The State and Effectiveness of the Green Bond Market in China

The Chinese domestic labeled green bond market grew to nearly USD 120 billion between 2016 and 2019, becoming the second largest globally. While it has funded significant projects in clean transportation and energy, the market is characterized by high credit rating skew, limited international investor participation, and a lack of standardized project-level reporting. The report recommends consolidating regulatory frameworks, easing credit rules to diversify issuers, and establishing a centralized data depository to improve transparency.

• The Chinese domestic labeled green bond market experienced rapid growth, quadrupling in size from USD 29 billion in 2016 to nearly USD 120 billion by the end of 2019, making it the second largest in the world.
• Between 2016 and April 2019, clean transportation and clean energy were the primary recipients of green bond proceeds, receiving USD 17 billion and USD 16 billion respectively. Hydropower was the largest sub-category within clean energy at USD 7 billion, while urban rail transit led clean transportation at USD 5.7 billion.
• There is a significant lack of transparency regarding the use of proceeds; approximately 31% of total proceeds (USD 31 billion) were unspecified or pending allocation, and 51% of bonds lacked project-level details.
• The market is dominated by large entities with high credit ratings, with 78% of green bonds holding an AAA rating. This skew is attributed to stringent listing requirements and differences between Chinese and international rating systems.
• Chinese green bond standards do not fully align with international benchmarks because they allow the financing of clean coal and efficient fossil fuel utilization, and permit higher allocations to working capital (up to 50% for enterprise bonds) than the international 5% threshold.
• The market is fragmented across multiple regulatory authorities—including the PBoC, NDRC, CSRC, and MoF—leading to inconsistent standards and reporting expectations depending on the bond type.
• Reported cumulative environmental impacts from 157 analyzed issuances include an annual reduction of 52.6 million tons of CO2e and the installation of 11.2 GW of clean energy capacity.
• Preliminary analysis of additionality suggests the market has successfully attracted new participants; 160 of the 181 unique issuers who entered the market after the 2015/2016 guidelines were new entrants, accounting for 84% of labeled green bonds issued since 2016.
• Financial bonds, primarily issued by commercial and policy banks, dominate the market by value, accounting for 65% of total issuance amount, though they often decrease transparency as they act as intermediaries.

APA

Escalante, D., Choi, J., Chin, N., Cui, Y., & Larsen, M. L. (2020). The State and Effectiveness of the Green Bond Market in China. Climate Policy Initiative. http://climatepolicyinitiative.org/wp-content/uploads/2020/06/The-State-and-Effectiveness-of-the-Green-Bond-Market-in-China.pdf

Chicago

Escalante, Donovan, June Choi, Neil Chin, Ying Cui, and Mathias Lund Larsen. The State and Effectiveness of the Green Bond Market in China. Climate Policy Initiative, 2020. http://climatepolicyinitiative.org/wp-content/uploads/2020/06/The-State-and-Effectiveness-of-the-Green-Bond-Market-in-China.pdf.

Wikipedia

{{cite report |last1=Escalante |first1=Donovan |last2=Choi |first2=June |last3=Chin |first3=Neil |last4=Cui |first4=Ying |last5=Larsen |first5=Mathias Lund |title=The State and Effectiveness of the Green Bond Market in China |publisher=Climate Policy Initiative |date=June 2020 |url=http://climatepolicyinitiative.org/wp-content/uploads/2020/06/The-State-and-Effectiveness-of-the-Green-Bond-Market-in-China.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{escalante2020state, author = {Escalante, Donovan and Choi, June and Chin, Neil and Cui, Ying and Larsen, Mathias Lund}, title = {{The State and Effectiveness of the Green Bond Market in China}}, institution = {Climate Policy Initiative}, year = {2020}, month = jun, url = {http://climatepolicyinitiative.org/wp-content/uploads/2020/06/The-State-and-Effectiveness-of-the-Green-Bond-Market-in-China.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }