Core Viewpoint - China's green bond market has transitioned from "scale expansion" to "quality and efficiency improvement" [3] Group 1: Market Performance - Global green bond issuance has decreased by 11% year-on-year to $506 billion, while China's green bond issuance has increased by 92% to $101.8 billion, accounting for 20% of the global market [3] - From 2016 to 2024, the issuance scale of China's green bonds grew from 201.8 billion RMB to 683.3 billion RMB, with an average annual growth rate of 16.5% [5] - The total outstanding scale of green bonds in China increased from 2,039 billion RMB to 21,621 billion RMB, with an average annual growth rate of 34.3% [5] Group 2: Innovation and New Products - There has been a strong growth in innovative green bond varieties, with transition bonds seeing a year-on-year increase of 53.6% in 2024 [8] - New products such as sustainable development-linked bonds and low-carbon transition-linked bonds are significantly supporting high-carbon industries [8] - The issuance of green rural revitalization bonds accelerated in Q3 2025, reaching 20.725 billion RMB, marking a historical high for quarterly issuance [8] Group 3: International Influence and Standards - The scale of green bonds held by foreign institutions in China increased from 200 million RMB to 31.88 billion RMB from 2016 to 2024, with an average annual growth rate of 40% [11] - China's green bond standards are closely aligned with international capital market standards, making them an important reference for ESG investments [11] - The report suggests enhancing the sustainable bond standard system and improving information disclosure standards to boost international influence [12]

Core Insights - The total issuance of various sustainable bonds in China's domestic market reached approximately 10.07 trillion yuan by the end of Q3 2025, with a total issuance of 337.6 billion yuan in Q3, reflecting a quarter-on-quarter decrease of 11.83% [4][7][10]. Sustainable Bonds Overview - The cumulative issuance of labeled green bonds in China reached 4.93 trillion yuan by the end of Q3 2025, with an outstanding balance of 2.32 trillion yuan. In Q3 2025, the issuance of green bonds totaled 257.69 billion yuan, down 18.03% quarter-on-quarter but up 17.24% year-on-year [7][10][11]. - Green financial bonds were the most significant category, accounting for 50.49% of the total green bond issuance in Q3 2025 [10]. - The primary funding targets for green bonds were the clean energy industry (54.06%) and infrastructure green upgrades (26.88%) [21]. Transition Bonds - By the end of Q3 2025, the cumulative issuance of transition bonds in China was 273.13 billion yuan, with a balance of 171.88 billion yuan. In Q3 2025, the issuance of transition bonds totaled 22.88 billion yuan, representing a quarter-on-quarter increase of 43.9% [2][42]. - The issuance included 20 sustainable-linked bonds totaling 16.37 billion yuan and 8 low-carbon transition-linked bonds totaling 5.4 billion yuan [42]. Other Sustainable Development Bonds - Other sustainable development-themed bonds reached a cumulative issuance of approximately 4.87 trillion yuan by the end of Q3 2025, with a total issuance of 57.03 billion yuan in Q3, reflecting a quarter-on-quarter increase of 8.4% [2][47]. - This category included 73 regional development bonds totaling 47.17 billion yuan and 4 social project bonds totaling 2.53 billion yuan [47]. Innovation Practices - The first sustainable bond from a local state-owned enterprise was successfully issued on the London Stock Exchange, marking a significant milestone for cross-border financing [50]. - The first dual-labeled credit bond in the rail industry, combining "carbon-neutral green" and "rural revitalization," was issued by the Jinhua Rail Transit Group [51]. - The first low-carbon transition-linked bond supporting small and micro enterprises was successfully issued on the Shenzhen Stock Exchange [53]. Policy Developments - The People's Bank of China and other regulatory bodies released the "Green Finance Support Project Directory (2025 Edition)," which standardizes the recognition criteria for various green financial products [54][55]. - A joint opinion was issued to enhance financial support for new industrialization, emphasizing the role of green finance in promoting low-carbon transitions in manufacturing [57]. - The Green Bond Standards Committee published a notification regarding the application of the new project directory for green bonds, ensuring a smooth transition from the previous standards [56].

Policy Overview - The Ministry of Finance of China released the "Green Sovereign Bond Framework," promoting the issuance of green sovereign bonds in overseas markets, reflecting the country's commitment to sustainable development and enhancing the diversity of high-quality green bond products in the international market [3][4]. Green Bond Market Update - In the first half of 2025, China saw the issuance of 251 new green bonds, with a total issuance scale of approximately 4749.87 billion yuan, marking a 25.5% increase in the number of bonds and an 89.5% increase in issuance scale compared to the same period in 2024 [8][9]. - The structure of green bonds showed significant growth in financial bonds (+330%), medium-term notes (+53%), and short-term debt financing tools (+126%), indicating strong demand for long-term green infrastructure financing [9][10]. Transition Bonds - A total of 43 transition bonds were issued in the first half of 2025, with a new issuance scale of approximately 289.50 billion yuan, reflecting a 0.49% increase in the number of bonds but a 25.4% decrease in issuance scale compared to the previous year [37][42]. Case Studies - The first issuance of RMB green sovereign bonds by the Ministry of Finance in London amounted to 6 billion yuan, with a dual structure of 3-year and 5-year bonds, showcasing strong international investor confidence with a subscription rate of 6.9 times [26][27]. - Huaneng Lancangjiang issued "twin green bonds," marking the first application of the "Li Sheng Green Bond" model in the domestic interbank market, which aims to quantify the market performance differences between green and non-green bonds [30][31]. Sustainable Development Linked Bonds - In the first half of 2025, 27 sustainable development linked bonds were issued, with a total scale of 176.00 billion yuan, focusing on various key performance indicators related to energy efficiency and renewable energy development [45]. - The issuance of low-carbon transition linked corporate bonds totaled 13, with a scale of approximately 73.50 billion yuan, primarily concentrated in the power and energy sectors [46]. Issuer Information - State-owned enterprises dominated the green bond issuance in the first half of 2025, accounting for 86.85% of the number of bonds and 82.06% of the issuance scale, indicating a stable market foundation but highlighting the need for policy support to enhance participation from private enterprises [17][19].