We spent many happy years as a family in Hong Kong. But one thing we don't miss at all is the air pollution. It used to lift for only one week, a year around Chinese new year when the government told the factories to shut down. But once the festival was over and the factories came back online, again, the smog returned.
It was clear then that China's growth, although incredible, came at a considerable external cost. And fast forward to today, China is now the world's largest emitter of global greenhouse gases with over 20% of the total. So it's clear now to me, that China's energy transition is going to be the key to limiting global warming. There are some encouraging signs. China has committed to carbon neutrality by 2060 in its latest and 14th five-year plan. And also said that it's going to peak its coven dioxide emissions by 2030 at the latest given the way the government is also withdrawing from funding internal projects and tapering the fiscal stimulus. I think the gap is going to have to be filled by the private market. And so green bonds should step up.
There are some encouraging signs again, in the first quarter of this year, China was the global leader in terms of green bond issuance, but its market has only a sixth of the size of the U S despite its bond market in total being about 90%, the size of the US it means there's a lot more room to grow. And I think the market's not just going to grow in size, but it's going to broaden in terms of diversification and it's going to improve in terms of liquidity. So all plus points for international investors. However, what we're still hearing from international investors about the Chinese green bond market in particular, as they have told us about the Chinese bond market as a whole, is that they're worried about state interference and the lack of transparency, which makes me worry myself that the Chinese green bond market won't really get the investor intention it deserves, and won't get off the ground and help finance this climate transition, which is effectively going to save the world. So what can China do? Well, I thought of four things, firstly, it needs to add transparency to its climate reporting through mandatory reporting and enforcing those standards. Secondly, it needs to fall in line with global green bond standards. At the moment, a third of its green bonds don't adhere to the global norms and this needs to be fixed.
Um, it's working with the EU on a global green taxonomy, hopefully that will help. And it's trying to implement these standards in its Belt and Road initiative as well, but there's still a lot more to be done. Thirdly, it needs to develop its offshore US dollar bond market and especially the green bond market. This will give issuers access to the longer term stable funding from better sources that they desperately need again to finance this green transition. And finally, China needs to be proud and step up as a global climate leader, hopefully shoulder to shoulder with the Biden administration. Now time will tell whether China competes - some have called this a climate war - cooperates, or even coordinates with the US which would be the Goldilocks scenario on climate transition. And in a sense, only time will tell if China is a fair weather climate advocate or it's really in it for the long term.
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