The Ministry of Environmental Protection (MEP) organized a ceremony in Beijing on June 24, for launching a green credit program with support from the China Development Bank, in which the banks, governments and investment companies will jointly provide loans to SMEs that are environmentally friendly. At the event, MEP's Foreign Economic Cooperation Office (FECO) signed cooperative agreements with Financial Office of Hainan, the Government of Haikou, China Banking Association, Taishan Insurance, China Cinda and China Life, which marked the start of pilot phase of the program.
This green credit program is one of the outcomes from the reform of ecological civilization conducted by MEP. According to the requirements of the Leading Group of the Central Party Committee for Comprehensive and In-depth Reform, MEP has identified 10 key reform tasks in 2014, one of which is to create an innovative investment and financing mechanism for attracting social capital into the protection of the ecological environment, aiming to solve the problem of inadequacy and inefficiency of investments in environmental protection. FECO, as the main supporting institution in this reform task, has conducted in-depth researches in consultation with some local governments and financial institutions, and proposed this special green credit program. With this program, the banks, governments, and investment companies will jointly invest to provide concessional loans to SMEs to solve the financing difficulty faced by the environmental protection industry. The government capital flows into the loan pool in interest-free way, which will increase the efficiency as well as the effect of the governmental funds greatly and at the same time reduce the cost of the enterprises. Investment institutions will be the inferior beneficiary to ensure security of funds from banks and government.
Although in recent years, the scale of investment in environmental protection in China increased greatly, there is still a considerable gap between the actual demand and real investment, especially when the CPC central committee and the State Council has made a call for "war on environmental pollution", and the action plans for prevention and control of air, water and soil pollution has been or are being formulated. Apparently, governmental investment alone seems to be "a drop in the bucket". The establishment of diverse, market-oriented financing mechanisms for environmental protection is in great need. The green credit program is an exploration for a tripartite unblocked financing approach between government, banks, and enterprises. It can be derived, replicated, and promoted and therefore provides a new finance channel for air, water, and soil pollution control. It is reported that the program will be piloted firstly in Hainan and Shandong provinces, about 2 billion RMB in Hainan and 10 billion in Shandong.
Mr. Zhao Hualin, Director-General of the Department of Planning and Finance of MEP, Mr. Chen Liang and Ms. Fang Li, Deputy Directors-General of FECO, Mr. Ye Yanfei, Deputy Director-General of the Department of Statistics of the China Banking Regulatory Commission, as well as other representatives from China Banking Association, Financial Office of Hainan Province, the Government of Haikou, China Development Bank, Minsheng Bank, Huaxia Bank, Taishan Property & Casualty Insurance Company Limited, China Cinda Asset Management Company Limited, and China Life attended the ceremony and carried out in-depth discussions on cooperation in environmental finance.