Regulating green bond in China: definition divergence and implications for policy making

ABSTRACT

China has become a significant player in the green bond market globally after the issuance of the first green bond in China in 2015. Given the nascency of the green bond market in China, there are still two main questions that remain under-researched in the relevant scholarship. The first question relates to whether the multiple definitions of green bonds and its eligible use of proceeds under the Chinese regulations are consistent with the international standards. The second question centres on the degree of divergence of the transparency requirements under the Chinese regulations themselves. Using doctrinal and comparative analysis, this article discovers that, despite the generally consistent definitions of green bond under the Chinese regulations, there are still some slight differences in terms of eligible uses of proceeds and information disclosure. Potentially these differences may affect the lender’s investment assessment and their decision-making of whether to provide financing to the issuer.

KEYWORDS:

• Green bond in China
• eligible use of proceeds
• information disclosure
• Chinese regulations

Acknowledgement

The author is grateful to comments provided by the participants at the workshop titled ‘Green Infrastructure Development in Asia. Investment, Financing and Economic Impacts’, organized by the Asian Development Bank Institute on 14–15 November 2019. The usual disclaimer applies.

Disclosure statement

No potential conflict of interest was reported by the author.

ORCID

Hao Zhang http://orcid.org/0000-0003-2429-5336

Notes

1 The NDRC is aligning its catalogue with the commonly used PBoC’s catalogue to ensure better consistency for project eligibility.

2 Worth noting is that although NDRC is working to align its catalogue with PBoC’s catalogue, the scope of investment into coal-fired generation under NDRC’s catalogue is much bigger than the specified eligibility under the PBoC’s catalogue.

Additional information

Funding

This research benefits from the Chinese University of Hong Kong Direct Grant for Research (4059043).