(Source: Global Times 2025-04-09)
Recently, the Ministry of Finance of China successfully issued the first RMB-denominated green sovereign bond in London, UK, with a scale of RMB 6 billion. This time, it included 3 billion yuan each for 3-year and 5-year terms, with coupon rates of 1.88% and 1.93% respectively, both lower than the Hong Kong secondary market government bond interest rates of the same term. However, the final subscription amount reached 41.58 billion yuan, and the subscription multiple was as high as 6.9 times.
This issuance is China’s first issuance of RMB treasury bonds in London in nine years. It is the first time China has issued green bonds in the international market with the backing of sovereign credit. It is also a key measure to implement the policy outcomes of the 11th China-UK Economic and Financial Dialogue. Embedding green financial ties into the global sustainable development agenda not only demonstrates the consensus between China and the UK in the field of green finance, but also means a major breakthrough in the process of RMB internationalization.
China’s green sovereign bonds have created a new paradigm for the collaborative layout of RMB internationalization. The bonds will be listed on the Hong Kong Stock Exchange and the London Stock Exchange and will be hosted by the Central Monetary Unit for Debt Instruments (CMU) of the Hong Kong Monetary Authority. Among them, London is the world's largest foreign exchange market, but its RMB liquidity has long been weaker than that of Hong Kong. The bonds are denominated in RMB and listed in London, which directly strengthens London's position as an offshore RMB trading center, further expands the international layout of offshore RMB assets, and enhances the attractiveness of RMB as an international settlement and investment currency. As the main listing place for China's offshore green bonds (accounting for nearly 80% in 2024), Hong Kong and London form strategic complementarities - the former consolidates its position as the Asia-Pacific pricing center, and the latter radiates to the European capital market, jointly building an offshore RMB network spanning the Eastern and Western hemispheres.
From a technical perspective, the issuance of green sovereign bonds will also move the internationalization of the RMB from scale expansion to rule empowerment. The subscription ratio for this issuance (6.9 times) far exceeds the average level of U.S. Treasury bonds during the same period (usually 2-3 times), reflecting the confidence of international capital in China's sovereign credit and RMB assets. Among them, 22% of the orders came from green and sustainable investors, indicating that the RMB is upgrading from a "w88 currency" to an "investment currency". This issuance covers two mainstream maturities of 3 years and 5 years, and initially constructs the offshore RMB green bond yield curve, providing a pricing benchmark for Chinese-funded enterprises to issue green bonds overseas. For example, in 2024, the proportion of Chinese offshore green bond issuances denominated in RMB will exceed that of US dollars. The demonstration effect of this sovereign bond issuance will also further promote this trend.
At the same time, the issuance of green sovereign bonds also reflects China’s firm commitment to promoting the construction of ecological civilization. According to the "Green Sovereign Bond Framework of the People's Republic of China" released by the Ministry of Finance in February 2025, all funds raised will be used for green projects in the central fiscal budget, including climate change mitigation and adaptation, pollution prevention and biodiversity protection and other fields. This financing model backed by sovereign credit not only provides a safe channel for international capital to participate in China's green transformation, but also sets a high-standard example for the global green financial market, becoming a reference template for future international green bond issuance, and promoting the evolution of global green finance from "voluntary" to "normative". Compared with the iterativeness of U.S. policies in the field of green finance, China has locked in long-term capital flows in the form of sovereign bonds, demonstrating stronger policy consistency and execution capabilities.
In the long run, by issuing green sovereign bonds, China can not only attract international capital to support domestic green and low-carbon development, help make green finance a big deal, and continue to promote the construction of a beautiful China. It can also enrich the variety of high-quality green bonds in the international market, promote the formulation and improvement of international green finance rules, and achieve a coordinated breakthrough in financial voice and climate leadership. Against the backdrop of heightened volatility in U.S. bond yields and doubts about the credit of the U.S. dollar, RMB green sovereign bonds provide diversified options for international capital. China has reconstructed the logic of currency competition through green issues and transformed the "moral discourse power" of environmental governance into the "rule-making power" of the financial market. This "asymmetric competition" strategy not only provides international capital with an alternative option to the US dollar, but also reshapes the sovereign financing paradigm through the "green credit premium" and opens up a new path for emerging markets to break their dependence on the US dollar. It is foreseeable that in the future, more emerging market countries will follow China's model and issue green bonds relying on sovereign credit to promote the flow of international capital to low-carbon projects in developing countries and bridge the global green investment gap.
The issuance of green sovereign bonds is a model for China to coordinate national strategy and global responsibilities. It is not only a milestone in the process of RMB internationalization, but also a "green answer" submitted by China to the world. In the face of noise from certain countries that are badmouthing the RMB, China needs to unswervingly promote internationalization with more open financial markets, more transparent green standards, and more innovative financial tools. In the future, as more "green anchors" are implemented, the RMB will become an indispensable monetary pillar for global sustainable development, contributing Chinese wisdom to building a community with a shared future for mankind.
(The authors are respectively the director and professor of the BRICS Research Center at the w88 casino, and a doctoral student at the w88 casino of International Economics and w88 at the w88 casino)
Attached original text link:
https://opinion.huanqiu.com/article/4MCLbEQPm6a
