{"id":60132909,"date":"2026-05-14T14:07:48","date_gmt":"2026-05-14T13:07:48","guid":{"rendered":"https:\/\/dialogue.earth\/?post_type=news_digest&p=60132909"},"modified":"2026-05-14T14:07:54","modified_gmt":"2026-05-14T13:07:54","slug":"china-to-welcome-financial-institutions-into-its-carbon-market","status":"publish","type":"news_digest","link":"https:\/\/dialogue.earth\/en\/digest\/china-to-welcome-financial-institutions-into-its-carbon-market\/","title":{"rendered":"China to welcome financial institutions into its carbon market"},"content":{"rendered":"\n

China plans to include a first batch of financial institutions in its national carbon market by the end of 2026, according to the National Business Daily<\/a>. <\/p>\n\n\n\n

The announcement, made on 29 April by vice minister of ecology and environment Li Gao, will enable financial institutions to directly participate in the carbon market and thereby influence carbon prices. Currently, the majority<\/a> of participants are compliance enterprises, that is, carbon emitters.<\/p>\n\n\n\n

The financial institutions will be able to \u201cdevelop innovative carbon financial products<\/a>\u201d, potentially accessible to a variety of traders. That aligns with a previous policy opinion<\/a> on \u201cintroducing other non-compliance entities at an appropriate time\u201d.\u00a0<\/p>\n\n\n\n

The move is designed to \u201cenhance market liquidity and daily trading activity\u201d, explained<\/a> Zhang Zheng, climate finance director at the Environmental Defense Fund Beijing Office.\u00a0\u00a0<\/p>\n\n\n\n

Research shows<\/a> that when financial institutions participate more in carbon markets, prices can rise. This in turn creates<\/a> incentives for companies to reduce their carbon emissions and accelerate green investment.\u00a0<\/p>\n\n\n\n

China\u2019s current carbon prices are relatively low. At the end of 2025, prices were around RMB 74<\/a> (USD 11) per tonne. By comparison, prices in the European Union’s carbon market are currently around EUR 74<\/a> (USD 86) per tonne. On 7 May, China co-launched<\/a> the Open Coalition on Compliance Carbon Markets, with the EU and Brazil, to strengthen global cooperation on carbon pricing.<\/p>\n\n\n\n

In an interview in 2025, Qian Lihua, executive vice president of the Industrial Bank\u2019s Carbon Finance Research Institute, said<\/a>: \u201cChina\u2019s carbon market still faces issues such as a limited number of participating institutions and relatively homogeneous trading products. It requires coordinated efforts from multiple stakeholders to continuously promote its development.\u201d\u00a0<\/p>\n\n\n\n

In his speech, Li Gao also emphasised<\/a> the importance of climate investment and financing work in China\u2019s approach to addressing climate change. <\/p>\n\n\n\n

While the national carbon market mainly relies on spot trading<\/a>, China has also developed pilot emissions trading systems, particularly in Beijing, Shanghai and Guangzhou<\/a>. These incorporate carbon finance instruments such as carbon allowance pledges<\/a> and carbon forwards<\/a>.<\/p>\n\n\n\n

According to a regulation document<\/a>, the pledges allow enterprises to use carbon emission allowances as collateral to obtain financing from banks. While the forwards help regulated entities hedge against carbon price volatility by locking in future allowance prices in advance. These pilot markets have achieved emission reductions, found<\/a> a recent study. <\/p>\n\n\n\n

The government\u2019s policy opinion, published<\/a> last August, recognises that bringing financial institutions and their products into the carbon market could potentially distort prices. So it states the aim of strengthening supervision of market trading, and cracking down on actions that disrupt or manipulate the market.<\/p>\n","protected":false},"excerpt":{"rendered":"

China will include financial institutions in its national carbon market to \u201cenhance market liquidity and daily trading activity”<\/p>\n","protected":false},"featured_media":60006649,"template":"","categories":[761],"tags":[50040310,544,580],"country":[],"digest-collection":[50039911],"class_list":["post-60132909","news_digest","type-news_digest","status-publish","has-post-thumbnail","hentry","category-climate","tag-carbon-markets","tag-finance","tag-policy"],"acf":[],"yoast_head":"\nChina to welcome financial institutions into its carbon market | Dialogue Earth<\/title>\n<meta name=\"description\" content=\"China will include financial institutions in its national carbon market to \u201cenhance market liquidity and daily trading activity"\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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