China’s Climate Challenge: Financing the Transition to Net Zero

China requires approximately CNY 140 trillion ($22 trillion) to transition key polluting industries to net zero by 2060, facing an annual funding gap of CNY 1.1 trillion. The report identifies critical needs for improved data infrastructure, longer-term financing products for SMEs, and a unified national policy framework to overcome structural imbalances in green finance.

• China requires an estimated total of CNY 140 trillion ($22 trillion) between 2020 and 2060 to transition the electricity, steel, mobility, and construction and real estate industries to net zero. There is a projected funding gap of approximately CNY 1.1 trillion ($170 billion) per year, totaling CNY 44 trillion ($6.7 trillion) over the period.
• The energy sector has the largest funding gap, estimated at CNY 15-20 trillion, though it has a clearer path to neutrality. Other significant gaps include mobility (CNY 8-10 trillion), construction and real estate (CNY 8-10 trillion), and steel (CNY 4-6 trillion).
• China's green finance infrastructure is hindered by a lack of credible data and unified standards. 48% of interviewed financial institutions identified data as the primary challenge, noting that emission factors are often based on outdated 2012 data.
• Small and medium-sized enterprises (SMEs) struggle to secure green financing despite accounting for 65% of China's total CO2 emissions. Barriers include a lack of tailored financial products and a preference among lenders for short tenors (1-3 years) over the longer payback periods required for green projects.
• The mobility sector's transition depends on New Energy Vehicles (NEVs) and greening the supply chain, where Scope 3 emissions account for roughly 35% of automotive emissions. Total investment needed for mobility by 2060 is estimated at CNY 30-35 trillion.
• In the construction and real estate sector, cement production alone is responsible for 15% of China's greenhouse gas emissions. Transitioning this sector requires longer-term loans (at least ten years) to match the period from land acquisition to first sale.
• The steel industry's transition focuses on shifting from long-process steel-making to short-process mini-mills, which could reduce industry emissions by 8-10%. However, this is hindered by high capital expenditure (CNY 4 billion for a 1 million tonne line) and a shortage of scrap steel.
• Policy implementation in China is often inconsistent across regions, with varying standards for green buildings and emissions limits. The report suggests a unified national market and the use of carbon taxes on exports to accelerate the transition.

APA

World Economic Forum (2022). China’s Climate Challenge: Financing the Transition to Net Zero. https://www3.weforum.org/docs/WEF_Finance_the_Transition_NewZero_Future_China_2022.pdf

Chicago

World Economic Forum. China’s Climate Challenge: Financing the Transition to Net Zero. 2022. https://www3.weforum.org/docs/WEF_Finance_the_Transition_NewZero_Future_China_2022.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=China’s Climate Challenge: Financing the Transition to Net Zero |date=July 2022 |url=https://www3.weforum.org/docs/WEF_Finance_the_Transition_NewZero_Future_China_2022.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2022chinas, author = {{World Economic Forum}}, title = {{China’s Climate Challenge: Financing the Transition to Net Zero}}, institution = {World Economic Forum}, year = {2022}, month = jul, url = {https://www3.weforum.org/docs/WEF_Finance_the_Transition_NewZero_Future_China_2022.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }