China’s new Green Finance Catalogue brings clarity and confidence to the market

Climate risks in China are escalating. Recent extreme weather events, including severe floods in Beijing and Hebei in July, displaced over 80,000 people and caused nearly USD 7.5 billion in damages. Simultaneously, heatwaves pushing temperatures above 46°C have put immense pressure on power and health systems. These disasters underscore the urgent need for increased capital directed toward climate solutions.

On July 14, China’s financial authorities introduced the new, unified Green Finance-supported Project Catalogue, which consolidates previous standards for green bonds, loans, and related financial instruments. This new framework clarifies eligibility criteria, streamlines standards, reduces operational costs, and enhances investor confidence.

A Strong Foundation for Scaling Green Investment

China is already a global leader in green finance. According to our China State of the Market 2024 report, the country reached USD 555.5 billion in aligned sustainable debt issuance by the end of 2024. Of that, USD 68.9 billion came from green bonds, which  accounted for 80 percent of the aligned issuance, with most proceeds directed to clean energy and low carbon transport. Transparency is improving too, with 73 percent of volumes supported by second party opinions.

The new Catalogue builds on this momentum, broadening the scope of eligible projects and helping channel even more green capital into China’s growing low-carbon economy.

What’s new in the 2025 Catalogue

The 2025 update to the Catalogue significantly expands the range of eligible economic activities, incorporating new sectors such as digital and IT services, smart manufacturing, and professional green services. A key addition is the inclusion of passenger rail, a long-standing recommendation from Climate Bonds. This inclusion is expected to strengthen the climate impact of the Catalogue and improve market liquidity by recognizing the low-carbon impact of this sector. It also offers substantial potential to increase the size and liquidity of the green bond market.

For the first time, the new Catalogue includes green trade and green consumption, opening up opportunities to finance the export of clean technologies and enhance consumer access to sustainable products, such as electric vehicles and energy-efficient appliances. This shift from production to demand allows for green consumer loans and mortgages, potentially reducing costs, incentivizing manufacturers, and driving innovation in the green sector.

The update also expands the Catalogue to include new activities related to climate resilience and methane abatement across various sectors, both of which present significant opportunities for the climate finance market. These additions broaden the scope for carbon capture, utilization, and storage (CCUS) applications, helping to integrate resilience and mitigation strategies into broader financing mechanisms.

More coherence, less fragmentation

This update marks a significant step forward in reducing fragmentation in green finance policy. By merging formerly separate lists for loans and bonds, the Catalogue now offers a more consistent and efficient standard for investors and financial institutions. It aligns capital with China’s green industry goals while improving project identification and verification.

As Wenhong Xie, Head of China Programme at Climate Bonds, explains:
“The new Catalogue consolidates China’s green finance standards, expanding the green investment landscape and providing unified guidance. This eliminates the reporting challenges of separate catalogues for green bonds, loans, and other products, improving transparency, lowering evaluation costs, and enhancing liquidity. By including upstream and downstream activities and shifting focus from supply to demand, it will provide further impetus to the low-carbon transition in the real economy and boost green capital flows.”

This is more than an update; the revised Catalogue represents a strategic move in aligning China’s financial system with its industrial policies and climate goals. By streamlining standards, expanding eligible activities, and strengthening the connection between finance and real-economy impact, it lays the groundwork for accelerated green investment. More capital flowing into climate solutions starts with this kind of clarity and ambition. 
 

‘Till the next time, 
Climate Bonds