Green technologies in China

Green China: Fintech – tech giants fueling green technology and green finance | Daxue Consulting

Tech giants as green innovators

China’s technology giants such as Tencent, Baidu, and Alibaba are playing a vital role in sustainable development. These top internet companies are accelerating the pace of change through online technology – particularly e-commerce, internet banking, and social media – as well as green innovation and technology. China’s sustainable technology sector has sparked international interest. With the government investing in over $50 billion annually in clean energy R&D, the country has become a global hub for green innovation. More and more clean technology companies in the United States have turned to China and its vast market.

High-profile companies like Alibaba has joined in on the sustainable energy business. Ant Financial, the banking subsidiary of Alibaba, is a founding partner of the Green Digital Finance Alliance. Tencent has partnered with the World-Wide Fund for Nature. The two parties will work jointly to empower ecological conservation using digital technology. Starting at the southern regions of China, near Guangdong, and Hong Kong-Macao bay area, the alliance will explore a digitally approach to construct the “beautiful Bay Area,” as the inception to the broader effort of building a “Beautiful China.”

Chinese innovation in clean technology sparking global interest

With the world’s largest investment in clean energy to date, the commitment to adopting renewable energy technologies is evidently high. Total efficiency in the power sector has increased by nearly 10% and is projected to grow. Examples of recent activities in China’s Green Technology sector include: adopting clean air-conditioning systems into energy efficient buildings, taking more advantage of renewable energy sectors particularly in solar and wind, and launch of green finance policies. The nation has committed to adopting and manufacturing renewable energy technologies. To accommodate the high emission of greenhouse gases, the government has also proposed a plan to have 50% of new buildings certified sustainable by 2020. The country sees the development of sustainable industries as a great opportunity to upgrade its innovation in manufacturing as well, transitioning from a resource intensive and labor-intensive economy to one driven by innovative technology.

Green finance in China

Shenzhen is China’s center of technology, and the city plans to integrate innovative technologies in sewage treatment, waste utilization, ecological restoration, and A.I. to solve issues in resource management and pollution. An interesting catalyst for sustainable change is education of sustainable development. Thirst is a company at the forefront of green education efforts. The organization has educated more than 400 schools in China. In addition, booming startups in artificial intelligence, mobility, sustainable agriculture and more also demonstrates just how far the country’s clean tech sector has developed from tech giants all the way down to small companies and startups.

Fintech and green finance – China as a global leader in green financing

Provided by Deloitte: “Green Finance refers to financial services provided for economic activities that are supportive of environment improvement…. These economic activities include the financing, operation and risk management for projects in areas such as environmental protection, energy savings, clean energy, green transportation, and green buildings.”

China is only beginning in its projected endeavors for green development, but such projects will certainly require financing.  In 2014, China launched the world’s first green finance policy package. The People’s Bank of China in co-sponsorship with the United Nations Sponsorship Programme began the Green Finance Task Force in August of 2014. Practices mentioned to promote green finance include: green credit and securitization, green industrial funds, green securities and investment funds, green bonds, green banks, green insurance, etc.

In the following year, “Establishing a Green Financial System” became an official mandate from the Central Party Committee and State Council. In 2016, 35 policy actions were set as “Guidelines on Establishing the Green Financial System,” with the state council launching five provincial pilot program in 2017. In addition, China officially launched its green bond market in 2016. Green bonds issued domestically reached an astounding 205.2 billion RMB (USD32.4 billion), making China the world’s largest issuer of green bonds, at 40% of bonds issued globally.

How the happy marriage between finance and technology aims to turn China green

Fueling the green transformation in China is Fintech, the intersection of financial services and technology. Alibaba’s Ant Financial is the highest-valued Fintech company in the world. Ant Financial has partnered with the UN Environment Programme to create the Green Digital Finance Alliance. This alliance aims to use digital technology as the main advancing force of green finance, to align sustainable development with the future’s fintech powered global-financial system. The initiative aims to instill environmental risks, opportunities, incentives, and choices into decision-making across the financing value chain, through methods such as market innovation, collaboration and public awareness.

In addition, its 450 million users can sign up for Ant Forest, Ant Financial’s app that gamifies carbon footprint tracking, promoting users to cut greenhouse gas emissions in their daily lives. Users can benchmark their carbon footprint and earn “green energy” credits for reducing their carbon footprint, such as by taking public transportation instead of driving. Furthermore, Yu’eBao, Alibaba’s newest online investment platform, has now surpassed JP Morgan in becoming the world’s largest money market fund. Such efforts not only emphasize the enormous potential for Fintech in driving sustainable development but the incredible power and expanding potential in China’s happy marriage of finance and technology.

Author: Julia Qi

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