The Chinese government has revealed plans to issue 1 trillion yuan (US$137 billion) in additional sovereign debt, according to Xinhua. The bonds are primarily to support the reconstruction of areas devastated by natural disasters and bolster resilience to such events.
The move has been interpreted as part of Beijing’s broader strategy to stimulate infrastructure development and foster economic growth. However, the emphasis on enhancing post-disaster recovery and fortifying climate resilience also demonstrates a commitment to investing in climate-adaptation measures.
In the past few years, China has experienced increasingly frequent and intense extreme weather during the summer months, including floods, typhoons, and heatwaves. The recent record-breaking rainfall in northern China impacted millions of people and caused losses of nearly 100 billion yuan (US$13.7 billion) in Hebei alone.
The escalation of these so-called “natural disasters” is largely attributed to the effects of climate change, heightening the need for proactive climate-adaptation strategies.
Experts have stressed the critical importance of investing in adaptation, but challenges persist. In particular, adaptation projects may be less profitable than those for mitigation – such as renewable power generation and electric car manufacturing – which are booming. This has discouraged private investment.
If these new sovereign bonds are indeed specifically allocated to climate-adaptation projects, instead of infrastructure in general, they could pave a path for the economy’s green recovery.
According to Yicai, a major financial media outlet in China, the bonds will be allocated to local governments through transfer payment, meaning the central government will eventually assume responsibility for repayment. The approach aims to revive the investment capabilities of local administrations, thereby helping to stabilise the growth trajectory of China’s economy.
Read China Dialogue’s article on the need for a national climate-adaptation strategy.