The Chinese government issued a series of policies on Tuesday to help its largest economic zone implement its green transformation and move toward “higher quality” growth through multi-tier capital markets – priorities shared across the country.
Eligible companies in the extensive economic belt on the Yangtze China – an area that accounts for 21 percent of China’s land area but generates 44 percent of its gross domestic product – will be encouraged to raise capital through green bonds and equity, according to a guideline jointly released by the country’s central bank and seven other ministries. The proceeds will be used to improve waste treatment, green technologies and pollution control.
The move follows promises made last month at the Third Plenum of the Communist Party Central Committee, a major economic conference, to promote green finance. The world’s second-largest economy has frequently stressed the need for financial instruments to Improving climate resilience and strive for ecologically sustainable growth.
The belt, which includes 11 provinces and cities, was described in the policy as the “main battlefield” for green development, the “main artery” of Dual circuit system and the “driving force” of “high-quality economic development”.
Companies in the zone that meet certain – as yet unspecified – requirements will receive support from the central authorities in using multi-level capital markets to raise funds. The guidelines stipulate that state-owned enterprises can be listed on the National Equities Exchange and Quotations System, carry out refinancing, conduct mergers and acquisitions, and be listed on the National Equities Exchange and Quotations System. over-the-counter market known as the “third board” in mainland China.
Financial institutions and companies in the region are encouraged to issue green bonds in accordance with national and international standards to “facilitate foreign funds’ investment in China’s transformation to a low-carbon economy.”
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In addition, structural monetary policy tools will be used to encourage financial institutions to support green initiatives more, the ministries and the central bank said. The quality of carbon dioxide emissions data will also be improved by promoting “high-level” tables from third-party providers.
Financial institutions were encouraged to continue to support key environmental projects in the zone, particularly urban waste treatment, pollution control, soil and water conservation, climate change mitigation and Conservation of biodiversity.
In addition, incentive and restriction mechanisms will be created, with the possibility of setting up carbon accounts for some industries and individuals, to improve data efficiency in carbon footprint management.
Tuesday’s guidelines came two weeks after the State Council, China’s cabinet, revealed a plan to make the country’s economy more environmentally friendly in key sectors such as agriculture, transport and energy.
The plan outlined the development of more financial instruments such as green insurance, equity and trusts to support economic decarbonization. It also set an ambitious goal of building an environmental protection industry worth 15 trillion yuan ($2.1 trillion) by 2030.
