People’s Bank of China outlines green finance strategy

February 11, 2021|Written by Graham Caswell|People's Bank of China

A comprehensive overview of the Chinese central bank’s green finance strategy has been presented by the bank’s research director.

Wang Xin focused on how the People’s Bank of China (PBoC) will deliver on the goal of “green financial reform and development”, outlined in the government’s 14th Five-Year Plan. Wang’s presentation also referenced Xi Jinping’s pledge that China’s emissions will peak by 2030 and fall to net zero by 2060.

The bank has continuously improved the top-level design of green finance, Wang said, while at the same time supported “leapfrog development” from the bottom up. The bank’s initial green finance strategy was organised around the “five pillars of green finance”:

  1. Green taxonomies and standards
  2. Disclosure requirements and financial supervision
  3. Incentive and restraint mechanisms
  4. The innovation of green financial products and market systems
  5. International cooperation.

Wang also highlighted “bottom-up” green finance reform, pointing to early success in China’s pioneering innovation pilot zone for green financial reform.

Steps that the PBoC will take during the new five-year plan include “building a long-term mechanism to improve financial support for a low-carbon transformation,” improving green financial standards and carbon accounting, and introducing climate stress tests for financial institutions. The bank will also construct a “multi-level green financial market system” involving financial products such as green loans, green bonds, green insurance, carbon futures and other derivatives.

“China will build a green financial system that supports the green and low-carbon development of the economy, which will actively support carbon peaking before 2030 and carbon neutrality before 2060,” Wang said. “We aim to make full use of the market mechanisms and improve government incentives, to build a multi-level and diversified green financial market system, and promote market-based trading of carbon emission rights.”


This page was last updated April 23, 2021

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