중 Central Bank "Expansion of Climate-Related Stress Tests in the Financial Sector"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Hyunjung] Yi Gang, Governor of the People's Bank of China (PBOC), announced plans to expand climate-related stress tests in the financial sector, according to a report by the Hong Kong South China Morning Post on the 1st.

At a panel discussion of the Green Swan Conference hosted by the Bank for International Settlements, the European Central Bank, NGFS, and PBOC, Governor Yi stated that central banks plan to investigate how climate risks in eight industries, including aviation, non-ferrous metals, and petrochemicals, will affect the profits of banks in China.

Last year, 24 commercial and policy banks in China examined the risks of climate change, particularly how rising carbon prices impact the debt repayment capacity of the energy, steel, and cement industries. Governor Yi explained, "At that time, it was concluded that without a low-carbon transition, the debt repayment capacity of energy, steel, and cement companies would weaken," adding, "However, since bank loans to these industries do not constitute a large overall proportion, the banks' total capital adequacy ratios still met regulatory requirements under all scenarios."

The People's Bank of China also plans to adopt scenarios developed by the Network for Greening the Financial System (NGFS) and apply them to China's context to develop its own macroeconomic scenarios for measuring climate risks.

Governor Yi's remarks came as China mentioned its pathway plan toward 'net-zero carbon emissions,' which includes the issue of continued reliance on coal in the near future.

In a separate discussion, Liu Jing, Deputy Secretary-General of the PBOC Monetary Policy Committee, predicted that rapid decarbonization and achieving carbon neutrality goals will be challenging changes.

China previously announced that it would reach its peak emissions by 2030, ten years later than over 60 advanced countries that signed the Paris Agreement, and achieve net-zero emissions by 2060.

To achieve stable climate goals, the PBOC introduced a loan program worth 200 billion yuan last November to support 'clean and efficient' coal use. Following the global energy crisis triggered by Russia's invasion of Ukraine, an additional 100 billion yuan was added to the program in May.

So far, 138 billion yuan has been loaned for carbon reduction, which has helped reduce annual carbon emissions by 48 million tons, Deputy Secretary-General Liu reported.

This content was produced with the assistance of AI translation services.