China’s climate change objectives under the Paris Agreement will require it to invest a massive amount of capital into growing its domestic renewable energy generation, as well as invest in other emissions-reducing efforts. The government of China has adopted a green financing initiative that includes regulating its green bond market.
Green bond guidelines have been issued by the various regulators of the domestic (CNY) bond markets to encourage capital raising. These bond guidelines have led to RMB 34 billion of issuance in the first quarter of 2016 alone, with a required target of RMB 300 billion annually.
Although recent developments have made access to the CNY interbank bond markets easier for foreign investors (e.g. investment managers of pension funds and insurance funds), it is important to understand that there are important differences between international and Chinese green bonds.
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