Over the past decade or so, Chinese stimulus efforts have tended to feature housing and steel as the main course, with green infrastructure as a side. This time Beijing appears to be eyeing greens for the main.
On Nov. 8, the People’s Bank of China announced a new “carbon emission reduction lending facility,” which would provide low-cost funds for banks to relend to clean power, energy efficiency and other similar projects. The scale isn’t yet clear, but HSBC reckons it could reach one trillion yuan ($157 billion) over the next couple of years. Banks will have a strong incentive to use the facility because it’s extremely low-cost—an interest rate of 1.75%, against around 2.1% for a seven-day interbank loan and nearly 3% for the PBOC’s key one-year lending facility. Separately, state media last week announced an additional 200 billion yuan relending program for clean coal.