Researchers affiliated with China’s central bank have proposed creating a China Ecological Development Bank with at least 100 billion yuan ($16 billion) in capital as part of a broad plan to boost “green finance.”
Discussion is continuing about whether such a bank is necessary and how it should be financed, Ma Jun, the chief economist of the People’s Bank of China’s research bureau, said at a briefing in Beijing on Wednesday.
Ma, who chairs the team of researchers, wrote in a March report that the bank’s capital could be sourced from the nation’s finance ministry, its foreign-exchange reserves, as well as investments from pension funds, insurers and international organizations.
The bank, a model of the U.K. Green Investment Bank, is part of a broad proposal by the team, which was formed by researchers from state-controlled banks in China and the United Nations Environment Program. Pan Gongsheng, a PBOC deputy governor, is a counselor for the team, which proposed public-private green funds, green bonds and a fast-track initial public offering process for companies with high environmental standards.
“For instance, there’s a good subway project with just 4 percent investment return, but the commercial financing cost will be 6 percent,” Ma said at the briefing, which was held in the PBOC’s office. “With the help of green finance, the project’s return can be boosted so that private investors are willing to join. That’s the primary purpose of green finance.”
The plan comes at a time when the nation faces a daunting task in cleaning up its environment. The cost of environmental degradation and resource depletion in China has risen close to 10 percent of gross domestic product over the past decade, according to a World Bank report published in 2012.
— With assistance by Xin Zhou