Constructing a Chinese-Style Zero-Carbon Financial System: Theoretical Considerations and Policy Recommendations

Abstract

The Chinese government’s “dual carbon” commitment to carbon peaking and carbon neutrality in September 2020 indicates that China will promote green economy transition and achieve high-quality growth in line with the New Development Concept. Definitely, both China’s economic and financial development will undergo a paradigm shift. This paper reviews the evolution of global finance’s role in supporting environmental governance, climate change and sustainable development, and proposes that the time has come to develop zero-carbon finance which should be closely aligned with the “net-zero emissions” requirement for achieving the global temperature target of the Paris Agreement. While the current policy frameworks for zero-carbon finance in major Western countries are useful references, they also have limitations. In order to build a Chinese-style zero-carbon financial system, China should integrate the experience of other countries and leverage both institutional advantages and green finance practices of own to the fullest extent possible. This paper goes into further detail about the concept of building a zero-carbon financial macro-management framework and a composite ecology of the zero-carbon financial market, and puts forward policy recommendations. The Chinese-style zero-carbon finance solution will also contribute to global carbon neutrality by enabling China to achieve carbon neutrality as soon as possible and providing countries with China’s solution as reference.