Green finance enjoys huge potential in improving environment, tackling climate change, and promoting efficient utilization of resources. In recent years, southwest China’s Chongqing municipality has worked vigorously to develop green finance and establish a long-term mechanism synergizing local governments, banks, and enterprises.
Having launched a series of innovative reform measures, the municipality is seeing fruitful economic and ecological results.
Developing green finance is now a priority for many banks in the municipality, and it covers a wide range of fields, from waste incineration to sewage treatment, from comprehensive governance of coastal lines to energy upgrading, and from green transportation credit to rural housing loans.
“Green finance means high-quality assets for banks,” said an executive with the Chongqing Rural Commercial Bank.
As of the end of this September, Chongqing’s balance of green loans stood at 497.23 billion yuan ($71.63 billion), up 40.2 percent year on year and 32.5 percentage points higher than that for all kinds of loans issued in the municipality. Green loans accounted for nearly 10 percent of all loans, and the municipality issued over 35.7 billion yuan of green bonds, 2.7 times higher than those in early 2019.
“It’s hard to imagine that we were still worrying about our project fund a year ago,” said Luo Li, who heads an ecological tea garden project in Dingshi township, Youyang Tu and Miao autonomous county, Chongqing.
In April 2021, the project had just started and needed a large investment. Therefore, capital shortages remained a major problem.
When the project team was at the end of its tether, it was reached by the Bank of Chongqing, which issued loans to the project.
“Identifying green projects is not an easy job. In the past, it was artificial, which was inefficient,” said Tian Pan, an account manager at the Bank of Chongqing.
Now the bank has launched an intelligent system that is able to perform automatic calculation of projects’ environmental costs and benefits, which significantly improves the efficiency of green project identification, Tian told People’s Daily, adding that Luo’s ecological tea garden project was exactly recommended by the intelligent system.
The intelligent system is a big data-enabled comprehensive service platform for green finance developed by the Chongqing Operations Office of the People’s Bank of China, the country’s central bank.
“Together with the Chongqing Municipal Commission of Development and Reform and the municipality’s bureau of ecology and environment, we made an evaluation standard for recognizing green projects and enterprises, and developed a smart recognition system based on it, which pushes identified green financing demands to financial institutions,” said Han Xintao, deputy director of the financial research department of the PBC Chongqing Operations Office. The system can better match banks with enterprises, he noted.
As of this September, the system had collected and published information about 1,860 green projects and enterprises at the municipal and county levels. In particular, nearly 1,000 of them had gotten in touch with banks.
Chongqing, as one of the six major traditional industrial bases in China, faces a heavy task of industrial upgrading. Therefore, the municipality has constantly upgraded its mechanisms to encourage financial institutions to optimize the allocation of low-carbon resources and advance the green transition of the real economy.
“I never thought that I could apply for loans with pollution discharge rights, and the interest is lower than that of regular loans,” said an executive of Chongqing Polycomp International Corporation, which manufactures fiberglass, after receiving a pledge loan of 100 million yuan.
The company is recognized by the Ministry of Industry and Information Technology as a “green factory.” It introduces advanced waste disposal technologies to control pollutants.
Upon learning the company’s demand to expand its scale, the Bank of Chongqing reached it and volunteered to provide a pledge loan, which turned the company’s “fixed” pollution discharge rights into flexible capital that helps it reduce energy consumption and improve the ecological environment.
“In the future, Chongqing will keep promoting supply-side structural reform and upgrading its traditional industries. Green transition is an inevitability, and green finance enjoys rich opportunities for development,” said Huang Yingjun, professor with the School of Economics and Business Administration, Chongqing University.
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