The role of green finance in supporting the transition to a green economy: China as a model

Amid escalating environmental challenges, this study aims to assess the pivotal role of green finance in supporting China’s transition toward a sustainable economy, highlighting the significance of this transition as a model for other nations. The study’s practical value lies in providing a contemporary analysis of the current state of green finance in China, given its status as the largest emerging economy and the world’s leading carbon emitter, while also offering actionable insights for policymakers and investors. The study employs a comprehensive research methodology that integrates both descriptive and analytical approaches, utilizing a case study to conduct an in-depth examination of green finance practices in China. It also relies on the collection and analysis of both quantitative and qualitative data from reliable sources, including government reports and studies published by international institutions, to evaluate the contribution of green finance across various economic and environmental sectors. The study’s findings indicate that green finance in China has undergone a significant transformation, particularly following the 2015 Paris Climate Agreement. This shift has led to a notable increase in the use of green financial instruments, especially in the renewable energy and sustainable transportation sectors, contributing to the reduction of carbon emissions and environmental pollution. However, the study highlights that current efforts remain insufficient to achieve a complete transition to a green economy. Additionally, it underscores the challenges facing green finance in China, including the lack of diversification in financial instruments and the complexities of the regulatory framework.