Green bonds in China and the Sino-British collaboration: More a partnership of learning than commerce
| DOI | 10.1177/1369148118807854 |
| Author | Le-Yin Zhang |
| Date | 01 February 2019 |
| Published date | 01 February 2019 |
| Subject Matter | Original Articles |
https://doi.org/10.1177/1369148118807854
The British Journal of Politics and
International Relations
2019, Vol. 21(1) 207 –225
© The Author(s) 2018
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DOI: 10.1177/1369148118807854
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Green bonds in China and the
Sino-British collaboration:
More a partnership of learning
than commerce
Le-Yin Zhang
Abstract
This article explores the role of Sino-British collaboration in promoting green bond development
in China, the extent to which it meets the United Kingdom’s wider objectives regarding the UK-
China bilateral relationship and the underlying factors. Drawing on desk research and interviews,
it tests and validates the hypothesis that the key driving force for this development is the coupling
of the financialisation of the Chinese economy and the politics of ‘ecological civilisation’, although
learning through international interaction has also played a role. It further shows that the scope
for the United Kingdom to benefit from this growth is limited by the structure of UK-China
trade, China’s strong macro-economic control and its approach to international relations that
prioritises learning and identity transformation rather than the opening up of its markets. Inter-
hub competition also plays a part.
Keywords
Chinese solutions, domestic politics, financialisation, green bonds, inter-hub competition,
learning, liberalism versus statism, macro-economic control, market access, national identity,
partnership, UK-China relations
Introduction
The growth of labelled green bonds (LGBs) in China since 2016 has been phenomenal.1
LGB issuance (domestically and internationally) in China was US$34 billion in 2016 (or
39% of the global total), up from a starting point of US$1 billion in 2015 (UNE, 2017).
This development means that China contributed 87% of the global LGB issuance growth
from 2015 to 2016. Moreover, in the first three-quarters of 2017, China issued LGBs
worth USD20.91 billion, accounting for 23% of the global total (Climate Bonds Initiative
(CBI) and China Central Depository & Clearing Co. Ltd (CCDC), 2017b).
Through this development, China is acquiring a new identity, namely as a global
front-runner, if not leader, in green finance.2 It has been praised for ‘showing thought
The Bartlett Development Planning Unit, University College London, London, UK
Corresponding author:
Le-Yin Zhang, The Bartlett Development Planning Unit, University College London, 34 Tavistock Square,
London WC1H 9EZ, UK.
Email: le-yin.zhang@ucl.ac.uk
807854BPI0010.1177/1369148118807854The British Journal of Politics and International RelationsZhang
research-article2018
Original Article
208 The British Journal of Politics and International Relations 21(1)
leadership’ in green finance by a top UK official.3 After the promulgation of the
national Guidelines for Establishing the Green Financial System jointly by seven
ministries in August 2016, China is now considered by some as ‘the most proactive
country in the world in pursuing a coordinated and comprehensive approach to green-
ing its financial system’ (Gilbert and Zhou, 2017: 1), or ‘the leading force in green
finance across the globe’ (IIGF and UNE, 2017: 14). This new identity forms a strong
contrast with China’s laggard environmental and sustainable development record. A
decade ago, China was considered as one of the 10 ‘rogue’ environmental states
(Lundqvist, 2007). Even today, China ranks 120th out of 180 countries in the 2018
Environmental Performance Index (Yale Centre for Environmental Law and Policy,
et al., 2018), and 71st out of 157 countries on the Sustainable Development Index
dashboard for 2017 (Sachs et al., 2017).
So what has caused China’s meteoric rise in green finance in such an apparently
inhospitable environment and in such a short time? More specifically, what role has
the UK-China strategic partnership played in this development? China introduced the
G20 Green Finance Study Group (GFSG)4 in 2016 during its G20 presidency and has
co-chaired the group alongside the UK ever since. Moreover, recent rounds of
China-UK Economic and Financial Dialogues (EFDs) have made green finance a
priority area for the partnership between the UK and China. However, as will be
shown later in this article, the UK appears to have not benefitted much in business
terms from this development. How do we understand and explain this puzzle?
Focusing on these questions, this article examines the role of UK-China collaboration
in promoting green finance (especially LGBs) development in China, the extent to which
it meets the UK’s wider objectives regarding the UK-China bilateral relationship and the
underlying factors. Drawing on desk research and interviews conducted as part of a
British Academy funded project, this article argues that while this collaboration has con-
tributed to the development of a green bond market in China largely through learning, its
effect on UK-China trade is limited, falling far short of the UK’s expectation. We explain
this asymmetry by highlighting the underlying structural barriers created principally by
China’s macro-economic control regime.
The rest of this article is organised as follows. The first part provides a brief overview
of UK-China trade relations. The second part explores theoretical perspectives that could
shed light on the present topic and their relevance to the research questions. Guided by
these perspectives, the third part then analyses the growth of the green bond market in
China and the UK-China collaboration. The last part concludes.
UK-China trade relations: A brief overview
UK-China relations were historically dominated by the issue of Hong Kong. After the
return of Hong Kong to Chinese sovereignty in 1997, however, the UK government’s
efforts shifted to engagement. At the same time, the two sides experienced what Brown
(2016: 6) calls ‘reversed asymmetry between the two powers’, namely that, while the UK
was a more powerful economy and a greater geopolitical player before 1997, China has
increasingly risen above the UK since.
The UK government’s strategy towards China is expressed in a strategy paper, The
UK and China: A Framework for Engagement, issued by the FCO (2009: 27) in the final
days of the New Labour government. This document identifies three discrete areas
where the UK ‘could and should work with China’. These areas include (a) getting the
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