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Climate for Business: Opportunities for Financial Institutions and Sustainable Development in the Chinese Carbon Market

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  • Alex Y. Lo
  • Xiang Yu

Abstract

Considerable efforts are being organized to build a functioning carbon market in China. This paper presents an overview of the development of the Chinese carbon market and offers an industry perspective on the domestic regulatory and investment environments. It is based on a review of relevant publications and interviews with Beijing‐based finance executives. We found that few financial institutions with the expertise required have been brought into the process of institutional development. Corporate demand for advanced financial services linked to emission trading is weak. Current regulations permit limited trading options, significantly reducing investment opportunities. The market scale is too small to attract investors and financial service providers. Consequently, the Chinese carbon market remains illiquid. Domestic financial institutions have not assumed a critical role in market development. It is suggested that policy‐makers minimize administrative intervention in the market, but a modest degree of direct administrative control is still considered to be instrumental. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment

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  • Alex Y. Lo & Xiang Yu, 2015. "Climate for Business: Opportunities for Financial Institutions and Sustainable Development in the Chinese Carbon Market," Sustainable Development, John Wiley & Sons, Ltd., vol. 23(6), pages 369-380, December.
    • Handle: RePEc:wly:sustdv:v:23:y:2015:i:6:p:369-380
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    Cited by:

    1. Yifei Hua & Feng Dong, 2019. "China’s Carbon Market Development and Carbon Market Connection: A Literature Review," Energies, MDPI, vol. 12(9), pages 1-25, May.
    2. Lo, Alex Y & Mai, Lindsay Qianqing & Lee, Anna Ka-yin & Francesch-Huidobro, Maria & Pei, Qing & Cong, Ren & Chen, Kang, 2018. "Towards network governance? The case of emission trading in Guangdong, China," Land Use Policy, Elsevier, vol. 75(C), pages 538-548.
    3. Peterson K. Ozili, 2021. "Circular Economy, Banks, and Other Financial Institutions: What’s in It for Them?," Circular Economy and Sustainability, Springer, vol. 1(3), pages 787-798, November.
    4. Ozili, Peterson K, 2021. "Circular economy, banks and other financial institutions: what’s in it for them?," MPRA Paper 107397, University Library of Munich, Germany.
    5. Alex Y Lo & Kang Chen & Anna Ka-yin Lee & Lindsay Qianqing Mai, 2020. "The neoliberal policy experimentation on carbon emission trading in China," Environment and Planning C, , vol. 38(1), pages 153-173, February.
    6. Lo, Alex Y. & Chen, Kang, 2020. "Business participation in the development of a Chinese emission trading scheme," Energy Policy, Elsevier, vol. 140(C).
    7. Chen, Ji & Huang, Jiayan & Su, Weihua & Štreimikienė, Dalia & Baležentis, Tomas, 2021. "The challenges of COVID-19 control policies for sustainable development of business: Evidence from service industries," Technology in Society, Elsevier, vol. 66(C).
    8. Cong, Ren & Lo, Alex Y., 2017. "Emission trading and carbon market performance in Shenzhen, China," Applied Energy, Elsevier, vol. 193(C), pages 414-425.

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