In a major speech to outline his vision for addressing China’s environmental challenges, President Xi emphasized the critical role that green finance will play in moving China to a more sustainable economy. The National Ecology and Environmental Protection Conference held in May brought together the key officials and Chinese Communist party members involved in environmental protection. Xi announced an aggressive combination of policy and financial measures to further develop China’s green financial infrastructure. If successful, which is still a big question, China could have a significant impact on the international standard for innovative financing to drive sustainable growth and development, especially in emerging markets.
President Xi announced the following priorities for China:
- Seek solutions to promote investment in green infrastructure
- Establish clear and consistent standards to define green to ensure accurate investment framework
- Develop incentive mechanisms that combine fiscal and financial policy to encourage green finance including discount loans, tax benefits, and loan guarantees
- Encourage sustainable companies to tap into capital markets
- Expand direct financing models, such as green bond pilots and the development of green funds
- Conduct additional research into innovative financing mechanisms, such as carbon futures, carbon funds, carbon-related financial products and derivatives
- Explore using market mechanisms to tackle air, water, and soil quality