Discussion: China's Green Finance Prospects: Where Do We Go From Here?
In a significant shift towards sustainable development, China has made impressive strides in renewable energy and electrification. The country has built the world's largest high-speed rail network, expanded its electric vehicle market, and made cities like Shenzhen, Nanjing, and Shanghai highly energy-efficient.
This commitment to a greener future is further reinforced by the appointment of Li Gao, China's former lead climate negotiator, as vice-minister for climate. Li's new role sends a strong signal of China's dedication to combating climate change.
President Xi Jinping's recent speech has signalled a broader ambition, aiming to cover all greenhouse gas emissions across every economic sector, including non-CO2 gases like methane. This ambition suggests a comprehensive approach to climate action, setting China apart in the global arena.
In a collaborative effort, China, along with the EU and Singapore, launched the Multi-Jurisdiction Common Ground Taxonomy (CGT) in 2024. This initiative aims to provide a common framework for green finance criteria, helping banks operate consistently across jurisdictions. Singapore and Brazil are currently in talks to join this alliance.
However, the EU has not recognized the CGT for internal use, as it references many EU-specific laws, making it challenging for outsiders to comply fully. As a workaround, an interoperability tool is being developed and is planned to be launched at the COP30 later this year.
While China is expanding its green project catalog to include "transition" projects aimed at making Chinese industries cleaner and "resilience" projects designed to better protect the country from the impacts of climate change, specific detailed updates or official catalog versions as of 2025 are not readily available.
Notably, the CGT does not yet include provisions to "do no significant harm" (DNSH), meaning damage to other environmental objectives, like biodiversity or water protection. This omission presents a challenge in achieving equivalence, both politically and technically.
The withdrawal of US leadership from the climate-action process has allowed China to step up and take a more prominent role in global climate efforts. With its significant progress and collaborative initiatives, China is poised to lead the way in sustainable development.
