MNI BRIEF: China Needs To Balance Green Target With GDP Growth

China should not set overly aggressive carbon emission reduction goals at the initial stage of its net-zero campaign to balance green-transition targets, GDP expansion and employment, while monetary authorities must do further research on the introduction of medium and long-term tools for net-zero growth, said Wang Xin, head of the research bureau at the People’s Bank, on Saturday during 2023 Bund Summit in Shanghai.

As China faces insufficient domestic demand and global economic recovery lacks momentum, a rapidly advancing decarbonisation may hurt short-term economic growth and worsen unemployment in certain regions and industries, Wang said while introducing a report on transition finance issued by China Finance 40 Forum.

The PBOC should use structural monetary policy facilities to guide financial institutions to increase credit allocation to areas like green technology innovation and the application of green technology in manufacturing, said Wang, noting the EU should use its Carbon Border Adjustment Mechanism (CBAM) to purchase carbon credits form exporting countries or from developing countries to support their carbon reduction efforts.