China to issue low-cost loans for emissions cuts

China’s central bank will by the end of the month issue a first batch of low-cost loans to financial institutions to enable carbon emissions cuts, state-owned Xinhua reported on Tuesday, citing an interview with central bank governor Yi Gang.

The People’s Bank of China (PBOC) in November said it would provide 60% of the loan principal taken out by financial institutions for carbon emission cuts, with a one-year lending rate at 1.75%, without specifying when the lending would be issued.

The measure is in line with China’s broader goal to bring emissions to a peak before 2030 and achieve carbon neutrality by 2060, as well as to shelter the economy from the fallout of the COVID-19 pandemic. China’s economy, the world’s biggest after the United States, faces the triple pressure of falling demand, supply problems and weakening expectations, Yi said, reiterating previous official comment.

“The macroeconomic market must by stabilised,” he told Xinhua. “In addition, it’s necessary to let shareholders of companies, and local authorities shoulder the responsibility of risk events occurring in the market.”