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China council brainstorms having economic growth with low-carbon transmissions

By Hou Liqiang | chinadaily.com.cn | Updated: 2022-06-15 11:12
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Aerial photo taken on Aug 23, 2021 shows the scenery of Saihanba forest farm in North China's Hebei province. [Photo/Xinhua]

A senior economist has called for long-term government climate bonds to address financing challenges in the country's endeavors to maintain stable growth while promoting low-carbon transition.

Zhu Min, chairman of the National Institute of Financial Research at Tsinghua University, made the remark in a forum on Tuesday under the theme of Synergizing Economic Growth, Energy Security and Climate Action for a Steady Growth. 

The forum was held on the sidelines of the annual general meeting of the China Council for International Cooperation on Environment and Development, an event that also marked the council's 30th anniversary.

The council is a high-level think tank that provides consultation to the Chinese government.

Like many other economies, China is confronted with challenges to maintain growth amid the economic downward pressure caused by the COVID-19 epidemic. Despite this situation, the country also needs to promote their long-term low-carbon transition to honor its climate commitment, said Zhu, who is also former vice-governor of People's Bank of China.

China aims to peak carbon dioxide emissions before 2030 and realize carbon neutrality before 2060.

Zhu stressed that investment is particularly important as the country forges ahead with the two tasks, both of which are indispensable, but the problem lies in how to get the funds.

As export and real estate development fail to perform well as traditional means to maintain growth, he eyes the potentials of green investment, investment into technological innovations and consumption in playing supplementary roles in driving development.

Historic experiences show, however, consumption will most likely decline after epidemic. This means the two types of investment will be extremely important amid current situation, he continued.

As China strives for carbon neutrality, a large amount of investment is needed to build necessary infrastructures to absorb renewable energy, he said.

Despite significant decreases in the costs to generate the renewables, the cost to consume such energy remains high, he noted. The poor infrastructures needed for their consumption is one of the factors to blame.

A lot of investment is also needed to transform urban infrastructures such as public transportation facilities, construct low-carbon buildings and build intelligent cities. Such investment will not only help promote low-carbon transition, but boost consumption, he said.

The economic slowdown and the decreasing fiscal revenue caused by the COVID-19 epidemic has made it challenging for the government to finance. Considering its big scale, lengthy period and high risk, private funds are reluctant to make investment for carbon neutrality.

All these factors make it necessary for the government to resort to long-term bonds to leverage investment amid the urgent need to maintain stable growth, according to Zhu.

If the government issues more than 1 trillion yuan ($148.5 trillion) of 30-year bonds, for example, it can at least leverage private investment of 3 trillion to 4 trillion yuan, he said. Altogether, they can motivate financial institutions to simultaneously offer financing support of 4 trillion to 5 trillion yuan.

Facilitated by necessary preferential financing policies from the central bank, Zhu said he believes such a facility that sees joint contributions from the government, market and financial institutions will help address the financing challenges the country faces.

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