Why this is important to Wisconsin businesses: The Chinese government's incentives for green business will lead to growth, and Wisconsin companies seeking to do business in China should consider opportunities in this area.
As the host of the Group of 20 (G20) summit in September, China has chosen to prioritize green finance, and included this topic on the G20 agenda for the first time to encourage more investment in energy-saving and environmentally friendly projects and building international consensus around green finance.
Just before the summit, the People's Bank of China and six other central authorities released guidelines on establishing a green financing mechanism in China to support the economy's transition to sustainable growth. China is the first country in the world to make such a move.
The guidelines proposed a series of incentives to support and promote green investment and financing. The Chinese government is also advocating developing green insurance and environmental rights trading markets to enrich green financing tools. Local governments are receiving support to establish funds to encourage private capital to invest in green sectors. Meanwhile, China will continue to pursue international cooperation in the green financing field to attract more investment.
The creation of a green financing system aims to mobilize more private capital into green sectors and counteract or divert investments that pollute the environment. The establishment of a green financing mechanism will help the green transformation of China’s economy and the development of technology for environmental protection, new energy and energy conservation.
Green finance has become a major part of China's national strategy. In its 13th five-year plan, which sets out China’s strategic growth targets for 2016-2020, the Chinese government placed significant emphasis on green finance. Over the years, China has made enormous efforts to advance green efforts and environmentally friendly practices. It uses institutional and policy arrangements to encourage more investment in green projects via financial products and services such as loans, bonds, stocks, private equity, insurance and carbon emissions trading. Traditional finance cannot meet the huge demand of China’s domestic need to tackle pollution. The financial system needed is one that is aligned to sustainable development—namely, the green finance market that is operational and has started to thrive.