China issues inaugural sovereign green bond
The RMB-denominated offshore issuance is valued at over $830m
China has entered the sovereign green bond market. On the 2nd of April, China’s Ministry of Finance issued a RMB-denominated bond at the London Stock Exchange - the first of its kind. The issuance is aimed at increasing China’s ability to finance its energy transition including its rapid renewable energy deployment.
Over the past five years, China accounted for 40% of global renewable energy capacity expansion - driven by solar PV and onshore wind.By 2030, China aims to increase the share of ‘non fossil fuel’ sources in its energy mix to 25%.
Currently, China’s coal-powered electricity production remains high. The International Energy Agency estimates that one in every four tons of global coal use is attributable to China’s young coal power plants.
A landmark event
The bond issuance, which is expected to raise $833m has been several months in the making. Early signs of Beijing’s intentions to enter the green bond market came in January 2025, following a set of high-level meetings between Chinese and UK government officials.
Wenhong Xie, who heads Climate Bond Initiative’s (CBI) China programme said, “We are thrilled by China’s inaugural green sovereign bond issuance in London—a landmark event that advances the global green finance agenda”.
Back in 2014, CBI’s chief executive Sean Kidney served on a taskforce that recommended the establishment of a domestic green bond market in China.
Green bond framework
In February this year, China released a framework for sovereign green bonds, which governs the bond’s use of proceeds. Capital raised from the issuance will finance or refinance ‘green expenditures’ included in the Ministry of Finance budget.
Green expenditures include projects aimed at mitigation, adaptation, natural resources conservation, pollution control and biodiversity protection. The framework was developed in accordance with the Green Bond Principles (2021) issued by the International Capital Markets Association and the 2022 China Green Bond Principles issued by the Green Bond Standard Committee.
Project eligibility requirements are jointly published by China’s central bank, its centralised economic planning agency (the NDRC) and its securities regulator.
“Backed by sovereign credit and aligned with environmental goals, this issuance addresses the growing global demand for sustainable assets while promoting cross-border investment through high transparency and adherence to international standards. It also establishes a pricing benchmark for RMB-denominated green bonds, encouraging local governments, financial institutions, and corporations to further engage in the green bond market”, adds Xie.
50% of the issuance has a three-year term at an interest rate of 1.88%. The remaining was issued at a rate of 1.93% with a five-year term. Chinese officials welcomed the strong investor appetite for the issuance, evidenced by its oversubscription - subscriptions received were 6.9 times the issuance value.
