Green finance: current status, development, and future course of actions in China

This study explores China’s implementation of a green financial system to combat the urgent climate emergency and achieve sustainable development amid rapid industrial and urban development. The research examines the current state of green finance in China, including its development, challenges, and future directions. The study finds that China has made significant progress in establishing green finance, being a leader in green financial products like green bonds and credits. Moreover, as suggested by some literature, green finance products could lead to CO2 reductions. However, challenges still remain, such as promoting green insurance, establishing a unified green financial system, and addressing the lack of asymmetry in green financial information. This research provides an essential contribution to the growing body of knowledge on green finance, offering useful insights into China’s unique approach to sustainable development through green finance.


Introduction
In the recent years, over 25% of global carbon emissions are from China (Yong et al 2022). To address this issue and promote economic and sustainable development, green finance has emerged as a crucial tool. This approach allows projects focused on environmental protection and climate change mitigation to receive financing. Green finance is now an important strategy for the financial sector and a reference point for government policies and organizations addressing environmental issues such as climate change and biodiversity loss (Dziwok and Jäger 2021). It involves a sequence of economic actions to achieve financial and social growth while improving resource efficiency and management, leading to a reduction in carbon dioxide emissions and environmental pollution.
In the past, China's outdated financial system ignored the negative relationship between economic development and environmental protection, resulting in uncontrolled carbon emissions and ecological degradation. Green finance, unlike traditional finance, considers the relationship between human living conditions and the environment. A report by the NGFS in October 2019 stressed the importance of addressing climate change to prevent financial and economic crises, highlighting the strong relationship between green economics and climate change (NGFS 2019).
Green finance uses tools to protect the environment by setting standards for measuring the impact of commercial activities and encouraging financial institutions to consider sustainable development issues (Zhou and Cui 2019). It aims to promote coordinated development of economic, environmental, and social structures to achieve sustainable development.
The concept of green finance emerged after the 2008 global financial crisis as a means for the private financial sector to address the urgent need to combat climate change. While it promotes sustainable development, it also offers new profit opportunities for the financial sector (Olaf and Amr, 2019). Researchers as such (Sachs et al 2019) believe that the growth of green economics can lead to increased conservation investments, advances in carbon bazaar tools, and the establishment of green central panels and communal green reserves to reduce reliance on coal-based strategies and lower carbon dioxide and other air pollutant emissions.
Green finance is gaining notoriety among financial practitioners, politicians, and researchers (Dayong Zhang et al 2019) due to its multiple implications for economic life. It deviates from a financial model focused solely on economic success and also prioritizes environmental protection (Zhang 2018, Wang et al 2019. The concept of green finance, also known as green investments , has different meanings to different groups including academicians, politicians and businesses, and researchers struggle to agree on a universal definition due to the concept of perpetual growth (Dörry and Schulz 2018, Liu et al 2020, Rawat and Dr Anu 2020.
Many Asian economies are prioritizing sustainable development by shifting investments from fossil fuels and natural resources to environmentally friendly technologies. To make this transformation possible, commercial associations must play a substantial role (Volz 2018). The green financial system relies on institutions that use financial tools like green bonds, stock market indices, green credits, green growth funds, climate finance, carbon finance, and powerful political incentives to support environmentally friendly projects (The People's Bank of China et al 2016). This is important because the demand for green financing to support green industries, businesses, and development continues to grow yearly. Many governments have implemented measures to promote green finance and support economic activities like environmental protection, energy conservation, renewable energy, transportation, and green buildings. Green finance helps accelerate economic growth and is a potent tool for developing a green economy and an ecological society. It also supports scientific advancements in ecological protection, renewable energies, and energy conservation. China is a great example of how green finance can be successful. In 2015, China issued its first green bond (Zhou and Cui 2019), which helped propel its green bond market to become the largest in the world. According to data from the Climate Bond Initiative, in 2018, China held $30.9 billion (USD) representing 18% of the worldwide total of $167.3 billion (USD) green bond issues, just behind the United States. Globally, there are several types of institutions that provide financial assistance to mitigate environmental damage, but many countries utilize environmental funds as an organizational tool to channel capital toward sustainable development (Campiglio 2016). According to recent studies by (Xu 2020, De Deus et al 2022, China has been making impressive progress in the development of green finance in recent years. Below are some specific developments in the green finance sector in China: ✓ Green bond market: China has the world's largest green bond market, and it has been growing rapidly in recent years. In 2020, the Chinese green bond market reached a record high of RMB 246.3 billion (about $37 billion) (Xu et al 2022).
✓ Green banking guidelines: The China Banking and Insurance Regulatory Commission (CBIRC) has developed guidelines for green banking in China, providing guidance to banks on how to develop and implement green finance initiatives.
✓ Green financial products and services: Several financial institutions in China have launched green financial products and services, including green bonds, green loans, green equity, and green insurance. These products aim to finance environmentally sustainable projects and activities.
✓ Green finance centers: Some cities in China have established green finance centers to promote the development of green finance in the region. These centers provide a platform for financial institutions, government agencies, and other stakeholders to collaborate on green finance initiatives.
✓ Green investment: The Chinese government has promoted the development of green investment in the country, including through the establishment of green investment funds and the promotion of green equity investment.
Overall, the Chinese government has made significant efforts to promote the development of green finance in the country, and the market is expected to continue to grow in the coming years. This research is divided into three parts: first, it reviews existing literature on the concept of green finance, with a focus on China; second, it examines the current state of green finance in China, including its various tools such as green credits, green insurance, and green bonds, as well as the challenges facing its growth; and finally, it looks at the future prospects of green finance in China, concluding with recommendations for successful green finance in the future.

Literature review _ green finance
Green finance is a new way of integrating environmental concerns into the financial industry. It involves investing and financing activities that offer environmental benefits to promote sustainable development (Salazar 1998). Green finance is a financial tool that aims to achieve sustainable economic, social, and environmental development (Scholtens 2006). In the context of the principles of marketing and its mechanisms, the concept of green finance is based on the idea that the government should deploy resources in the market while respecting environmental resources (Lv et al 2021). According to (Cowan 1999), to implement green finance successfully, three perspectives are essential. First, financial institutions provide the concept under the government's supervision. Second, the concept is innovative in solving environmental issues. Finally, the concept aims to improve the environment and reduce pollution while providing renewable energy services.
Green finance is rapidly developing in China, with the Chinese government's Green Credit Policy (Lv et al 2021) being recognized as an effective tool for regional development and reducing carbon emissions. According to experts (Hartzmark andSussman 2019, Heine 2019), green finance is primarily concerned with reducing carbon emissions by funding green projects and participating in the carbon market. On one hand, green finance provides funding for conservation and issues green bonds, reducing the financing and operational costs of environmental protection projects. This helps improve the efficiency of environmental protection initiatives and promotes the development of green technology while reducing carbon emissions. In China, green finance is essential for achieving sustainable growth by financing environmental, economic, and social projects that adhere to international standards (Xie et al 2020). Green finance is an innovative financial tool that bridges the gap between environmental and sustainable development (Labatt and White 2002). In the framework of financial and supportable development, researchers have studied the impact of green finance on sustainable development through the connotations, indicators, and evaluation techniques of the expansion of green finance in China and abroad. (Zeng et al 2014) attempted to design an evaluation system for the expansion of green economics in China. The results indicate that green investment significantly impacts China's overall economic development.
On the flip side, there are some bottlenecks at the regional level that need to be addressed. According to a study by (Li et al 2019), the effectiveness of green finance in terms of ecological and environmental protection and the business cycle needs to be evaluated. China's rapid economic development has resulted in environmental problems (Liu and Wu 2015), and in 2019, China's carbon emissions surpassed the combined emissions of OECD countries (Chen et al 2020). In response to this environmental crisis, the Chinese government has set goals to address the issue, with a commitment to peak carbon emissions by 2030 and achieve carbon neutrality by 2060 (Jung et al 2021). The Chinese government announced this at the 75th United Nations General Assembly in 2020. As such, various stakeholders, including politicians, national and international organizations, researchers, and civil society, recognize the importance of the environment and are actively working to promote the concept and implementation of green finance for a greener economy.

Research method
This review paper uses content analysis to identify potential research avenues in the field of green finance by analyzing existing literature. The study is limited to the literature review and databases such as Web of Science core collection to uncover concerns related to the China's green finance system. The current state, development, and future direction of China's green finance system are evaluated using a descriptive framework based on previous works by (Berg, Lune 2012, Weber 1990, and Krippendorff 2004, and the results of the content analysis provide insights into research gaps and potential directions for further studies. The top five keywords in previous studies on China's green finance are green finance, impact, economic growth, China, and CO 2 emissions. The sample comprised 248 papers published between 2013 and 2023. The criteria for selecting these papers were based on the titles of these articles, the names of their authors, the name of the journals in which they were published, the country of origin of the authors, and finally the key themes and interests of these studies in relation to the keywords. Also, only articles in the Web of Science core collection and indexed in relevant indices such as Science citation index-expanded (SCIE), Social science citation index (SSCI), Arts and Humanities citation index (A&HCI), and Emerging source citation index (ESCI) were sourced. A thorough cross check of paper titles and abstracts was done to exclude irrelevant articles. This approach ensures the accuracy and relevance of the findings. The study uses CiteSpace 6.1. R6 software developed by (Chen 2006) to visualize patterns in previous studies on China's green finance (figure 1).

Journal distribution
The table 1 displays a list of journals based on the number of publications included in the study. Journals with over 10 publications are listed. It's worth noting that while finance is a critical aspect of green finance, most of the journals publishing works in this area focus on topics such as green credit, green housing, China's economy, environmental science, and climate change. This finding highlights the interdisciplinary nature of green finance and the importance of collaboration across different fields to achieve sustainable development. It also emphasizes the need for researchers in finance and related fields to expand their research focus and engage with environmental and ecological issues to contribute to the development of green finance as a crucial component of sustainable development.

Author's country of origin
The paragraph discusses where authors in the field of China's green finance research come from. The majority of authors are from China, which is expected since the research focuses on that country. The USA has the secondhighest number of authors, which can be attributed to factors such as student mobility, scientific exchanges between universities, and support from international organizations. England, Pakistan, and Japan also have a significant number of authors, as these countries have implemented green finance initiatives and are represented by major international organizations. The geographic distribution of authors in the field of China's green finance reflects the global nature of the challenge of climate change and the importance of international cooperation in addressing it. The diversity of perspectives and experiences represented by authors from different countries can contribute to a more comprehensive understanding of the challenges and opportunities of green finance in China and beyond (figure 2). Figure 3 is a helpful tool for understanding the main topics and themes in the field of green finance research in China. The figure shows the top fifteen keywords used in the analyzed papers, providing insight into the areas of focus and interests of Chinese scholars in this field. While 'green credit,' 'green bonds,' and 'green investment'  are the main keywords related to the financial aspects of green finance, the presence of other keywords such as 'climate change,' 'carbon emissions,' and 'sustainable development' shows that Chinese researchers are also interested in the broader environmental and social implications of sustainable development. This suggests that green finance research in China is multidisciplinary, with contributions from scholars in various fields. Additionally, these findings underscore the importance of collaboration across different disciplines to achieve sustainable development goals. Overall, the analysis of keywords provides valuable insights into the research trends and interests of Chinese scholars in the field of green finance. Table 2 presents a list of the top 15 keywords that were identified in our analysis. The five most commonly used keywords are 'green finance,' 'impact,' 'economic growth,' 'performance,' and 'CO2 emissions.' These topics are particularly relevant to the goal of developing sustainable solutions to address climate change.  Citation is an important way to measure the impact and influence of academic research. In the context of China's green finance, papers on this topic have received a considerable level of interest and engagement, as shown by the relatively high number of citations they have received. In our sample of 248 articles, the average number of citations is 3.24, indicating a significant interest in this research area. The most highly cited paper in our sample is 'Demand for green finance: Resolving financing constraints on green innovation in China' by , which has been cited 25 times. Table 3 presents a list of the top fifteen most cited articles in our sample, which have been sourced from a diverse range of publications, further highlighting the interdisciplinary nature of China's green finance research. These high citation rates suggest that these papers have made significant contributions to advancing knowledge in this field. Figure 4 presents the subject categories that are most cited in the reference lists of the papers in our analysis. We found that the dominant subject categories in our research are Environmental Science, Green and Sustainable Science and Technology, Computer Science, and Interdisciplinary Applications. Some journals from other fields, such as Management, Economics, and Engineering and Industrial, have also shown interest in our research topic. However, it is important to note that researchers are divided between these different themes, which reflect their efforts to address environmental issues, specifically green finance and its related topics. These findings highlight the interdisciplinary nature of our research, and emphasize the importance of collaboration across disciplines to address the challenges of green finance.

. Overview of green finance developments in asian countries
Green finance refers to financial products, services, and markets that support environmental sustainability. In recent years, there has been growing interest in green finance in Asian countries as a way to support the transition to a low-carbon and environmentally sustainable economy (Ziolo and Sergi 2019). There have been major advancements in green financing in Asia (Tolliver et al 2021), with countries such as Japan, China, and South Korea experiencing a major surge in green bond issuance. China has been the world leader in green bond issuance since 2015, and major financial institutions and development banks in Japan and South Korea continue to increase their green bond issuance. India; since 2017, has also taken steps towards promoting green finance, with the launch of the Green Masala Bond Market in 2017, which allows Indian companies to raise capital in international markets to finance green projects. The Indian government has also established a Green Finance Task Force to promote the development of green finance in the country.
South Korea 2018; the South Korean government launched the Green Investment Bank in 2018, which aims to support the development of green infrastructure projects in the country. The government has established a set of green finance guidelines to promote the development of green finance in South Korea.
Japan; in 2019, the Japanese government also took the initiative to launch the Japan Green Infrastructure Fund in 2019, which aims to support the development of low-carbon and environmentally sustainable infrastructure projects in the country. The government has also established a set of guidelines for green finance in Japan.
In Vietnam, there has been significant progress in promoting green growth in the banking sector. According to a study by (Durrani et al 2020), the State Bank of Vietnam (SBV) has been leading the way in institutional improvement and capacity building to support this goal. The SBV issued Decision No. 1552, which outlines an action plan for the banking sector to contribute to the National Green Growth Strategy through 2020. In addition, Directive No. 3 was issued in 2015 to promote green credit growth and implement Environmental and Social Risk Management (ESRM) into lending operations. Under this directive, banks are required to protect the environment, improve natural resource and energy efficiency, and ensure sustainable development when granting loans. The SBV is responsible for coordinating capacity building and oversight of financial institutions in these areas. The directive also requires the development of green credit policies to increase the proportion of green credit in financial institution portfolios, as well as the implementation of ESRM in loan-granting activities. Financial institutions are also required to report their green actions to the SBV quarterly. Overall, these policies have led to significant advancements in sustainable and green banking practices in Vietnam since 2015. In 2015, the Chinese government initiated a green finance action plan to promote the development of environmentally sustainable finance in the country. China has since made significant progress in this area, including the creation of green bond markets, development of green banking guidelines, and launch of green financial products and services. Despite being the world's largest emitter of carbon dioxide, China has made strides in reducing its carbon emissions, with various initiatives and measures in place to tackle this issue. The top five emitting provinces in China are among the most industrialized and have large heavy manufacturing sectors, which contribute significantly to their carbon emissions. Referring to data from the Global Carbon Project, the top emitting provinces in China in 2018 were: Apart from government initiatives, there are also private financial institutions active in the green finance space, such as banks, asset managers, and insurance companies. Several regional and local initiatives are also underway in China to support the development of green finance, such as the establishment of green finance centers and the promotion of green investment.
Overall, in the Asia region, there is a growing emphasis on fighting against global warming and the consequences of environmental pollution through the implementation of various tools, such as green finance, green bonds, green credit, and green insurance, at national, regional, provincial, and international levels.

The last decade of green finance in China
Over the last decade, the Chinese government has set ambitious goals to fight climate change, including achieving carbon neutrality by 2060. To accomplish this, the government has relied on the financial sector and private financing to drive the fight against climate change. Before reaching this stage, green financing policies were already in place between 2007 and 2010, including green credit, green insurance, green bonds, and green securities. The main objectives of these policies were to increase green credit, conduct conservation audits for registered companies, and test ecological contamination liability insurance (People's Bank of China Research Bureau (PBCRB) 2018). Between 2011 and 2014, efforts were made to establish a green and sustainable financial system. The Chinese Green Finance Working Group, created by the PBoC Research Bureau and the United Nations Environmental Survey, released 14 recommendations to establish China's green financial system. Efforts have also been made to test carbon trading, establish guidelines on green credit and promote a pilot project for environmental pollution liability insurance. The recommendations covered four main areas: 1. Dedicated investment vans to sustain green investment, including green banks and funds; 2. Fiscal and financial sustenance, notably to uphold green bonds and green IPOs; 3. Economic structure insurances, for instance, carbon markets, green credit scores, and stock catalogs; 4. Legal infrastructure comprises necessities to improve ecological lender liability, compulsory environmental liability insurance, and environmental information disclosure (PBC and UNEP 2015).
In the last phase of implementing green finance, which began in 2015, the Chinese government has been continuously promoting the development of a green financial system. In 2016, seven parliamentary organizations, including the PBoC, adopted the main policy framework for green finance. This led to a rapid growth of the green bond market in China and the development of various green financial products and services. Furthermore, the China Society for Finance and Banking Green Finance Committee has collaborated with other relevant organizations to promote green finance, resulting in notable progress in developing green finance standards, conducting environmental risk assessments, and establishing analysis mechanisms. As part of this effort, pilot areas for implementing green finance reforms were identified in Zhejiang, Jiangxi, Guangdong, Guizhou, and Xinjiang. These developments have led to significant advancements in green finance in China over the past decade such that: ✓ Green bond market: China's green bond market has grown rapidly, reaching a record high of RMB 246.3 billion (about $37 billion) in 2020 (Xu et al 2022).
✓ Green banking guidelines: In 2016, the China Banking and Insurance Regulatory Commission (CBIRC) released guidelines for green banking, providing direction to banks on developing and implementing green finance initiatives.
✓ Green financial products and services: Financial institutions in China have launched a range of green financial products and services, such as green bonds, loans, equity, and insurance, to finance environmentally sustainable projects and activities.
✓ Green finance centers: Several cities in China have established green finance centers to promote the development of green finance in the region, facilitating collaboration among financial institutions, government agencies, and other stakeholders.
✓ Green investment: The Chinese government has promoted green investment by establishing green investment funds and promoting green equity investment.
Thanks to these various concrete and sustained policies, and efforts, green finance has gained momentum both nationally and internationally, and the market is expected to continue to grow in the coming years.

The evolution of different types of green financial products in China
In recent years, the Chinese market has seen the emergence of various green financial products, which encourage investment in environmentally sustainable activities. There are four main types of green financial products that are currently dominant in the market: green credit, green bonds, green insurance, and green equity.

Green credits
Green credit is a type of green financial product that plays a significant role in promoting green finance and combating climate change. It is in high demand in the green financial market, with many companies seeking to obtain it. Therefore, it is considered the most powerful instrument of green finance. Its primary purpose is to reduce carbon emissions by directing capital towards energy-efficient and low-pollution production. Green credit was officially launched in 2007 as part of China's conservation initiative, which was developed by the State Ecological Safety Management, the People's Bank of China, and the China Banking Regulatory Commission. The China Banking Regulatory Commission's publication 'Advising on the Implementation of Environmental Protection Policies and Regulations to Prevent Environmental Protection credit risks', clarified the importance of green credit in green and low-carbon companies. In 2012, the Chinese government issued guidelines on green credit, which enabled major commercial banks to regulate green credit products, increase credit to economic entities, and promote continuous improvement of green credit products.
The government has continued to support the development of the green credit system, and commercial banks have established corresponding plans to improve the system. According to statistical reports from the country's financial institutions and Assurance Supervisory Command, the green credit balance of 21 central

Green bonds
Generally, green bonds perform a critical role in the financial industry of green products in China. As a derivative of green credit, they have become increasingly popular in recent years. In 2015, the PBOC issued a declaration regarding the issuance of green bonds in the interbank bond market, and China has since established a green bond market. With the growth of this market, China has introduced innovative policies such as the guarantee system for green bonds and the standardization of regulations. These efforts have diversified the types of green bonds and attracted more green companies and investors to this giant Chinese market. According to the World Bank database, China is the world's largest emitter of carbon and a developing economy (Banque Mondial 2019). The country's economic expansion has been fueled by cheap labor and substantial investment, but it has had a significant impact on the environment. The establishment of a green bond market is one of the innovative steps taken by the Chinese government to address this issue. As per recent studies (Jian et al 2022), the issuance of green bonds in China has been booming in recent years.
China continues to make significant progress in both the scale and quality of green bond issuances. Many state-owned enterprises, especially central enterprises, have issued green bonds for large-scale infrastructure projects such as railways, urban transport roads, hydroelectric power plants, and urban wastewater treatment plants. This has led to an upsurge in the number and magnitude of green bond issues, as reported in the 2019 'Review of China's Green Bond Market Development' which indicated that between 2016 and 2019, a total of 542 green bonds were supplied domestically and internationally with a total issue scale exceeding One Trillion Yuan (RMB), reaching 1.089.364 billion Yuan (RMB) (Huang andYue 2019, Cao et al 2021). In 2019, the size of China's domestic and international green bond issues was 339.062 billion Yuan (RMB), with the number of issues at 214, representing an increase of 26 percent and 48 percent over the previous year. China accounted for about 21.3 percent of global green bond issuances in 2018 during the same period. While there is substantial evidence of a rise in green bond issuance, (Ehlers et al 2020) argue that it may not necessarily result in a reduction of CO 2 emissions.
The diversity of green bond products in China has increased, with several 'blue chip' products successfully issued in the green bond market, expanding the scope of support for the green industry. According to (Kangqi et al 2022), Anhui Ma'anshan Rural Commercial Bank's first phase of green financial bond issuance certified by the climate bond standard was a success. (Poshan et al 2021), in 2019, the Manufacturing and CBC issued the first green interbank standardized cooperation bond 'Belt and Road', covering the RMB, the US dollar, and the euro, equivalent to US$2.2 billion, subscribed by 22 institutions in more than 10 countries and regions along the 'Belt and Road', and raising funds to support the development of the 'Belt and Road' green project (Figure 5 below).

Green insurance
Green insurance products support ecological development and climate change mitigation by incentivizing conservation and effective production and use of resources. (Belozyorov and Xie 2021). It is a new type of insurance product that was introduced by the Chinese financial industry to manage environmental risks and encourage environmental protection. It focuses on areas such as environmental pollution liability to reduce pollution and promote green production. Several researchers have suggested that environmental degradation has a negative impact on financial markets. Based on this assertion, the Chinese financial industry, in collaboration with the government and partners, is implementing mechanisms to combat human-induced environmental harm. This includes the development of green insurance products to support environmentally sustainable practices ( Figure 5).
The implementation of the green credit system in 2016 marked the beginning of rapid development in green insurance in China. Green insurance has played an important role in addressing extreme weather conditions and promoting the transition to a greener, low-carbon, energy-saving economy. To support green finance, collaboration among insurance corporations and other financial organizations is needed to establish an ecological contamination accountability insurance scheme. China has developed a legal framework to monitor the growth of green insurance in several areas.
China's insurance industry has gradually expanded its green offerings, providing risk management and building material risk protection services that comply with environmental standards. The industry also offers green transportation, green buildings, green production technologies, climate regulation, and forest carbon sinks. Encouraged by the Chinese government, a unique model for operating insurance funds with Chinese characteristics has emerged to support green industry projects. Between 2018 and 2020, the investment stock of Chinese green insurance funds increased by 19.17%, from 3.954 billion rubles to 5.615 billion rubles (Belozyorov and Xie 2021). The steady growth of China's green insurance system strongly supports various industries in the country.

China green equity
Green equity refers to investments in environmentally friendly or sustainable companies or funds, such as those focused on renewable energy, energy efficiency, water conservation, and clean technology. The aim of green equity investments is not only to generate financial returns but also to promote environmental sustainability and combat climate change. China has been actively promoting green equity as part of its efforts to address climate change and transition to a more sustainable economy. The Chinese government has implemented policies and initiatives to encourage investment in green industries, including renewable energy, energy efficiency, and clean technology. This includes setting ambitious targets for renewable energy deployment and implementing a capand-trade system to limit carbon emissions. The government has also established financial incentives and subsidies to encourage investment in green projects. The China Securities Regulatory Commission (CSRC) has issued guidelines to promote green bond issuance, which has helped to increase funding for green projects. As a result, China has become a major player in the global green finance market, and other types of green financial products have been developed in China, such as green securitization products, green investment funds, and green crowdfunding platforms, to provide additional financing options for green projects in the country.

China's green finance development obstacles and ways to resolve them
China's Green finance system has grown rapidly, but it is facing some obstacles that could hinder its progress. These problems can be divided into three main areas: the lack of a unified green financial system, information asymmetry, and insufficient incentives for green consumption. To expatiate: 4.4.1. Insufficiency of a unified green financial system A standardized green finance system is needed to ensure that all green financial schemes align with the Defensible Growth Objectives and avoid being purely 'formal' without real environmental and climate benefits. Non-green schemes can have significant environmental consequences, so it's important to update guidelines for the timely issuance of green bonds and eliminate projects that don't contribute to achieving the 'double carbon goal' for a livable environment. To achieve this, specific and achievable practices can be based on the List of Green Bond-Backed Schemes (Edition 2021), the 'Aerial Energy Projects' guidelines for issuing green bonds, and the unification of standards for supporting green finance projects. It's important to note that green credit and green bonds are closely linked. Therefore, updated Green Credit Guidelines should clarify the scope of support projects in line with the Green Bond-Backed Project Catalogue to ensure that project companies benefiting from both green credit and green bonds receive maximum support in financial markets. Finally, to guide the industrial transformation of enterprises, a system of dynamic green financial standards should be established, taking into account each business's carbon emission rate. Those with low or almost zero rates will receive support, while those with high rates will be subject to sanctions until the next evaluation.

Lack of asymmetry in green financial information
Integrating ESG (environmental, social, and governance) information into corporate disclosure systems is a promising way to advance environmental, social, and governance objectives. Entities engaged in green finance, including green credit, green insurance, and green bonds, will be required to disclose ESG information and gradually increase the scope of disclosure. To promote transparency, responsible investment practices, and sustainable development, it's important to integrate ESG information into corporate disclosure systems for entities involved in green finance. However, there is currently a lack of ESG awareness among market entities in China. To address this, China can explore an ESG disclosure model that combines 'willingness and willingness' and adopts 'reporting'. In addition, a differentiated disclosure system should be implemented based on international experience, obliging listed companies and unlisted polluting companies to disclose environmental information through the financial information channels of green project companies.
External mechanisms can also be put in place to strengthen ESG ratings and investment systems. Investors should be strongly encouraged to pay attention to different ESG ratings and explore relevant investment tools based on ESG information and rating standards. This will help promote self-disclosure by companies on ESG criteria. In addition, China's nationally appropriated environmental risk analysis methodology can be used to assess information on environmental risks related to green investment and green project financing, which can effectively promote the professionalization of information disclosure. Finally, the system of environmental certification and evaluation by third parties can be improved. External evaluation institutions with a strong capacity for quantification of information and a high professional level should be required to regularly evaluate and publish reports on companies carrying out projects that have benefited from green funding.

Lack of incentives for green consumption
To promote green finance and achieve the 'double carbon goal,' there is a need to implement a comprehensive green financial provision policy with market incentive elements. This policy should have targeted subsidies for ecological protection and other green projects. The subsidy model for green credit and green bonds should also be improved. The focus should be shifted to less developed areas and green insurance and carbon finance to promote a balanced growth of China's green financial market.
Furthermore, companies that implement green projects and reduce low-carbon or near-zero emissions should receive tax breaks. A tiered tax rate system should be established to encourage companies and associations to actively participate in carbon reduction efforts. Incentive programs for third-party valuation grants can be funded by local governments for green bonds, reducing costs for bond issuers and expanding credit augmentation channels.
The policy incentive tool should incorporate incentive elements into all aspects of the circulation of green financial funds. This will help take into account the interests of all parties in green economy activities and improve the efficiency of capital usage. For instance, commercial banks can obtain better ratings, a good business image, and incentives for differentiated capital requirements by granting green loans to green project companies. Green project companies that receive loans can obtain financing at a lower cost for green transformation, operation of green projects, and market supply of green products. Consumers can receive green coupons through green consumption and participation in reducing carbon emissions.

Lack of coordination in policies and standards
One of the obstacles to the development of green finance in China is the lack of coordination between policies and standards. Some businesses and agencies do not fully understand green financing, and local governments may not prioritize it because early green products involve expensive investments with little return. Moreover, existing green finance policies may not align with fiscal and tax policies, leading to inefficient implementation. This lack of coordination and unclear division of duties and powers between government agencies hinders the policies' ability to have a leading role (Zhou 2022).
To promote green finance in China, the People's Bank of China (PBOC) must establish consistent and comprehensive green financial standards that align with international standards such as the 'Equator Principles' and the 'Green Bond Principles.' However, as 'green' is a broad and abstract concept, various departments have differing definitions of the 'green industry,' making it difficult to share development knowledge with international financial institutions. The publication of the Green Industry Guidance Catalog in 2019 provided a precise definition of the 'green industry,' which could help address this issue.
The development of China's green finance system has been limited, with a small variety of green financial products available. Green credit continues to dominate the market, accounting for over 90% of overall green financing. Although the green bond market has expanded significantly since China entered it at the end of 2015, it is still dominated by the interbank market, and green financial bonds make up the majority of the market. In order to achieve the 'double carbon' goal, China should proactively develop new financial instruments such as green stock indexes, green development funds, green insurance, and carbon financing. By doing so, China can diversify its green financial products and promote the growth of its green finance system (Han and Du 2021).
At present, the availability of green financial products and services in China is limited. Green credit and green bonds are the mainstays of China's green financial products, while other instruments such as green insurance, green funds, green trusts, green stocks, and environmental equity pledge loans are underutilized due to a lack of innovation and standardization . As a result, these instruments have a limited range of applications and provide inadequate support to the growth of green industries. Furthermore, the emphasis of green finance is predominantly on clean energy and other green industries, with little support provided for energy, transportation, construction, and other high-carbon industries that have a significant impact on China's economy and environment, and require effective support to achieve low-carbon transformation (An et al 2017).
4.5. The future direction of china's green finance development China's green finance sector is developing rapidly, but stakeholders need to consider the benefits of integrated and sustainable growth. To ensure its continued growth, it's crucial to establish and enhance laws and regulations that govern the sector. A supervisory system should be put in place to strengthen communication and coordination between the financial and economic production sectors for environmental protection. This would ensure the actual impact of specific projects and clarify the rights and obligations of all stakeholders. The law must be the cornerstone to ensure fair and just transactions both domestically and internationally in the green financial market.
The expansion of new green financial products and their associated risks will largely determine the future of green finance. Except for the experimental regions of the green finance project, the country needs to advance the scope of the development of a green financial market mechanism that fosters innovation, research and development (R and D) of green financial products and services that meet environmental protection requirements. In addition, educational programs should also be introduced throughout the country to raise awareness of the characteristics of green products. As the market gradually introduces high-value derivatives, such as green bonds, insurance, and credits, the scope of coverage should be expanded. Every time a green derivative is issued, it's crucial to raise awareness of risk management, acknowledge the existence of risk factors, and quickly deal with risk exposures.
Last but not the least, to develop a green business model, the government and financial institutions should strengthen financial education and implement incentive programs. Increased green finance advertising is necessary to make market participants aware of the value of green finance. It's also necessary to raise the level of social acceptance of green finance so that more people can adopt it as a way of life. Financial institutions can actively contribute to luring social funding, offering monetary assurances for the progression of green finance, and endorsing the future extension of green finance at the national and global levels through effective incentives.

Conclusion and recommendations
At economic growth rate of 9.7%, China's speedy expansion of industrialization and modernization (Han et al 2018) has resulted in environmental challenges such as pollution and excessive energy consumption. To address this, the concept of green finance has been introduced, with the objective of promoting sustainable development by supporting financial events, environmental protection, and green stability. Green finance aims to promote the harmonious development of financial activities, environmental protection, and sustainable development. It is no longer just a global trend, but an essential component for both developed and developing countries to achieve sustainable growth. China is leading the way in researching and implementing green financial policies, which have the potential to reduce credit risk, increase financial transparency, and promote sustainable growth. China's financial authorities are exploring the inclusion of green financial products in macro-prudential policy research, and the People's Bank of China (PBOC) is working to develop new green financial products that will accelerate the transition to a green financial system in China.
In this study, we conducted a comprehensive review of the Chinese financial system, with a particular focus on green finance. Our research objective was to examine the current state of green finance in China, its development, challenges, and future prospects for sustainable growth. Our findings show that China has made significant progress in establishing green finance, becoming a global leader in green economic products such as green credits and bonds. In 2019, China's green bond issuance totaled over 339.062 billion Yuan (RMB), accounting for about 21.3% of global green bond issuances during the same period However, this study also reveals that there is still much to be done to promote the growth of green finance in China. Despite the increasing popularity of green financial products, such as green insurance, it remains relatively unknown to a significant portion of the actors in the Chinese green financial system. To incentivize actors, investors, banks, and the general public to embrace green finance, it is necessary to promote green insurance and other green financial products.
The Chinese government's efforts in promoting green finance have been substantial, with constant efforts to implement practical applications of green finance in China and globally. Nevertheless, we suggest that establishing a unified green financial system, mandatory green financial disclosures, and promoting green consumption incentive mechanisms could help the Chinese green financial system achieve even greater success in the future.
This work has some limitations that must be taken into account. Firstly, the research scope was limited to the current state of green finance, its development, obstacles related to its growth, and future direction in China, without delving into an in-depth analysis of its impact on the country's sustainable green growth. In a future study, it is recommended to focus on a case-by-case study of each green financial product, such as green credit, green bonds, and green coverage, to determine their influence on green economic growth and their limitations in China. Secondly, the study faced difficulties accessing certain documents related to green finance in China, such as government conference notes, and monthly or annual updates on green financial policy, and certain companies working towards the country's green transformation.