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Ma Jun: banks are encouraged to support green finance

By Leng Cheng | 15:13 UTC+8 April 7, 2017 | Online Edition

TO encourage efforts on battling environmental challenges, China will rate banks on their fund support for green investment with the inclusion of such actions into the country’s macro prudential financial regulation, according to Chief Economist of the central bank’s research bureau Ma Jun today.

China requires three trillion yuan (US$433.6 billion) to four trillion yuan of green investment annually, and needs a framework to guide private fund get into green finance, said Ma during the Duke International Forum held in Kunshan, Jiangsu Province.

The main channels to mobilize funds for the green investment include the banking system and a green bond market, Ma said. Other policy supports, such as interest subsidies, low-cost loans given by banks on environmental projects, setting up nationwide green development funds, and promoting markets for the trading of emissions, should also be put on the table, Ma said.

China has become the world's largest green bond market, accounting for nearly 40 percent of global green bond issuance last year. The market size jumped to 230 billion yuan in 2016 from zero after the country launched a set of standards and guidelines on green initiative in late 2015, with 200 billion yuan on the domestic market and 30 billion yuan overseas, according to Ma.

The scale of green bond could be even larger this year due to stronger demand in 2017 and years after, with the combination of public finance and policy frameworks coming along, Ma said.

“Huge amounts of fund are needed in the areas of environment protection, energy saving, clean energy, green transportation and green construction, while the central government and local governments can provide only some 250 to 300 billion yuan, so the majority will have to come from the private capital,” Ma added.

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