Sustainable Development Finance in China丨Jan-Feb 2020

1. CBRC: Encouraging Residents to Carry Out Value Investment through Institutions

The “Guiding Opinions of the China Banking and Insurance Regulatory Commission (CBRC) on Promoting the High-quality Development of the Banking and Insurance Industry” (hereinafter the “Opinions”) was issued last weekend and received widespread attention across the market. Yanfei Ye, high level inspector of the Policy Research Bureau of the CBRC, explained that in the past, most of the household savings entered the financial market in the form of bank deposits as indirect financing; in the future, the household savings may increase the investment in financial management, trust, insurance and other financial products, and these funds will form direct financing when entering the financial market, so as to balance the proportion of indirect and direct financing. Moreover, through institutional investors, returns and risks of the investments can be better balanced.

2. Xiaomi Finance Announces Establishment of Partnership to Enable Sustainable Development in SMEs

Xiaomi Finance, AMTD Group, SP Group and Funding Societies jointly announced the formation of an exclusive strategic partnership and their submission of an application to Monetary Authority of Singapore (MAS) for a digital wholesale banking license on December 31st, 2019. Combining the strengths and resources of all parties, the digital bank is devoted to empowering and enabling sustainable developments of SMEs through innovative financial solutions and products via the state-of- the-art technologies including AI & big data analysis. By doing so, the digital bank will drive and connect these SMEs to the capital markets, facilitate green and sustainable developments and financing options, as well as improve their productivity and efficiency through smart devices.

3. Experts Call For A New Journey for Green Development Since 10 Year’s Establishment of IGEA

“The International Green Economy Association (IGEA) is China’s earliest non-government organization defining ‘green economy’, which has made a vivid mark on the path towards China’s green development and ecological civilization.” Sha Zukang, former Under Secretary-General for Economic and Social Affairs at the United Nations, remarked. The IGEA marks its 10th anniversary in January 2020, and at its 2020 China Green Economy Annual Conference, held under the theme of “Our Common Green Era”, commemorates the past and look forward to the future path with the 2030 United Nations Sustainable Development Goals as a milestone.

4. AIIB President Jin Liqun: Using ESG Data to Promote Asian Financial Development

On January 13th, speaking at the 13th Asian Finance Forum (AFF), AIIB President Liqun Jin noted that the AIIB is striving to contribute to Asia's sustainable development through innovative approaches, trying to ensure its support for infrastructure development does not significantly impact the ecosystem, helping some Asian countries to reduce debt through infrastructure. This can be achieved through the cooperation with Hong Kong.

Since its establishment, AIIB has unlocked many achievements. It has won the support of 102 member countries since it started operation four years ago. According to Jin, the bank has lent US$12 billion to support infrastructure, attracting an additional US$40 billion in capital. In the future, the bank will be “clean and efficient” and play an active role infrastructure development.

5. Hong Kong Financial Secretary Paul Chan: Green Bond Issuance Will Increase By 200% This Year

Speaking at the recent 2020 Asian Financial Forum, Paul Chan, financial secretary of the HKSAR government, said that Hong Kong’s green bond market has expanded rapidly since the city issued its first green bond. So far it has reached HK$11 billion. Paul Chan said, “This year green bond issuance will be increased by 200%. We have announced a package of measures to develop the city’s bond market.”

The report also notes that China’s key investment opportunities in relation to SDGs 6, 7 and 9 lie in infrastructure development and water and sanitation, as it has already achieved universal access to electricity across its population. The transport sector alone needs an estimated USD2.310 trillion of private-sector investment for China to improve its infrastructure score significantly, representing the biggest opportunity across all sectors and countries.