China Economy

Exit of high-carbon industries in China could bring 'systemic financial risks,' state media says

Key Points
  • The pull-out of high-carbon industries in China would lead to a possible reevaluation of invested financial resources and might bring systemic financial risks, state-owned Shanghai Securities News said on Monday, citing a central bank official.
  • Authorities should pay close attention to changes in macro-leverage ratios and conduct more comprehensive and accurate risk assessments and stress tests on the financial system, said Wang Xin, head of the research bureau at the People's Bank of China, at a recent event in Shanghai.
This general view shows smog down a main street of Linfen, in China's Shanxi province, regarded as one of the cities with the worst air pollution in the world.
Peter Parks | AFP | Getty Images

The pull-out of high-carbon industries in China would lead to a possible reevaluation of invested financial resources and might bring systemic financial risks, state-owned Shanghai Securities News said on Monday, citing a central bank official.

Authorities should pay close attention to changes in macro-leverage ratios and conduct more comprehensive and accurate risk assessments and stress tests on the financial system, said Wang Xin, head of the research bureau at the People's Bank of China, at a recent event in Shanghai.

They will also study the establishment of a dynamic risk warning mechanism for financial institutions, which would trigger early intervention from deposit-taking institutions and insurers to problematic financial institutions, Wang said.

President Xi Jinping has pledged to make the country "carbon neutral" by 2060, as part of the ongoing global efforts to battle climate change. Officials have said carbon dioxide emissions should peak by 2030.

China can be more ambitious in its goal to be carbon neutral: Atlantic Council
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China can be more ambitious in its goal to be carbon neutral: Atlantic Council