China’s “Belt and Road Initiative” is being billed by President Xi Jinping as “the project of the century”. But this ambitious plan must also be economically and environmentally sustainable. China has been building its domestic infrastructure for many years, but as its economy matures and this spending ebbs , its vast foreign-exchange reserves – about US$3 trillion – give it a “backup” supply of capital for financing global infrastructure. As China’s influence grows, there is an opportunity to showcase green leadership abroad. The country is the world’s largest emitter of greenhouse gases, but it has embraced a green agenda domestically. It acknowledges its key role in limiting global average temperature rises to within 2 degrees Celcius through the Paris Agreement . Its carbon footprint has fallen since the economic reforms of the late 1970s. China now emits 73 per cent less carbon dioxide per unit of real GDP than it did 35 years ago, though it accounts for around a quarter of total global greenhouse gases. China has become the new Japan, as nation eschews coal for natural gas in its war on air pollution Environmental targets have been incorporated into economic planning since 2006. The legal, regulatory and institutional framework for environmental protection has been expanded widely. Its medium-term environmental targets are achievable. The severity of extreme events such as floods ... last year were magnified by climate change Environmental protection is compatible with and good for growth. Greener energy and environmentally friendly technology drives new growth opportunities while a healthier and more productive labour force reduces the fiscal burden on health care. Besides being the world’s factory and, increasingly, the world’s innovator, China’s endeavours overseas can significantly influence global emissions. Success at home – in renewable energy capacity and improving energy efficiency, and in world-class infrastructure and public transport – can be replicated abroad. Many international financiers still do not take into account climate considerations when providing capital. However, there are signs this is changing. Infrastructure should be designed and constructed to last, coping with not only historic patterns of usage, but also future wear and tear. The severity of extreme events such as floods, storms and wildfires in the past year were magnified by climate change. Infrastructure should thus be embedded with a higher level of climate resilience. Even if higher risk tolerance raises costs, preparation by resilience is more cost-effective than rebuilding after a disaster. Peru’s alpine herders revive ancient technologies to face climate change in the future Green financing has an important role to play in realising a lower-carbon future Infrastructure usually lasts decades and the emissions profile usually remains fixed in that time. It is thus important to avoid high-carbon “lock-in” by choosing infrastructure that adopts newer technology, embeds more efficiencies and embraces sustainability. Historically, high-carbon investments were seen as lower risk, yielding higher reward than low-carbon investments. However, more financial institutions are beginning to favour lower-carbon investments . For example, the World Bank will cease to fund oil and gas exploration after 2019. Green financing has an important role to play in realising a lower-carbon future. President Xi has offered strong policy support and Chinese banks are beginning to issue belt-and-road-focused green bonds whose proceeds finance green projects. Better labelling of green finance would raise awareness among other investors and encourage them to consider the environmental sustainability of their own investments. Why some Chinese green bonds are ‘not so green’ in the eyes of international investors China’s green-bond market is among the largest in the world: the US$30 billion issued last year comprised more than a fifth of the global green-bond total and compares with just US$1 billion in 2015. Indeed, 2017 saw the issuance of a US$2.15 billion One Belt One Road Green Climate Bond that will refinance renewable energy, low-carbon and low-emission transport, energy efficiency and management of sustainable water resource projects. Other green financing tools could include loans, securities, insurance, banking and funds that favour environmentally friendly ventures. Transparency and disclosure are important to ensure environmental integrity is upheld, but if “the project of the century” is to be climate resilient and sustainable, it should also be “green-financed”. Wai-Shin Chan is head of the HSBC Climate Change Centre of Excellence