GUIYANG, June 27 (Xinhua) -- China is considering conducting green reform to the financial system, a central bank official said Saturday.
Lu Lei, head research at the People's Bank of China (PBoC), said the PBoC is drafting plans for the next five years, with green finance high on the agenda.
"Under the green finance scheme, financial institutions will be encouraged to lend to businesses compatible with environmental protection," Lu said at the ongoing Eco Forum Global Annual Conference in Guiyang City, capital of southwest China' s Guizhou Province.
It is badly needed, considering that the country's green industry will need at least 2 trillion yuan (322 billion U.S. dollars) in the next five years, said Chen Youan, chairman of China Galaxy Securities.
Only about 10 to 15 percent of that capital will come from the government, and the rest will be funded from society, according to Chen.
"We need to give stimulus to encouraging environment-friendly companies if we want to clean up our environment," Lu added.
China is currently entangled in an environmental crisis, after its economic model powered decades of explosive growth but tainted much of the country's air, water and land.
Environment Minister Chen Jining said earlier this month that "the Chinese environment is reaching or has reached its limit due to years of sprawling development at the price of environment."
The Chinese government has promised to take "more forceful" measures in the next five years to protect the environment and promote green development. In April, it issued a guideline on green credit.
With green finance, financial institutions will take into consideration the environmental impact of businesses as well as their environmental protection credit before providing loans.
Industry insiders at the forum said that such schemes, though still on a small scale across the globe, have contributed significantly to the sustainable development of many developed countries.
"Green finance only accounts for about 2 percent of the world's total investment, but it has certainly helped the economic model transition for many countries," said Ma Jun, chief economist at the PBoC research bureau, adding that it makes sense for China to make use of its potential in this area.
"Protecting the environment has become a national strategy," Lu Lei said. "With green finance, we will be able to implement that strategy and tackle China' s environmental blues."