Reuters:

My first question is, how is the progress of green finance? What are the bottlenecks and difficulties, and how to solve them? And, some analysts expected that due to the impact of the COVID-19 pandemic, the economy in the second quarter would register a markedly slow growth or even a negative growth. How will macro policies respond to that? What incremental policy tools will be used? Thank you.

Chen Yulu:

Thank you for your questions. The international community has paid close attention to China's green finance development. Developing green finance is not only the requirement of implementing Xi Jinping Thought on Ecological Civilization and practicing the principle that lucid water and lush mountains are invaluable assets but also a crucial measure to realize the goals proposed by President Xi Jinping to peak carbon emissions and achieve carbon neutrality. China is a global pioneer in publicizing and championing the philosophy of green finance. So far, green finance has been demonstrating three major functions, basically formed five major pillars, and is playing a more and more important role in supporting China in its low-carbon and high-quality development.

First, China's multi-layered system for green finance products and the market has basically taken shape. By the end of 2021, China's outstanding green loans in yuan and foreign currencies have already reached nearly 16 trillion yuan, up 33% year on year, ranking first in the world. In 2021, China's domestic issuance of green bonds exceeded 600 billion yuan, a 180% year-on-year increase, and the balance reached 1.1 trillion yuan, also among the highest in the world.

Second, China has established a clear and enforceable green finance standard system in line with international standards and uniformly adopted at home. Four green finance standards of great attention at home and abroad have been officially released, namely the Green Bond Endorsed Projects Catalogue, the Guidelines for Financial Institutions on Disclosing Environment Information, Financing Instruments for Environmental Rights and Interests, and Carbon Finance Products. In addition, China and the EU have jointly rolled out the Common Ground Taxonomy for Sustainable Finance, which symbolizes that Chinese and foreign green finance standards are gradually converging.

Third, China has made important progress in the disclosure of financial institutions' environmental information. Some financial institutions in the pilot zones of green finance reform and innovation have compiled environmental information disclosure reports on a trial basis and piloted carbon accounting, accumulating experience for the nationwide promotion at a suitable time in the future.

Fourth, China has gradually improved the incentive and restraint mechanism in green finance. The carbon-reduction supporting tool and the special re-lending to support the clean and efficient use of coal set up by the People's Bank of China (PBC) have channeled more social funds into green and low-carbon sectors. At the same time, the PBC has carried out an overall evaluation of the green finance business of financial institutions in the banking sector. By including green loans and green bonds in the quantitative evaluation, it has guided financial institutions toward increasing green assets in an orderly manner.

Finally, China has deepened international cooperation in green finance. In 2021, as co-chair of the G20 Sustainable Finance Working Group, the PBC led the drafting of the G20 Sustainable Finance Roadmap and the G20 Sustainable Finance Synthesis Report, both of which have been approved. In addition, the PBC has engaged in the launch and establishment of the Network of Central Banks and Supervisors for Greening the Financial System, which is becoming one of the most globally influential international cooperation platforms for green finance.

Going forward, we will make efforts to improve the top-level design of the green finance system, promote the green and low-carbon transformation of China's energy mix, industrial structure, and ways of production and living, further strengthen the disclosure of financial institutions' environmental information, carry out carbon accounting, and steadily advance climate stress tests. At the same time, we will develop carbon finance to control and reduce carbon emissions in a market-based way.

As for monetary policies in response to COVID-19, the PBC, in accordance with the decisions and arrangements of the CPC Central Committee and the State Council, has stepped up the implementation of prudent monetary policies to provide sufficient, targeted, and proactive support for a stable macro-economy.

First, we have cut the required reserve ratio in a proactive manner to maintain reasonably ample liquidity. Second, we have guided the prime loan rate to further decline from a relatively low level to reduce the financing cost of market entities and stimulate their financing demand. Third, we have introduced a number of new structural monetary policy tools. For example, we have set up a 200-billion-yuan re-lending for scientific and technological innovation and a 40-billion-yuan special re-lending for inclusive elderly care while giving more targeted support to weak links such as green development and small and micro-enterprises. By the end of March, the PBC had already allocated 138.6 billion yuan of carbon-reduction supporting tool funds and 22.5 billion yuan of special re-lending to support the clean and efficient use of coal, and supported financial institutions to provide qualified firms with 230.9 billion yuan and 22.5 billion yuan of loans. The balance of inclusive loans for small and micro-enterprises also continued to grow. Fourth, we have introduced 23 policies and measures to strengthen financial services and support the real economy in a timely manner so as to fully support epidemic prevention and control as well as economic and social development.

Next, the PBC will give more priority to stabilizing growth, strengthen cross-cyclical policy adjustment, accelerate the implementation of introduced policies and measures, and in particular, make active planning for incremental policy tools, continue maintaining stable total credit amount, lowering financing cost and strengthening financial support for key areas and weak links, and give further support to the real economy.

Thank you.

Han Wenxiu:

I would like to add something. We all know that the Political Bureau of the CPC Central Committee studied the current economic situation and economic work at a meeting not long ago. The CPC Central Committee has predicted an increase in the downward economic pressure very early on. In response to the mounting risks and challenges brought about by the COVID-19 pandemic and the Ukraine crisis, the CPC Central Committee unequivocally required efforts to ensure effective pandemic control, stable economic development, and secure development. To achieve success in all these respects, instead of only one, is no easy job and constitutes a major test for all localities and departments. Meticulous endeavors will be required.

The COVID-19 pandemic is a drag on economic and social development, so it is necessary to prevent and control it in a scientific, targeted, and effective way to create a fundamental prerequisite for normal economic and social operation. Economically, first of all, the policies already determined need to be put in place as early as possible. It is our aim to put all policies in place in the first half of the year. The State Council is working with relevant departments to adopt detailed policies and measures one after another to actively support industries, micro, small, and medium-sized enterprises, and self-employed businesses and households hit hard by the pandemic and ensure the steady performance of the numerous market entities.

Second, additional incremental policy tools will be planned and launched. China's fiscal, monetary, and other policies have ample leeway and diverse tools available. Moreover, we have accumulated rich experience in macro regulating downward economic pressure. Based on this, we will further strengthen well-timed regulation and act promptly. 

Third, we are adept at solving development problems through reform. China boasts enormous market vitality and development potential, but they need to be unleashed. We will continue to deepen reform, expand opening-up, and invigorate the economy steadfastly to provide the strong driving force for development.

Another priority is to fully tap into the potential of domestic demand. The Central Commission for Financial and Economic Affairs stressed in a recent meeting that infrastructure development will be strengthened comprehensively to give play to the key role of effective investment. The meeting also highlighted the leveraging role of consumption in economic circulation. Relevant departments are implementing new policies and measures in this regard to chart the route for ensuing efforts.  

To sum up, it is important to take a long-term perspective to look at things. The Chinese economy is now experiencing another uphill battle which is crucial, but what face us  are still problems and troubles emerging in the course of development. As long as we remain confident and face difficulties head-on, we will surely be able to turn challenges into opportunities and bring things around. This is the basic logic of China's economic development.

Thank you.