It may surprise no one that China has caught up with some of the world’s most established markets when it comes to green finance – it is now the second largest green bond market after the US and before France, according to the Climate Bonds Initiative and its analysis of what should be considered green. It is still quite something to see that, last year, it grew by the largest amount among all: $44.4bn.
In a recent report published jointly with China Central Depository and Clearing Research Centre, the CBI found $68.2bn worth of Chinese green bonds aligned with both Chinese and the organisation’s green definitions in 2021, for a cumulative total of $199.2bn.
The reasons behind this growth are potentially even more interesting. Out of all issuances that China labelled as such, 62 per cent were aligned with CBI definitions last year, a growth of 10 percentage points, which, the report says, could be due to the introduction of the 2021 edition of the Green Bond Endorsed Project Catalogue, China’s green taxonomy. That reiteration “removed carbon-intensive projects related to fossil fuels such as clean coal technology, and adopted the do no significant harm (DNSH) principle, aligning with international standards.”
Worth keeping an eye on how regulation moves the international appeal of China’s green debt.
(Separately, foreign operations of Chinese groups – banks, to be precise – have begun issuing green bonds under the common ground taxonomy between China and the EU. You will find a few details here, by another bank that worked on those issuances.)