Pilot zones will boost green finance

The central bank announced measures on Friday to support the establishment of five green finance pilot zones, a move to help upgrade the industrial structure and honor commitments under the framework of the Paris climate accord.

Incentives will be established to boost the development of green finance, especially interest discounts and tax incentives, from the central and local governments, Chen Yulu, vice-governor of the People's Bank of China, said during a policy briefing.

The central bank will support the zones through preferential loans and low-cost capital from green development funds, which will reduce financing costs in the field, he said. Chen added that the central bank will closely work with local governments to promote the project. He also urged innovation in green finance products and services and increasing transparency of the market.

Chen's announcement came after a decision at a State Council executive meeting, which was presided over by Premier Li Keqiang on Wednesday, to set up the five pilot zones. They will be in Zhejiang, Guangdong, Guizhou and Jiangxi provinces as well as the Xinjiang Uygur autonomous region.

"The key to developing green finance is to balance environmental and economic benefits by endowing green economies with effective financial support to achieve sustainable development," the premier told the meeting.

Green finance will help improve the environment and increase efficient utilization of resources, a significant component in China's commitment to the Paris climate accord, the vice-governor said.

The cities of Huzhou and Quzhou in Zhejiang, for example, will focus on industrial transformation while Guizhou will focus more on modern agriculture and ecological protection, according to the central bank.

"Green development is an international trend, which cannot be reversed. China will develop green finance to transform its development model as a responsible country. It also meets the internal demand for China's economic development," Chen said.

On June 1, US President Donald Trump declared the United States would withdraw from the Paris agreement, while China maintains its commitment to the accord.

China became the first country to boost green finance nationwide last August, when the central government released a guideline on building a national system for green finance, he said.

The pilot zones have been selected in eastern, central and western areas that are at different stages of economic and social development, Chen said.

The regions have their own specialties and lessons learned can be promoted and replicated in other regions, said Wang Yao, president of International Institute of Green Finance at the Central University of Finance and Economics.