{"id":11658,"date":"2025-03-05T08:30:00","date_gmt":"2025-03-04T22:30:00","guid":{"rendered":"https:\/\/testblogs.griffith.edu.au\/asiainsights\/?p=11658"},"modified":"2025-03-06T16:13:09","modified_gmt":"2025-03-06T06:13:09","slug":"china-green-finance-status-and-trends-2024-2025","status":"publish","type":"post","link":"https:\/\/testblogs.griffith.edu.au\/asiainsights\/china-green-finance-status-and-trends-2024-2025\/","title":{"rendered":"China green finance status and trends 2024-2025"},"content":{"rendered":"\n

MENGDI YUE<\/a> AND CHRISTOPH NEDOPIL<\/a> | 40 MINUTE READ | <\/p>\n\n\n\n

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Download PDF<\/a><\/figcaption><\/figure>\n\n\n\n

1. Introduction<\/h1>\n\n\n\n

In 2024, green finance in China saw significant progress across several areas. Early in the year, the CPC Central Committee and the State Council issued the Opinions on Comprehensively Promoting the Construction of a Beautiful China<\/em><\/strong>,[1]<\/a> laying out key strategies for achieving a green, low-carbon economy across all sectors. In particular, it advocates the robust development of green financial systems, including green bond issuance, expansion of the national carbon market, climate finance innovation, and ESG information disclosure. It also supports creating standards and certifications for green products and a “carbon inclusive” mechanism for public participation.<\/p>\n\n\n\n

In response to this high-level directive, four ministries (PBOC, MEE, NFRA and CSRC) jointly released Guiding Opinions on Doing a Good Job in the Five Major Financial Sectors in the Banking and Insurance Sectors<\/em><\/strong>[2]<\/a> in May 2024, <\/em>underscoring the role of green finance in resource allocation, risk management and market pricing in support of building a \u201cBeautiful China”.<\/p>\n\n\n\n

With continuous support through a favourable policy environment, China\u2019s green finance ecosystem evolved through strategic policy interventions, innovative financial products, and enhanced regulatory frameworks in 2024. Notable developments include the finalisation of the Green and Low-Carbon Transition Industry Guidance Catalogue<\/em>, advancements in green insurance and taxonomy, the establishment of more robust and unified disclosure requirements for corporations, the re-launch of the China Carbon Emission Reduction (CCER) market, and the introduction of national carbon footprint management standards.<\/p>\n\n\n\n

The growth of green finance instruments has been mixed in 2024: Green loans maintained strong growth, while green bond issuances continued to decline; transition-related bonds and green insurance grew significantly compared with 2023, but were still small in scale; green funds had a strong rebound from 2023.<\/p>\n\n\n\n

Building on the previous reports for 2022-23[3]<\/a> and 2023-24,[4]<\/a> this brief analyses China\u2019s green finance policies in 2024, identifies key trends and recommends actions to scale green finance further. It is written as a snapshot of key developments and uses specific examples to understand China\u2019s green finance trends and directions. It is by no means a complete guide to Chinese green finance and its developments.<\/p>\n\n\n\n

2. Progress on China\u2019s green finance policies in 2024<\/h1>\n\n\n\n

The following sections highlight and analyse recent green finance policy developments in China based on the five pillars[5]<\/a> for green finance development promulgated by PBoC since 2021:<\/p>\n\n\n\n

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  1. Improve the green finance standard system;<\/li>\n\n\n\n
  2. Strengthen regulation and disclosure requirements;<\/li>\n\n\n\n
  3. Enhance the incentive and restraint mechanisms;<\/li>\n\n\n\n
  4. Enrich the product and market system; and<\/li>\n\n\n\n
  5. Expand international cooperation and lead the setting of international standards for green finance.<\/li>\n<\/ol>\n\n\n\n

    2.1 Standard system<\/h2>\n\n\n\n

    Progress in standard system were observed in the insurance industry, green taxonomy, transition finance and biodiversity finance.<\/strong><\/p>\n\n\n\n

    Green Taxonomy<\/h3>\n\n\n\n

    Following a public consultation version revealed in 2023, a coalition of ministries led by NDRC finalised and published the Green and Low-Carbon Transition Industry Guidance Catalogue (2024 version),<\/em><\/strong>[6]<\/a> which went into effect in February 2024. Compared with the 2019 version, it highlights more of \u201clow-carbon\u201d than \u201cenvironmental protection\u201d and includes traditional industries that need resources for a green transition.<\/p>\n\n\n\n

    For example, the 2024 Catalogue includes industries working on carbon capture, utilisation, and storage (CCUS), substitutes for ozone-depleting substances (ODS), and emissions reduction industrial processes. In the section on \u201cclean and low-carbon transition of traditional energies\u201d, besides \u201cclean production and utilisation of coal\u201d, which were included in previous versions, the 2024 Catalogue also adds the low-carbon transformation of coal power generating units. The Catalogue serves as a reference, but not a binding standard, for governments, companies and financial institutions (e.g., for green loans).<\/p>\n\n\n\n

    In May 2024, Hong Kong Monetary Authority published its first Hong Kong Taxonomy for Sustainable Finance<\/em><\/strong>[7]<\/a> that covers 12 economic activities across four industries\u2014power generation, transportation, construction, sewage and waste treatment. It is highly aligned with Common Ground Taxonomy (CGT), China’s Green Bond Endorsed Project Catalogue, and the EU Sustainable Finance Taxonomy. The interoperability attracts cross-border green finance and strengthens Hong Kong\u2019s position to channel international capital into sustainable projects.<\/p>\n\n\n\n

    Green Insurance<\/h3>\n\n\n\n

    Following the Green Insurance Classification Guidelines published in 2023, in April 2024, the National Financial Regulation Administration (NFRA) issued Guiding Opinions on Promoting the High-quality Development of Green Insuran<\/em>ce.<\/strong>[8]<\/a><\/p>\n\n\n\n

    For underwriting, the Guiding Opinions lists 9 key areas for green insurance coverage: (climate-related) natural disasters, low-carbon technology innovation, green energy and the green transition of traditional energy, restoration activities that benefit the carbon sink, products that benefit public low-carbon lifestyle (such as EVs, bike-share programs and green products), liability insurance for business with high environmental risks, green manufacturing, green buildings and green transport. For investment, it encourages insurers to invest in green industries.<\/p>\n\n\n\n

    This document sets goals of establishing a comprehensive green insurance policy support system and service framework by 2027, and making green insurance a vital financial tool by 2030. It is expected that both the scale of green insurance products and internal readiness of insurance companies will be accelerated.<\/p>\n\n\n\n

    Transition finance<\/h3>\n\n\n\n

    In March, a coalition of seven ministries, led by the People’s Bank of China (PBoC), released the Guiding Opinions on Further Strengthening Financial Support for Green and Low-Carbon Development<\/em>.[9]<\/a> The document calls for accelerating the development of transition finance standards and defining key elements, including the catalogue of transition activities, disclosure requirements, product frameworks, and incentive mechanisms.<\/p>\n\n\n\n

    PBOC has completed the compilation of transition finance standards for the first batch of four high-emission sectors including steel, thermal power, construction materials and agriculture and have piloted them in some regions. Compilation work on the second batch of seven sectors including copper, aluminium and textile is in progress.<\/p>\n\n\n\n

    In addition, local governments and financial institutions actively explored transition finance standards in 2024, such as:<\/p>\n\n\n\n