Beijing-Green Finance Summit: Launch of China Local Government Report-Green Bonds Growth Policies
Annual China Green Finance summit in Beijing was the backdrop for debut of 'Study of China’s Local Government Policy Instruments for Green Bonds' report.
Prepared by Climate Bonds & Syntao Green Finance, the new report examines green bond developments at a local government level and sets policy recommendations for growth.
What’s it all about?
Released to coincide with the China Green Finance Committee annual conference held over last weekend in Beijing, Study of China’s Local Government Policy Instruments for Green Bonds (中国地方政府绿色债券 激励机制研究) is the most detailed analysis of regional and city based green bond policy and issuance in China produced to date.
Taking as its starting point the rapid growth in Chinese green bond issuance from almost zero in 2015 to RMB 238 billion (USD 36.2 billion) or 39% of global issuance in 2016, the report outlines the policy steps taken by Government regulators and stock exchanges in supporting such rapid growth.
Beijing Green Finance Summit reflects green growth
More than 500 green finance experts from regulators and industry gathered at the annual Green Finance Summit on Saturday, the surging number of attendees reflecting the increased attention being placed on greening the financial system.
The Summit has been held annually since 2015 by the China Financial Society Green Finance Committee which operates under the auspices of the PBoC.
Major issues on the agenda this year included:
- opportunities and challenges facing green credit and green bond markets;
- establishment of green financial systems at a local level;
- innovation in green financial products
Keynote Summit Commentary
Keynote speaker Chen Yulu, Deputy Governor of PBoC, acknowledged that China’s development in green finance has made enormous progress in 2016, which included enhancement of policy framework, expansion of funding channels and continuous green credit growth.
As of February 2017, green credit assets of 21 major Chinese banks reached RMB 7.5 trillion, accounted for 8.8% of the total outstanding loan.
Chen Yulu also noted some of the challenges facing China’s budding green finance industry such as unattractive investment returns of some green projects, fundraising difficulties and high funding cost in some local regions and industries, and lack of financing instruments that fit with the funding pattern of medium to long term green projects.
Ma Jun, Chief Economist of PBoC, added that the market sees more frequent launches of innovative green products, financial institutions should keep the momentum going and drive the innovation in green financial products and services further, as well as to push forward the development of greens bonds, green securitization and green index-linked products.
Several other keynote speakers also talked about the significance of China and the international community working hand in hand to promote green finance.
Liu Dashan, Chair of China Energy Conservation and Environmental Protection Group (CECEP) told the audience that the collaboration with Climate Bonds Initiative and its internationally recognized Climate Bonds Standard would help China’s green bonds market go global and boost investors’ confidence.
Report focus on local and regional finance
At the local government level Study of China’s Local Government Policy Instruments for Green Bonds (中国地方政府绿色债券 激励机制研究) reviews the progress of policy signals, supporting facilities, financial incentives and recognitions that have been offered to encourage the development of green finance at the local and regional level.
The report also identifies the policy instruments at the disposal of local governments based on central government policy framework, and presents a few successful and replicable case studies and international experiences as reference for China’s future development in promoting green bonds.
Six Core Recommendations
Six recommendations are made to support green bonds development and a local and regional level:
- Further action by central government ministries, commissions and exchanges actions to encourage local governments to support green bonds including additional local pilot programs;
- Development of specific green bond agendas and explicit policy signals by local governments that have already begun explorative actions;
- Use of a wider range of policy measures at local government depending on resources and financial capabilities including financial incentives to bond issuer, policy signals, facilities recognition and awards;
- For the many provincial and municipal governments that have yet to incorporate green finance and green bonds into their agenda, more preliminary research and benchmarking is formulating action plans and promotion of green bonds in light of local conditions;
- Assistance from regulators, industry associations and academic institutions for local governments to gain more experience on the policy instruments at the disposal of local governments to promote green bonds;
- Enhanced communications from media and industry associations in recognition of “top green firms” and engagement with more local governments to introduce policy measures for the promotion of green bonds.
The Last Word:
The growing attendance at the green finance summit is indication of the importance being placed on green investment policy at all levels of government in China.
This report is a further contribution to those green finance policy discussions and development.
Available in both English and Chinese, Study of China’s Local Government Policy Instruments for Green Bonds (中国地方政府绿色债券 激励机制研究) has been produced with the support of the Green Finance Committee and the UK Foreign and Commonwealth Office (FCO).
Climate Bonds thanks both organisations for their assistance.
We will be increasing our China based development work and activities during 2017 in conjunction with our local partners.
Keep an eye out for future reports and events.
Till next time,
Disclosure: CECEP is part of a collaboration between the China Central Depository & Clearing Co. Ltd (CCDC) & the Climate Bonds Initiative to produce the The ChinaBond China Climate-Aligned Bond Index.
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