Now in its eleventh year, The G20 Summit heads to the city of Hangzhou, China – the first time a G20 summit has been held for heads of state in China. As this years’ destination, China is maximising its role as the host nation to not only highlight its position as an economic superpower, but also to push for continued commitment to climate change and showcase its market-leading role in green finance.
In preparation for the summit, China has not only spruced-up its host city, but has cleaned up its skies. Chinese authorities implemented strict controls on factories operating in the provinces of Zhejiang (where Hangzhou is located), Jiangsu and the city of Shanghai, as part of its short-term air quality plan to ensure blue skies during the G20. As significant industrial centres, the restrictions introduced impact global supply chains across various industries, yet such impact has not deterred the priority of air quality.
On the Agenda
Green finance development (both public and private) is expected to feature prominently on the summit agenda, following remarks by President Xi Jinping last year. Claiming 33% of all green bond issuances worldwide in the first half of 2016 (totalling US$11 billion), China leads the global market by volume, but also in analytic techniques for environmental risks according to Ma Jun, chief research economist of the People’s Bank of China. In addition, the Green Finance Task Force of the China Council for International Cooperation on Environmental Development released recommendations last year for establishing a modern green finance system. The recommendations included creating a green stock index, a green ratings system, public-private green funds, and nationwide carbon and pollution trading markets.
Its leadership in the global green bond market reiterates China’s commitment to improving environmental quality. Like many emerging economies, China is experiencing rapid urbanisation, resulting in polluted groundwater, contaminated arable land and dangerously high smog levels. Green finance is set to bridge the investment gap required to sustainably transition to a greener economy. It is estimated that China will need to invest at least US$320 billion annually to meet the country’s environmental goals – an investment that substantially exceeds public financial resources, which can only cover 10-15% of the required capital.
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