Core view
China’s green financial system continues to improve, and structural monetary policy instruments continue to increase. After the implementation of China’s “double carbon” goal in September 2020, the importance of the construction of green financial system is highlighted. Since 2021, China’s green financial system has been continuously improved. In April 2021, the central bank, the national development and Reform Commission and the CSRC jointly issued the catalogue of green bond support projects (2021 version), which unified the definition standards of green projects by relevant management departments of green bonds for the first time. In June 2021, the central bank issued the notice on printing and distributing the green finance evaluation scheme for banking financial institutions, upgrading green loans to green finance. In addition, structural monetary policy tools continued to increase in support of green development. In November 2021, the central bank officially launched carbon emission reduction support tools. In that month, the executive meeting of the State Council proposed to set up another 200 billion yuan of special refinancing to support clean and efficient utilization of coal. Looking forward to 2022, at the fourth quarter regular meeting of the central bank, it was stressed that “structural monetary policy tools should actively \’add up\’ and make accurate efforts”. The field of green development is expected to continue to benefit. Favorable policies may become an important driver of rapid and large-scale green credit, and the growth rate of green credit in 2022 can be expected to reach a higher level.
China’s green financial system tends to be diversified, and green credit of commercial banks is the backbone of the green financial system. With the continuous improvement of the green financial system and the directional support of structural monetary policy for credit funds to flow into the green field, China’s green financial development pressed the “fast forward key”. Among them, green credit is the most important financial instrument in China’s green financial system. By the end of the third quarter of 2021, the balance of green loans of all financial institutions was 14.8 trillion yuan, a year-on-year increase of 27.9%; The green credit balance of 21 major banking institutions reached 14.08 trillion, accounting for 95.26% of the total green loans. At the level of green bonds, at the end of the third quarter of 2021, the balance of China’s green bonds was 1.02 trillion yuan, a year-on-year increase of 24.7%. In addition, new products such as green fund, green insurance, green trust, green PPP and green leasing are also emerging, and China’s green financial products tend to be diversified. The use of green credit and industry concentration have decreased, indicating that the direction of green credit is more diversified. At the end of the third quarter of 2021, according to different purposes, the total loan balance of infrastructure green upgrading industry and clean energy industry accounted for 72.94%, down 0.77pct month on month. By industry, the total balance of green loans in the top two industries accounted for 54.80%, down 1.66 PCT month on month.
The scale of green credit of state-owned banks is leading, and the growth rate of urban rural commercial banks in Jiangsu Province is bright. According to the data disclosed in the semi annual report of listed banks, at the end of June 2021, Industrial And Commercial Bank Of China Limited(601398) , China Construction Bank Corporation(601939) and Agricultural Bank Of China Limited(601288) green credit scale were 2.15 trillion, 1.57 trillion and 1.76 trillion respectively, in an absolute leading position. As the first equatorial bank in China, Industrial Bank Co.Ltd(601166) among the joint-stock banks, the scale of green credit reached 412.7 billion yuan by the end of June 2021, with a year-on-year increase of 29.19%, leading the joint-stock banks in both scale and growth. The carbon emission reduction support tool and the special refinancing line of RMB 200 billion to support the clean and efficient utilization of coal all benefit national banks. In 2022, under the favorable policies of state-owned banks and joint-stock banks, the scale of green credit is expected to achieve rapid volume. The scale of green finance of regional banks is still small, but the development momentum of green credit of urban rural commercial banks in Jiangsu Province is outstanding. At the end of June 2021, the scale of green credit in Bank Of Jiangsu Co.Ltd(600919) and Bank Of Nanjing Co.Ltd(601009) located in Jiangsu Province increased by 24.18% and 31.00% compared with the end of last year, and at the end of 2020, the year-on-year growth rate of green credit in Bank Of Suzhou Co.Ltd(002966) and Jiangsu Suzhou Rural Commercial Bank Co.Ltd(603323) was as high as 67.40% and 61.47%.
Investment advice
After the implementation of the “double carbon” policy goal, the importance of the construction of green financial system is highlighted. Since 2021, the green financial system has been continuously improved, the construction of the “five pillars” of green finance has been continuously deepened, and the structural monetary policy has been continuously overweight. China’s green finance has ushered in a golden period of development. Looking forward to 2022, under the guidance of “addition” of structural monetary policy, monetary policy is expected to continue to increase, green finance will continue to benefit, and the rapid and large-scale green credit can be expected. National banks are the main force of green credit and the support object of structural monetary instruments. Therefore, we suggest paying attention to medium and large banks that are favorable by policies and focus on developing green business.
The implementation of risk warning policy is not as expected; Macroeconomic growth declined.
