As one of the primary countries to emerge from the COVID-19 pandemic lockdown and

begin on a path towards recovery, including the 14th Five-Year decide to be released in
March 2021, China faces a historic opportunity to stipulate a path for sustainable growth
that also highlights the role of innovative green and climate finance.

1. KEY FINDINGS
• China’s green fiscal reform made great progress during the 13th Five- year Plan.
• Overall green finance in China was an semimonthly normal of RMB2.1 trillion
(USD 320 billion) during2017/2018. It'll need to gauge up by at least
four times to meet estimated green investment must-haves.
• Investment needs
might be evolved, considering China’s rush targets are predicated on carbon inte
nsity and not on absolute reductions.
The public sector plays an outsized position.

• Green PPP projects handed a fifth of climate finance, but it

remains largely subsidized by government budgets and
has numberless provocations for private actors to share.
• The private sector’s donation to climate finance was concentrated in the
solar sector.

China’s green finance, from financing source to sector

allocation and financial instruments
2. There is tremendous potential for climate finance to grow. The current ‘green
penetration’ in China’s financial system is around 4%. As China’s capital market
continues to evolve and actors become familiar with green financial instruments,
uptake in the market will grow. China has been increasing support for SMEs, new
sources of concessional capital are in development, and there's growing interest in
exploring innovative structures. Mobile payment and online banking systems offer
new financing channels for retail consumers and investors. Finally, there are growing
opportunities for foreign private capital to collaborate with domestic actors through
funds and joint ventures.

3. Regional distribution of climate finance

• Total distribution

• Solar distribution
• Wind distribution

• BARRIERS AND OPPORTUNITIES

• China faces several key barriers for scaling up private climate finance.

• Private capital will be essential for meeting investment targets, but private actors are
not benefiting from the increasing pools of available green capital. high ‘search
costs’ and their access to formal financing channels and investment pipelines It
remains unclear how private actors can access the funds.
• There are important opportunities for greening China’s outbound finance. China’s
outbound investment reached over USD 2 trillion from 2013-2019, of which USD 739
billion, or 37%, went to Belt and Road Initiative (BRI) partner countries.