On December 17, in the “Finance” magazine,Financial NetworkAt the “Caijing” Annual Conference 2023: Forecast and Strategy jointly hosted by Caijing, Caitong Think Tank, and Caitonghui, Wang Xin, director of the Research Bureau of the People’s Bank of China, shared the impact of green and low-carbon transformation on economic growth.
Wang Xin, director of the Research Bureau of the People’s Bank of China
He believes that the short-term, mid- and long-term impacts of green and low-carbon transformation on the economy are different. In the short term, if the adjustment is too fast and too drastic, the increase in green investment may not be able to offset the shrinking scale of high-carbon investment, the consumption level may be affected, and the export of high-carbon products in developing countries will also be restrained. In the medium to long term, an orderly low-carbon transformation of the economy can promote economic growth by promoting employment growth and capital formation, accelerating technological progress and increasing productivity.
Wang Xin pointed out that my country is still in the process of industrialization and urbanization, its industrial structure is heavy, its energy structure is more dependent on fossil energy, and the time from carbon peak to carbon neutrality is relatively short, so it is facing severe challenges to achieve the goal of carbon peak carbon neutrality. In the short term, care must be taken to avoid drastic adjustments in the energy structure and industrial structure, which would greatly impact economic growth.
At present, my country has one-third of the world’s installed wind power generation capacity and one-quarter of solar power generation capacity, and there is broad room for the development of green finance and transformational finance. Wang Xin believes that my country is fully capable of achieving economic growth and green and low-carbon orderly transformation at the same time. The key lies in giving full play to the basic role of the market mechanism and the supporting and guiding role of relevant policies. The focus includes five aspects:
The first is to improve the carbon pricing mechanism as soon as possible, and give full play to the role of reasonable carbon prices in effectively guiding resource allocation. Improve the unified national carbon emissions trading market, expand its coverage of industries and enterprises, introduce financial institutions to develop various financial products, and improve the effectiveness and scientificity of carbon pricing.
The second is to focus on global high standards, establish and improve my country’s green finance and transition financial standards, strengthen carbon accounting and climate and environmental information disclosure of enterprises and financial institutions, strengthen market constraints and regulatory evaluations for various market entities to carry out green and low-carbon transformation, and prevent “Greenwashing” and “pseudo-transformation”.
The third is to vigorously develop green financial products and services in response to the large-scale investment in green and low-carbon transformation and the characteristics of more uncertainties in the initial stage. Related products include green credit, green bonds, sustainability-linked bonds, carbon-neutral bonds, as well as stocks, funds, insurance, etc. Increase the support and guidance of fiscal and financial policies, especially the implementation of the requirements of the just-concluded Central Economic Work Conference, and accelerate the research and development, promotion and application of cutting-edge technologies such as new energy/green and low-carbon, which is conducive to the formation of a benign technology-green and low-carbon industry-finance cycle.
The fourth is to take timely measures to promote a just transition in view of the fact that some regions, industries, and groups of people may be greatly impacted by the low-carbon transition. Increase financial transfer payments, further improve and develop unemployment insurance, endowment insurance and medical insurance, properly solve the reemployment problem of the impacted population, and maintain their physical and mental health.
The fifth is to prevent and respond to financial risks related to climate change in a timely manner. Do a good job in climate risk sensitivity analysis and stress testing of financial institutions and regions, and study the adoption of macro-prudential tools to prevent the accumulation of risks in high-carbon industries. Financial institutions with greater vulnerabilities should replenish capital and dispose of non-performing assets in a timely manner.
(Editor: Wen Jing)
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