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China to establish green finance pilot zones

Updated: Jun 15,2017 2:27 PM

Pilot zones will be set up in Guangdong, Guizhou, Jiangxi and Zhejiang provinces and Xinjiang Uygur autonomous region to boost green finance in China.

The decision was made at the State Council executive meeting on June 14 to improve the green finance system.

Developing green finance is of practical significance to accelerate construction of an environment-friendly society, promote environmental governance, and advance structural reform, according to Zhao Qingming, chief economist at the China Financial Futures Exchange.

Building pilot zones is a new move to boost green finance and upgrade the green economy, he said.

Lian Ping, chief economist at the Bank of Communications, said setting up pilot zones will make it easier to implement innovation policies.

Green finance reform was initially carried out in five provincial regions, some of which are in western China. The move can avoid secondary pollution during capacity transfer to the central and western regions, said Lian.

The State Council executive meeting on June 14 brought forward five tasks: supporting financial institutions to set up green finance departments or branches, promoting green credits, establishing trading markets for rights over emission, water and energy use, setting up government service channels for green industries, and building risk control mechanism for green finance.

The five tasks provide guidance for reform and innovation of green finance, said Dong Ximiao, a researcher from the Chongyang Institute for Financial Studies of Renmin University.

Few banks have green finance departments, and there are also very few cases of overseas capital going into green investment. So it will be safe to comprehensively promote green finance after testing it in some regions, according to Dong.

For banks, green finance is a new credit standard. To develop green finance, commercial banks should not only be socially responsible, but also build sustainable commercial modes, according to Bao Zuming, head of Heilonjiang province’s banking regulatory commission.

The State Council executive meeting’s decision also encourages small loan and financial lease companies to participate in green finance and supports venture capital and private equity in green investment.

The promotion of investments such as small loans, financial leasing, venture capital, and private equity will further promote the development of green finance, said Lian.

Technology upgrade and financial reform will not be done in one day. Thus, more efforts should be made in the pilot zones to improve preferential finance and tax policies and subsidized loans, according to Zhao.