China & Transnational Green Finance: Diverse Influences in an Unsettled Field

Green finance is an unsettled transnational regulatory space that spans multiple legal fields, including securities and financial regulation, environmental law, and corporate governance, among others. It is also a unique context in which to explore China’s influence on the international legal order. On the one hand, the institutions of transnational finance are well-established, influential, and historically Western-led. On the other hand, ‘greening’ financial systems requires governments and market actors everywhere to retool existing institutions, introduce new incentive systems, and achieve significant normative and policy shifts as they move into the uncharted territory of a post-carbon transition. In addition, there is no established model for greening the financial system, giving China an opportunity to exercise greater transnational influence.

This chapter places China’s domestic green finance reforms in a transnational context and applies concepts of transnational legal process and regulatory innovation to explore how China is shaping transnational green finance standard-setting. It does so using three case studies from different green finance subfields: (i) green banking; (ii) the development of ‘taxonomies’ for green bonds and other investment activities; and (iii) corporate sustainability disclosure regulation. Taken together, these cases shed light on the diverse ways in which China is both shaping and being shaped by transnational green finance innovations.