China has taken the green bond market by storm following the broad bear market of 2022 and extended its global leadership in 2023, recent data from the Climate Bond Initiative (CBI) shows.
With a total green bond issuance of $131.3 billion (about ¥0.94 trillion) in both domestic and international markets, the country was nearly double that of second-place Germany, which issued approximately 67.5 during the year. billions of dollars.
The milestone comes as the market recovers from a sharp decline in 2022 due to rising interest rates around the world. Total green bond issuance in 2023 rose 10% year-on-year to $575 billion, thanks in large part to economic recovery in Europe, according to S&P Global.
China saw a 3.5% YoY decline in sales compared to 2022. But this decline was not enough to counter the country’s massive leadership.
The US, which ranked first in the global green bond market until 2021, now ranks third globally with total issuance of $58.3 billion in 2023, according to the Climate Bonds Initiative.
The UK, the world’s fastest growing country, has jumped from seventh to fourth place this year, issuing $32.6 billion of CBI-eligible green bonds.
However, data for 2024 warns that maintaining China’s lead this year may be more challenging than it appears. Sales of green bonds in the country fell 46% in the first quarter, according to S&P Global.
However, experts say the country has a lot of untapped potential if only there was buying interest. “Issuing green municipal bonds as a green financing mechanism has not been actively pursued due to insufficient awareness and capacity to expand financial resources and instruments,” explains Liu Wenjie, senior analyst at Greenpeace East Asia. Meanwhile, the global green bond market is expected to post strong YoY growth in 2024 amid falling interest rates. While record numbers are not expected until 2025, S&P Global estimates that environmental, social, sustainability and sustainability-related bonds account for 14% of total debt issued this year.