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China to encourage non-financial firms to issue green bonds: PBOC

[BEIJING] China will encourage non-financial firms to issue green bonds as part of measures to widen financing channels for environment-friendly projects, the central bank said on Thursday.

The move comes after the People's Bank of China (PBOC) allowed policy banks, commercial banks and other financial institutions to issue green bonds in its interbank market this month. "First we introduced financial green bonds and the next step will be corporate green bonds," Cao Yuanyuan, director of the bond issue management department of the PBOC, told a news conference. "We will see the first batch of green bonds issued by financial institutions coming soon," said Cao.

Some foreign institutions have also shown an interest in issuing onshore green panda bonds, Cao added.

China is trying to develop a green financial system to help contain the cost of pollution while related companies mainly rely on bank loans to support their projects. "The bond issues will ease the problem of maturity mismatches in the banking system, helping banks issue more medium-and long-term loans to green projects," Ma Jun, PBOC's chief economist, told the same briefing.

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The size of China's green bond market is expected to be nearly 300 billion yuan (S$65 billion) annually, analysts said.

The Agricultural Bank of China, the country's third-largest listed lender, issued the country's first green bond in October in London.