Facilitating Cross-Border Capital Flows to Grow the China Green Bond Market

The document identifies significant barriers to the growth of China's green bond market, including discrepancies between domestic and international green definitions, capital flow controls, and a lack of transparency in domestic credit ratings. It argues that while China has become the world's largest green bond market, only 2% of its bonds are foreign-owned. To attract international private capital—which is expected to provide 85-90% of the investment needed for China's green transition—the paper recommends harmonising green standards, simplifying approval processes for overseas issuance, developing RMB hedging instruments, and opening the domestic market to international credit rating agencies.

• China has rapidly expanded its green bond market, becoming the world's largest, with total issuance reaching RMB431.533bn (USD64.34bn) by late 2017. However, international ownership remains very low, with only 2% of bonds in the third largest bond market being foreign-owned.
• There is a significant gap between China's domestic green definitions and international standards, specifically regarding the eligibility of fossil fuel projects. China's definitions include coal-powered generation, 'clean' coal, and high-efficiency fossil fuel production, which are generally not accepted by international investors.
• International investors face several structural and regulatory barriers when accessing China's onshore market, including capital flow controls, limited RMB hedging options, and a lack of familiarity with domestic credit rating methodologies, where 51% of corporate bonds are rated AAA.

APA

Dai, L., Kidney, S., & Yao, W. (2017). Facilitating Cross-Border Capital Flows to Grow the China Green Bond Market. Climate Bonds Initiative. https://www.climatebonds.net/files/documents/publications/china_intracountry_2017-01d_da_en_28nov17_a4.pdf

Chicago

Dai, Lily, Sean Kidney, and Wang Yao. Facilitating Cross-Border Capital Flows to Grow the China Green Bond Market. Climate Bonds Initiative, 2017. https://www.climatebonds.net/files/documents/publications/china_intracountry_2017-01d_da_en_28nov17_a4.pdf.

Wikipedia

{{cite report |last1=Dai |first1=Lily |last2=Kidney |first2=Sean |last3=Yao |first3=Wang |title=Facilitating Cross-Border Capital Flows to Grow the China Green Bond Market |publisher=Climate Bonds Initiative |date=December 2017 |url=https://www.climatebonds.net/files/documents/publications/china_intracountry_2017-01d_da_en_28nov17_a4.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{dai2017facilitating, author = {Dai, Lily and Kidney, Sean and Yao, Wang}, title = {{Facilitating Cross-Border Capital Flows to Grow the China Green Bond Market}}, institution = {Climate Bonds Initiative}, year = {2017}, month = dec, url = {https://www.climatebonds.net/files/documents/publications/china_intracountry_2017-01d_da_en_28nov17_a4.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }