China's leadership is promoting global green finance by using its political will, a top British expert says.
"China is emerging as a global force in many areas,
Gifford is a longtime champion of green finance, having made it a key issue in his previous roles as the UK head of SEB, the Swedish finance group, and as lord mayor of the City of London, a post he held in 2013.
When he visited Beijing in September 2013, he proposed to the Beijing government that is issue green bonds to finance clean-energy projects.
"I believe I was the first person to make the suggestion that the city issue green bonds to help clean up the city and provide cleaner energy," he says. "At the time, he (the mayor) thought it was an interesting concept but perhaps didn't know much about it. Since then, the amount of initiatives taken by the Chinese government to understand green finance has greatly grown."
Although local governments in China are yet to issue green bonds, the idea is much more understood, thanks largely to regulatory changes that allow authorities to fund infrastructure projects by issuing bonds.
"Chinese governments should be encouraged to look at this closely, as they have tight budgets and need money for clean-energy projects," Gifford says.
City of London Corp governs the British capital's financial center, the so-called Square Mile. London's diverse and vast investor base made it an attractive city for the Chinese central bank to issue its first offshore renminbi bond.
Gifford says he expects the Chinese central bank will work closely with the Green Finance Initiative, which was set up this year, and together can facilitate long-term discussions on many green finance items raised as a part of the G20 dialogue. China will assume the presidency of the G20 this year.
Importantly, China has led the establishment of a G20 green finance study group, co-chaired by the Chinese central bank and the Bank of England, which will present its findings in September.
"China has been extremely active in developing a domestic green finance market, and it's really positive that China is giving the subject a boost through its G20 leadership," Gifford says, adding that he considers the Chinese government to already be an authority on this subject.
China's strong leadership to augment the green finance agenda with a top-down approach is useful, in the same way that an agreement at the Paris climate talks to limit temperature increases to below 2 C was greatly helped by strong political leadership.
On a global level, the Paris agreement was significant in creating a consensus, he says. "Even two years ago we had scientists who weren't convinced that climate change is manmade, but now we have a consensus that, whatever the reasons, something must be done.
"China is well up on the curve on understanding how this needs to be translated into action."
Efforts to reform China's green finance industry are also significant for China's structural shift from growth powered by manufacturing to long-term, sustainable growth built on a knowledge economy, Gifford says.
"China knows it has huge infrastructure requirements that need to be financed. It knows the country needs more power and needs to reduce pollution in cities, which gives it an imperative to grow green finance. But there's also a growing belief that green finance really works."
(China Daily 03/04/2016 page30)