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China’s carbon neutral target will attract global funds to the mainland’s green bonds market, HKEX CEO says
- The average daily turnover of northbound bond connect has risen 34 per cent year on year to 26.6 billion yuan in the January to June period
- The launch of the southbound leg of the Bond Connect scheme is still pending
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China’s ambition to become carbon neutral will encourage more international investors to tap the mainland’s green bond market via the Bond Connect scheme, which will further strengthen the city’s role as a link between the mainland and the global markets, according to Hong Kong Exchanges and Clearing (HKEX).
“China’s goal of achieving carbon neutrality by 2060 will create more opportunities for China to issue green bonds,” chief executive Nicolas Aguzin said during the annual Bond Connect summit on Friday. “International investors will be interested to invest in these green bonds.”
The Bond Connect, which allows foreign investors to invest in mainland China’s US$17.5 trillion domestic bond market via the city’s stock exchange, marked its fourth anniversary on Friday. A plan to open the Hong Kong debt market to onshore Chinese investors is still pending.
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The issuance of green bonds by Chinese companies is expected to rise following a pledge by President Xi Jinping in September to attain carbon neutrality by 2060. Yi Gang, governor of the People’s Bank of China, said in April the country’s carbon neutrality goal would cost the country about 2.2 trillion yuan (US$339.43 billion) annually through 2030, the year it expects carbon emissions to peak.
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After that, the yearly expenditure would rise to roughly 3.9 trillion yuan over the next three decades. If these estimates hold up, the total cost will amount to about 139 trillion yuan.
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