As many western countries are slowly moving away from coming up with strong climate finance policies, China has taken a different direction as it is not only expanding climate financing but also deepening the green financing to make it a key pillar of economic growth.
This is because the world is entering a new phase where green finance will not only shape climate outcomes but also economic power and with this China is well aware that green finance is the engine for transformation.
The deliberate decision by China, that has since received immense support from top party organs as well as through China’s government ministries and regulators has seen tremendous growth because green finance is no longer treated as a fashionable policy trend but is now embedded into long-term national planning, industrial strategy and financial regulation.
This is in contracts with other western countries like Europe where support for climate policies is weakening because of political and economic pressures while in the United States, sustainable finance has slowed down tremendously as green investment policies have become part of political fights as some of the leaders have opposed climate related financing.
The decision taken by the western country is a big departure from what China stands for at the moment as it has been treating green finance as a long-term national priority which is now part of the country’s economic planning, industrial growth and financial regulations.
This is a major step because China which is the largest growing economy is not only being looked up to as a standard setter but also role model for green finance cooperation in the Global South, especially with withdrawal of major economies and private institutions from setting green finance standards.
One reason for China’s progress in green financing is its focus on long-term planning where it is able to stick to long-term goals for many years, a move that has allowed leaders to focus on scientific and economic realities instead of short-term political pressure.
For instance, by directing loans, bonds and investment capital toward green sectors, Beijing has effectively used finance as an industrial policy tool and the numbers presented have proven that this is doable.
In the insurance industry China, for example, China has strengthened green insurance, impacting both the insured assets and the invested assets of insurance companies with some of the key developments including the expansion of the emission trading system to encompass steel and other sectors, along with a commitment to shift from intensity-based to absolute emission caps within the next five-year plan.
In terms of numbers, this is so evident as by the end of third quarter of 2025, China’s outstanding green loans had reached RMB 43.51 trillion about USD 6.2 trillion representing over 16 per cent of total lending up 6.47 trillion (USD 0.9 trillion), or 17.5 percent from the beginning of the year.
Green bond issuance rebounded strongly after a slowdown in 2024, by 56.5 percent compared to the year ended 2024 to RMB 1.09 trillion (USD 154.72 billion) with the annual number of green bond issues broadly following the same trajectory.
Panda bonds issued by non-Chinese entities in RMB on China’s domestic bond market also remained attractive to international investors in 2025 because by the end of December 2025, the issuance amount totaled RMB 183.56 billion (USD 26.04 billion), in line with the RMB 194.80 billion (USD 27.63 billion) issued in all of 2024.
The Implementation Plan for High-Quality Development of Green Finance in the Banking and Insurance Sectors has positioned green finance as a core pillar of the banking and insurance business which is a shift from isolated green credit products.
And apart from using green loans, green bonds and investment funds, China has also built strong expertise in green finance regulation as over the past decade, institutions such as the People’s Bank of China have developed systems for climate finance rules, sustainability reporting and transition finance.
Through initiatives such as the Green Investment Principles and South-South cooperation frameworks, China is exporting its green finance expertise to developing countries, a move that has seen many nations in Africa, Asia and Latin America looking up to it rather than the west.
For Africa, and particularly Kenya, this shift presents both opportunities and strategic questions.
Kenya to be specific is set to gain a lot especially now when it has come up with ambitious renewable energy goals and significant potential in green industrialization.
Access to Chinese green
investment, climate technology and financing frameworks could help accelerate
infrastructure development and clean energy expansion across Africa.
