China's regulatory pathway to green finance

China's green credit balance and green bond stocks have surged to become the world's largest within five years. China's regulatory pathway to this and other achievements in green finance remains an underexplored question.

In this presentation, Wenting and Peter will explain the distinct green finance regulatory model that China has developed, including its use of a richer set of regulatory styles than might be expected from a system ostensibly based only on central planning. The Chinese green finance regulatory model encompasses two parts, the pressure driving mechanism and experimental governance.

The pressure driving mechanism swiftly injects green finance targets into all levels of bureaucracy. Experimental governance through green finance pilot zones aggregates real-world information about probabilities attaching to the failure or success of a given regulatory approach, and so overcomes Hayekian suspicion that centralized planning may not calculate accurately. The pressure driving mechanism further adjusts targets and tasks based on information from multi-level reporting loops.

The Chinese regulatory practices that Wenting and Peter identify shed light on how to address some of the common challenges facing transforming financial systems into green or sustainable finance. Their article is published at Tsinghua China Law Review, which can be accessed here.

About the speakers

Wenting Cheng is a Grand Challenge Fellow in the ANU College of Law, working at ANU Grand Challenge Program "Zero-Carbon Energy for the Asia Pacific". She obtained her PhD degree in Regulation and Governance from RegNet. Her green finance-related research also considers setting green standards in Chinese green finance and China's climate policy along the Belt and Road.

Peter Drahos is Professor of Law and Governance in the Department of Law, European University Institute, Florence, Italy. He is Emeritus Professor at RegNet and holds a Chair in Intellectual Property at Queen Mary University of London. Drahos is the author of Survival Governance: Energy and Climate in the Chinese Century, published by Oxford University Press in 2021.

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This seminar presentation will be in-person only.

Image credit: Image of plants sprouting from stacks of coins by nattanan23 from pixabay (free to use under pixabay licence)