As several Western nations gradually move away from ambitious climate finance policies, China is heading in the opposite direction, expanding climate funding while deepening green finance as a central driver of economic growth.
The world is entering a stage in which green finance will shape not only climate outcomes but also economic strength, and Beijing clearly recognizes it as an engine for transformation.
China’s deliberate choice, backed by senior party bodies, government ministries and regulators, has generated strong momentum because green finance is no longer treated as a passing policy trend but is now woven into long-term national planning, industrial strategy and financial regulation.
This stands in contrast to many Western countries, including Europe, where support for climate policies is weakening under political and economic pressure, while in the United States sustainable finance has slowed sharply as green investment policies have become part of political disputes and faced opposition from some leaders.
The Western retreat marks a major break from China’s current stance, as Beijing treats green finance as a long-term national priority linked to economic planning, industrial growth and financial regulation.
The move is significant because China, the world’s largest growing economy, is increasingly viewed not only as a standard-setter but also as a model for green finance cooperation in the Global South, especially as major economies and private institutions withdraw from setting green finance standards.
A key factor behind China’s progress is its focus on long-term planning, allowing it to pursue goals over many years and enabling leaders to concentrate on scientific and economic realities rather than short-term political pressure.
For example, by directing loans, bonds and investment capital toward green sectors, Beijing has effectively used finance as an industrial policy tool, and the available figures show that the approach can work.
In the insurance sector, China has strengthened green insurance, affecting both the insured and invested assets of insurers, while expanding the emissions trading system to include steel and other sectors and committing to shift from intensity-based targets to absolute emission caps within the next five-year plan.
The scale is clear in the figures: by the end of the third quarter of 2025, China’s outstanding green loans reached RMB 43.51 trillion, about USD 6.2 trillion, representing more than 16 percent of total lending and an increase of 6.47 trillion yuan, or USD 0.9 trillion, equivalent to 17.5 percent from the start of the year.
Green bond issuance recovered strongly after a slowdown in 2024, rising 56.5 percent compared with the year ended 2024 to RMB 1.09 trillion, or USD 154.72 billion, while the annual number of green bond issues broadly followed the same path.
Panda bonds issued by non-Chinese entities in RMB on China’s domestic bond market also remained attractive to international investors in 2025, with issuance reaching RMB 183.56 billion, or USD 26.04 billion, by the end of December, close to the RMB 194.80 billion, or USD 27.63 billion, issued across all of 2024.
The Implementation Plan for High-Quality Development of Green Finance in the Banking and Insurance Sectors has made green finance a core pillar of banking and insurance operations, moving beyond isolated green credit products.
Beyond green loans, green bonds and investment funds, China has also built deep expertise in green finance regulation, with institutions such as the People’s Bank of China developing frameworks for climate finance rules, sustainability reporting and transition finance over the past decade.
Through initiatives such as the Green Investment Principles and South-South cooperation frameworks, China is sharing its green finance expertise with developing countries, leading many nations in Africa, Asia and Latin America to look to it rather than the West.
For Africa, and particularly Kenya, this shift creates both opportunities and strategic questions.
Kenya, in particular, stands to benefit significantly as it pursues ambitious renewable energy targets and has substantial potential in green industrialization.
Access to Chinese green investment, climate technology and financing frameworks could accelerate infrastructure development and clean energy expansion across Africa.