Study of China’s Green Finance Market

Eurasia Development Group: the assets of China’s ESG funds exceeded CNY 392.5 billion, the green lending market is estimated at CNY 46 trillion, and the ESG bond market exceeded CNY 1 trillion.

Green finance is becoming a key instrument for addressing climate challenges and supporting the sustainable development of China’s economy. Amid tightening environmental regulations and the transition to low-carbon models, ESG-labelled financial products are rapidly gaining popularity.

The study provides a comprehensive overview of the state and dynamics of China’s green finance market, including the development of ESG funds, green lending and ESG bond issuance, as well as an assessment of the prospects and financing mechanisms for green projects.

Key Findings

• As of June 30, 2022, China had 374 ESG funds with total assets of CNY 392.5 billion. Mixed funds accounted for 68%, while equity funds represented 25%.
• Green lending exceeded 10% of total bank lending. In 2022, green loans issued by China’s six largest banks amounted to more than CNY 12.5 trillion.
• By 2025, the green lending market is forecast to reach CNY 46 trillion, while the average interest rate on green loans stood at 4.66% in 2022.
• In 2022, ESG bond issuance reached CNY 1 trillion. The market expanded fourfold over three years and is expected to double to CNY 2.5 trillion by 2025.

Market Drivers

Stringent environmental requirements, government programs supporting green finance, preferential financing conditions and growing demand for sustainable investment are driving the expansion of ESG instruments across the banking and debt markets.

What This Means for Russian Players

• Opportunities to raise financing for green projects using the experience of Chinese green lending mechanisms.
• Issuance of ESG bonds in China’s financial market.
• Creation of Russia–China ESG funds and joint investment products.
• Adaptation of Russian companies to Chinese ESG standards and green regulation.

Expert Comment
“China’s experience in developing green finance demonstrates effective mechanisms for stimulating sustainable investment that Russian financial institutions can adapt for their own green projects,” says Konstantin Matveenkov, Director of the ESG and Sustainability Department at Eurasia Development Group.