sive in­ter­view.

Sup­port­ive poli­cies will pro­mote green fi­nanc­ing, such as of­fer­ing govern­ment in­ter­est sub­si­dies via re­fi­nanc­ing and pro­fes­sional guar­an­tees and set­ting up na­tional green de­vel­op­ment fund, which will re­duce in­vestors’ fi­nanc­ing cost or im­prove their profit, ac­cord­ing to Chen.

Chen be­lieved that en­ter­prises would wel­come the move as their green in­vest­ment might im­prove their rep­u­ta­tion as re­spon­si­ble in­vestors.

China also de­cided to de­fine stan­dards for green bonds, pledged sup­port for qual­i­fied green firms to get listed and re­fi­nanced, and put in place com­pul­sory in­for­ma­tion dis­clo­sure mech­a­nism re­gard­ing en­vi­ron­men­tal is­sues to solve in­for­ma­tion asym­me­try prob­lems.

China is the world’s largest green bond mar­ket, with green bonds is­sued in the first half of the year

... the de­mands for green fi­nanc­ing keep grow­ing as China en­ters a crit­i­cal pe­riod for eco­nomic re­struc­tur­ing.”

Chen Yulu, deputy gov­er­nor of China’s cen­tral bank

reach­ing 75 bil­lion yuan ($11.2 bil­lion), or 33 per­cent of theworld’s to­tal.

Green bonds can ease fi­nanc­ing de­mands for medium and longterm green projects as banks are lim­ited in of­fer­ing such ser­vices, said Chen.

The govern­ment is also con­sid­er­ing de­vel­op­ing green in­surance and en­vi­ron­men­tal rights trad­ing mar­kets to en­rich green fi­nanc­ing tools. China has de­cided to launch a na­tional car­bon trad­ing mar­ket in 2017 to of­fer fi­nanc­ing tools for green firms.

Lo­cal gov­ern­ments should also take mea­sures such as set­ting up funds to en­cour­age more so­cial cap­i­tal to in­vest in green sec­tors, ac­cord­ing to the guide­lines.

Mean­while, as one of the world’s three economies with green credit in­dex sys­tem, China will con­tinue to en­hance international co­op­er­a­tion in this field and steadily pro­mote the two-way open­ing up of green bond mar­kets.

China has put green fi­nanc­ing on the G20 agenda for the first time to mo­bi­lize more in­vest­ment in en­vi­ron­men­tally friendly projects. The G20 has setup are search team on the is­sue based on a pro­posal by China.

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