During the 14th Five-Year Plan period, the People’s Bank of China (PBOC) has advanced high-quality development of green finance through concrete actions. These include promoting the implementation of national green finance standards, piloting transition finance standards across the sector, launching the carbon emission reduction facility (CERF), expanding green credit to RMB40 trillion, driving substantive outcomes in the G20 Sustainable Finance Working Group (SFWG), and co-building international cooperation platforms. Together, these efforts have fostered a sound development landscape characterized by comprehensive standards, innovative tools, broad cooperation, and tangible results. Recently, Financial News interviewed the head of the PBOC’s Research Bureau.

Financial News: Green finance standards form the foundation of green finance. During the 14th Five-Year Plan period, what major progress has China made in building its green finance standard system?

Head of the PBOC Research Bureau: During the 14th Five-Year Plan period, in line with the principles of “domestic consistency, international alignment, clarity, and enforceability”, the PBOC has advanced China’s green finance standard system from framework building to refinement and deepening. This has laid a solid institutional foundation for financial support for green and low-carbon development.

First, a multi-sector standard system has taken shape. China has so far issued one national standard and nine industry standards for green finance, with over 30 more under development. In 2025, the PBOC released China’s first national green finance standard, Terminology for Green Finance, establishing a foundational and universal benchmark for financing green and low-carbon development. Meanwhile, the Green Finance Endorsed Project Catalogue (2025 Edition) was introduced, unifying the definitions of green finance products and extending support beyond production to trade and consumption. For the first time, the entire chain from production to circulation and consumption is fully covered, providing financial institutions with clear guidance to innovate and deliver effective green finance products.

Second, major breakthroughs have been made in transition finance standards. Given China’s energy structure and development stage, it is essential not only to develop green industries but also to support the orderly low-carbon transition of traditional high-emission or hard-to-abate sectors. This is a direct pathway to achieving the carbon emissions peak and carbon neutrality goals. To meet the needs of comprehensive green transformation of economic and social development, the PBOC has integrated transition finance with green finance based on market-oriented principles and promoted the rollout of transition finance standards, prioritizing areas with advanced technology and significant emission reduction benefits. Standards for four key sectors, including steel, coal-fired power, building materials, and agriculture, have already been piloted in more than 20 provinces and municipalities. As of end-August 2025, pilot regions had issued around RMB67 billion in transition loans, with approved credit lines totaling RMB125 billion. A second batch of standards for seven additional sectors, including metallurgy and petrochemicals, is being rapidly advanced. Several key reform regions have also introduced local transition finance standards and developed corporate transition planning guides tailored to regional conditions, boosting high-quality regional green finance development.

Third, standard systems for biodiversity finance and blue finance are taking shape. Ecosystems function as interconnected wholes, and promoting sustainable economic and social development requires treating financial support for environmental protection and green development as a systematic endeavor. During the 14th Five-Year Plan period, China has increased financial support for biodiversity conservation and the ocean economy, making biodiversity finance and blue finance important new pillars of the green finance system. Efforts have been made to explore ways to channel financial support toward realizing the value of ecological products, thereby promoting the conservation and sustainable use of nature and biodiversity. To date, more than 20 provinces and municipalities have piloted the biodiversity finance taxonomy, effectively supporting a nature-positive transition. Blue finance standards are currently under development and will be piloted in coastal regions when conditions permit.

Financial News: During the 14th Five-Year Plan period, what innovations and developments have taken place in green finance instruments?

Head of the PBOC Research Bureau: During the 14th Five-Year Plan period, demand in China’s green finance market has continued to climb. To effectively meet the reasonable and necessary funding needs of entities pursuing green and low-carbon transformation, China has leveraged market mechanisms, diversified the array of green financial products, and accelerated improvements in green finance infrastructure, resulting in increasingly tangible environmental benefits. Progress is reflected in three key areas:

First, structural tools have been deployed in a targeted manner. Targeting major strategies, key areas, and weak links, the PBOC has used structural monetary policy tools to channel low-cost funding to financial institutions for carbon reduction projects, directing more credit toward green sectors. Since its launch in 2021, the CERF has undergone continuous optimization, including an expanded pool of eligible financial institutions, and a pilot in Shanghai to include qualified transition loans. As of end-Q2 2025, the CERF had guided financial institutions to issue more than RMB1.38 trillion in carbon emission reduction loans.

Second, a diversified product system has taken shape, with green loans and bonds ranking among the world’s largest. China has built a multi-tiered, diversified green finance market encompassing green loans, green bonds, green insurance, green funds, green leasing, and green trusts. The scale of green loans and bonds remains among the highest globally, and green bond ratings have stayed robust. As of end-Q2 2025, outstanding green loans amounted to approximately RMB42.39 trillion, while outstanding green bonds exceeded RMB2.2 trillion. Financial institutions have also innovated by incorporating environmental rights such as carbon emission allowances, pollution discharge rights, and forestry rights as collateral and launching a range of green and transition finance products, including cross-compliance period carbon allowance pledge financing, carbon neutrality bonds, sustainability-linked bonds, low-carbon transition-linked bonds, and transition bonds.

Third, climate-related risk management has been strengthened. To mitigate the potential impact of climate risks on financial stability, China has actively organized climate risk stress tests and conducted in-depth assessments of climate-related financial risks. These efforts guided financial institutions to improve risk awareness and management, supporting the smooth operation of the green finance market. In recent years, the PBOC has piloted physical risk stress tests in several regions to evaluate the impact of extreme weather, natural disasters, and related events on local financial institutions. More than 20 institutions have also completed climate risk sensitivity stress tests for key emitting sectors, steadily enhancing their ability to identify and manage such risks.

Financial News: Addressing climate change is a global challenge. During the 14th Five-Year Plan period, what notable achievements has China made in international cooperation on green finance?

Head of the PBOC Research Bureau: At a State Council Information Office press conference on achievements in China’s financial sector during the 14th Five-Year Plan period, PBOC Governor Pan Gongsheng noted that the reform and opening up of China’s financial sector has continued to advance and that China’s participation, influence, and voice in international financial governance and cooperation have been significantly elevated. In the green finance sector, China has actively promoted and implemented global climate action over the past five years, leveraging multilateral and bilateral platforms and mechanisms to engage deeply in international green finance cooperation and governance. These efforts have advanced the transformation of the global sustainable finance system, elevated China’s international influence, and steered international financial rules toward green and low-carbon development. Today, green finance serves as a vital bridge connecting China with the modernization of the global financial system.

First, China has taken a leading role in shaping the G20 sustainable finance agenda. During the 14th Five-Year Plan period, as co-chair of the G20 SFWG, China spearheaded key documents like the G20 Sustainable Finance Roadmap, the G20 Transition Finance Framework, and the G20 Technical Assistance Action Plan, with the outcomes reflected in G20 summit communiqués. China has guided discussions on key topics including strengthening the global sustainable finance architecture, enhancing sustainability disclosure, financing nature-based solutions, and building the global financial system’s capacity to address climate- and environment-related risks, further consolidating international consensus on green finance. Furthermore, China has shared reports and case studies with both Chinese characteristics and global influence on international platforms, offering valuable guidance for global green finance development.

Second, China has made significant progress in aligning its green finance standards with international frameworks. Together with the European Commission, China co-launched the International Platform on Sustainable Finance (IPSF) and actively participated in the IPSF Taxonomies Working Group. Under the IPSF, China, the European Union, and Singapore jointly released the Multi-jurisdiction Common Ground Taxonomy, covering 110 climate mitigation activities across eight sectors agreed upon by the three jurisdictions. This framework serves as a reference for countries and regions developing local sustainable finance taxonomies and further facilitates cross-border capital flows into green and low-carbon areas.

Third, China has deepened pragmatic multilateral and bilateral cooperation on sustainable finance. China has co-initiated and actively participated in multilateral platforms such as the Network of Central Banks and Supervisors for Greening the Financial System and the Sustainable Banking and Finance Network, while strengthening bilateral cooperation on green finance with the United Kingdom, Singapore, Australia, and other partners. It has actively implemented the Green Investment Principles for the Belt and Road, integrating low-carbon and sustainable development goals into the Belt and Road Initiative (BRI), promoting green industrial investment, and deepening green finance collaboration with BRI partner countries. Through the Capacity Building Alliance of Sustainable Investment, China has launched a series of capacity building programs in countries and regions such as Brazil, South Africa, East Asia, Central Asia, and the Middle East, providing sustainable investment support to emerging economies and developing countries and earning broad international recognition.

Green and low-carbon development is an irreversible global trend, and finance holds immense potential to drive the comprehensive green transformation. Looking ahead, the PBOC will continue to advance high-quality green finance development to support the real economy’s transition to green and low-carbon operations, contribute to the Beautiful China Initiative, and offer more Chinese solutions for global climate governance.