China Doubles Down on Environmental Governance

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In late June, the Central Committee of the Communist Party of China (CPC) and the State Council issued national-level Guidelines to strengthen ecological and environmental protection and institutionalize the battle against pollution. Shortly after, China also released a three-year action plan on air pollution control, which suggests a working timetable and roadmap to improve air quality. These high-level announcements reiterate the emphasis that President Xi has placed on ecological environment governance and combatting pollution, which along with the economy and poverty alleviation are China’s ‘three tough battles.’

The Guidelines provide some direction on specific pollution targets, implementation requirements, and enforcement mechanisms to realize Xi’s goals of greater environmental governance by 2020 and beyond. It aims to coordinate and facilitate high-quality economic development and high-level ecological environmental protection. Indeed, there are particular pollution prevention and control targets for air, water, and soil quality. The Guidelines strike a stricter tone in terms of enforcement as county, city, and provincial Party and government officials will be held accountable for life—extending past their term at a particular post—through an assessment system to monitor progress and by an independent system of leading cadres to supervise implementation. It will provide more muscle for local environmental enforcement.

In terms of green finance, the guidelines provide reassurance that the goals of environmental governance and pollution control can only be achieved with the assistance of green financial tools and the development of a robust carbon trading market. The Guidelines highlight the following directives and actions:

  • Establish a mandatory pollution liability insurance system in high environmental-risk industries;
  • Monitor timely and accurate environmental disclosure of listed companies and debt-issuing enterprises;
  • Integrate corporate environmental credit information into the national credit information sharing platform and the national corporate credit information disclosure system;
  • Reaffirm China’s plans to establish a national emissions trading scheme by 2020. (This gives environmental regulators more power to promote its implementation and accelerates the formulation of laws and regulations on carbon emissions trading management.)

The issuance of these Guidelines by the CPC Central Committee and the State Council are the first attempts at expounding Xi’s grand environmental goals. While there is much to await in terms of environmental impact from the Guidelines, the growing prominence of green finance—in environmental policies—is evident.