MNI: PBOC To Enhance Tech, Green Fund Raising: Officials

The People's Bank of China's monetary policy will increasingly focus on sustained technology and green transformation financing following Beijing’s greater emphasis on emission reductions and the financial value of intangible assets within the 2026 work plan, former officials of the central bank told MNI.

The Government Work Report released earlier this month proposed to give full play to the role of intangible assets such as data and intellectual property, meaning financial institutions will place greater emphasis on enterprises' innovation capabilities and intellectual capital when assessing corporate value, said Lin Jianhua, a deputy to the 14th National People's Congress and former head of the PBOC’s Hubei Province branch.

This will broaden and support financing channels for technology enterprises with asset-light business models and enhance their ability to fundraise through innovation, said Lin, now a PBOC advisor.

Beijing will also need to embark on further reform, including the establishment of a unified national standard for intangible asset valuation and robust channels for their circulation, he noted, suggesting a risk-sharing and compensation mechanism involving fiscal authorities, insurance companies and banks. (See MNI: PBOC To Support Fiscal Efforts, Broad Easing Seen Limited)

Fu Xiguo, former head of the PBOC Liaoning Province branch and a deputy to the NPC, said local authorities will expand the issuance of technology innovation bonds to support related sectors and industrial upgrading. Authorities will also utilise the PBOC’s targeted relending facilities, and promote venture capital and industrial investment funds to drive innovation and strengthen strategic emerging industries, Fu said.

The PBOC currently operates two targeted relending tools to support technology and green growth, namely the CNY1.2 trillion relending facility for technological innovation and transformation and the CNY800 billion carbon reduction support tool. Both carry a 1.25% interest rate and a one-year term, with relending funds covering up to 60% of banks’ outstanding related loan balances. PBOC Governor Pan Gongsheng told reporters earlier this month that the focus of the targeted tools this year will be on domestic demand, technological innovation and small and medium-sized businesses, while financial institutions will be guided to assess risks and optimise credit structures to drive economic restructuring and upgrading. (See MNI: China Eyes More Tech IPOs, State Funds To Curb Volatility)

CARBON CHALLENGE

The Government Work Report also set a carbon goal to reduce emissions by 3.8% y/y, marking the first time Beijing has introduced an annual carbon reduction target, compared to 2025’s goal that focused on reducing energy intensity by 3%. This indicated Beijing’s aim to shift the country from energy-usage to carbon-emission control.

According to the National Development and Reform Commission’s plan, from 2027 all heavy-emitting industries will be covered by the carbon market – first established in 2021. Companies will be required to spend on carbon emissions to avoid paying additional costs to purchase carbon quotas, meaning spending on carbon measurement, reporting and verification will increase this year as Beijing steps up its decarbonisation efforts to meet its peak and neutrality goals.

The annual carbon reduction target will set tasks for the construction of the national carbon market, increasing trading entities, optimising pricing mechanisms and enhancing market functions, further strengthening the carbon market's role as a lever in reinforcing emission reduction constraints and facilitating carbon pricing mechanisms, Lin said.

He suggested authorities prioritise supporting financial institutions with mature risk management capabilities and green finance experience to enter the market in an orderly manner, introduce diversified carbon financial products and services, help enterprises revitalise carbon assets, and broaden financing channels in low-carbon sectors.

Fu pointed out that efforts will increase to strengthen financial support for green and low-carbon transformation by guiding lenders to make use of monetary policy tools such as the carbon reduction relending facility. Relevant special loan quotas will also be fully utilised, he added.