China’s finance ministry recently revealed that it is set to issue up to $829 million of yuan-denominated sovereign green bonds in London, marking China’s first issuance of such bonds overseas. The ministry didn’t provide further details, noting that the specifics will be announced prior to the issuance.
The announcement comes after a China-UK economic and financial discussion in Beijing chaired by Chinese Vice Premier He Lifeng and British Finance Minister Rachel Reeves in January. The plan for the green bond issuance was initially announced in a statement following that meeting.
“China agrees that it would issue an inaugural yuan-denominated sovereign green bond in 2025 and that this would be listed in London, the first in a program of Chinese green sovereign issuances in the U.K.,” the finance ministry said in a statement.
China launches framework for sovereign green bonds
In February, China’s finance ministry released a framework for sovereign green bonds, paving the foundation for the country to issue offshore sovereign green bonds and global capital to invest in its green development. The funds raised by green bonds within the framework will be allocated to eligible green projects included in the central fiscal budget.
The funds are expected to contribute to achieving environmental goals such as climate change mitigation and adaptation, natural resource protection, pollution control and biodiversity preservation. This initiative aims to diversify the range of high-quality green bond products in the global market and attract international capital to support domestic green and low-carbon development.
In 2020, China pledged to bring its carbon dioxide emissions to a peak before 2030 and become carbon-neutral by 2060. The world’s second-largest economy in 2021 started increasingly utilizing financial instruments such as green bonds to help it achieve its goals.
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Chinese issuers sell $19.14 billion in internationally aligned green bondsÂ
Mainland China issuers sold $19.14 billion of internationally aligned green bonds in the October-to-December quarter of 2024, the highest among major geographies in the world, according to data from the Climate Bonds Initiative.
Aggregate green bond sales, including both internationally aligned and nonaligned portions, increased by 1.7% year over year to $29.28 billion in the December quarter of 2024, the data showed.
“It’s likely that green development will continue to benefit from policy support over the longer term, given China’s ambitions to peak carbon and carbon neutralization target, as well as its global importance,” Lynn Song, chief economist for Greater China at ING, told S&P Global Market Intelligence.
Mainland China also sells substantial amounts of nonaligned bonds that conform with local rules on green finance. Issuers in mainland China sold $10.14 billion of such bonds in the fourth quarter of 2024, compared with $15.15 billion in the prior three months.
