Move makes china the first country to build a national system to boost green finance

As China strives to protect its ecological integrity, the financial sector is coming to the aid to contain pollution and help advance the industrial transformation.

Green finance－a concept still unfamiliar to most－entered the economic lexicon last week after the central government decided to set up five pilot zones nationwide.

The State Council, China's Cabinet, arrived at the decision at an executive meeting, which was presided over by Premier Li Keqiang on June 14. Financial institutions will further enhance their shoring-up for environmental protection projects and industrial upgrading with favorable policies on interest payments and loans.

The pilot zones will be set up in Zhejiang, Jiangxi, Guangdong, Guizhou provinces and the Xinjiang Uygur autonomous region, according to a statement released after the meeting.

Systematical innovation for green finance will increase the financial sector's support to improve ecology and boost the efficient utilization of resources. The statement said the pilot zones are also an important way to continue China's commitment to the Paris climate accord after US President Donald Trump announced the US would withdraw from the agreement early this month.

The statement said the government will support financial institutions to set up green finance departments and welcome foreign capital to participate in green investments. The development of "green credit" will be encouraged to take the environmental credentials of companies into account. The country will start pilot markets for trading rights of resources such as water and energy. The central government will provide support in fiscal, tax and land policies for green industries and projects, while a risk prevention mechanism will be established.

Green finance was first proposed in the Government Work Report delivered by Li in March 2016. The term, reiterated by the premier in this year's work report, was first officially defined in a guideline co-released by the National Development and Reform Commission and another six ministries in August. By definition, it means financial services that help increase investment and financing, project operations and risk management in fields such as environmental protection, energy conservation, clean energy, green transport and buildings.