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China Green Finance Awards

Outstanding green finance research in China 2020

Research on financing green technical innovations in China, done by the Institute of Finance and Banking under the Chinese Academy of Social Sciences

There is plenty of green finance research done by banks and credit rating agencies in China.

But the Institute of Finance and Banking, under the Chinese Academy of Social Sciences (CASS), has distinguished itself by both the depth and practicality of its research on financing green technical innovations in China.

The research paper that most impressed Asiamoney is called ‘Constructing a financial services system to support green technical innovations’ and was published in the journal Financial Theory and Practice, an academic journal founded by the Zhengzhou branch of the People’s Bank of China.

The paper is supported by official statistics, in-depth analysis and well-thought-out arguments. Most importantly, it presented an honest picture of the funding barriers facing Chinese green technology companies.

The researchers give a diagnosis of the key reasons green technology companies face barriers in securing funding from green bond investors, or from banks with green loan targets.

They identify three main problems. First, the difficulty of securing a bank guarantee, which would help drive bond demand. Second, a maturity mismatch between their long-term projects and the short-termism of many investors. Third, the relatively limited understanding of green technologies among China’s investor base.

The authors urge China’s government to provide more incentives for green technology investors and to nurture long-term green investment in the market.

They also call for a better evaluation system of the environmental impacts of green technologies. These are not vague proposals: at the end of the paper, the researchers provide 10 actionable policy suggestions.

Ma Jun, the first-named author of the research paper, is the chairman of the China Green Finance Committee.

An Guojun, an associate researcher at CASS, and Liu Jialong, a research at the Research Centre for Green Finance Development at Tsinghua University, are the second and third authors, respectively.

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