In a major push for sustainable manufacturing, the Ministry of Industry and Information Technology (MIIT) and the People's Bank of China (PBOC) have jointly issued a new notice to support green factory construction with green finance policies, aimed at accelerating the development of green factories.

This strategic initiative is a key part of China's efforts to achieve its "dual carbon" goal — carbon peaking and carbon neutrality — by 2030.

Green factories are critical to the nation's green manufacturing efforts, representing over 20 percent of total industrial output. With China's ongoing industrial transformation, the establishment and expansion of green factories is a pivotal component of reaching environmental targets. The country has already nurtured 6,430 green factories, and this new policy is expected to enhance their development.

The notice outlines three key areas of focus for financial support.

- It encourages backing transformative innovations in traditional industries, such as major technological breakthroughs in low-carbon processes and the development of critical technologies.

-It promotes the financing of green upgrades, including energy-saving, water-conservation, pollution reduction, and resource recycling projects.

-It supports zero-carbon factory initiatives and identifies carbon reduction potential in existing green factories.

A cornerstone of this initiative is the role of financial innovation. The PBOC has already committed 800 billion RMB through carbon reduction support tools, enabling financial institutions to increase investment in clean energy, energy efficiency, and carbon reduction technologies.

This policy aims to expand financial products tailored to green manufacturing, such as long-term loans, renewable debt financing, and green bonds, which will directly support factory construction and technological upgrades.

The policy also sets ambitious goals for the future. By 2030, the proportion of green factory output is expected to reach 40 percent of total industrial output. To achieve this, MIIT plans to refine the green factory evaluation system and introduce a multi-level cultivation management approach.

The notice also emphasizes expanding direct financing channels, including the issuance of green and transition bonds, and strengthening risk-sharing mechanisms.

In recent years, MIIT and PBOC have pioneered industry-finance collaborations, utilizing platforms and pilot programs to match green factory financing needs. More than 130 billion RMB in green financing has already been allocated, with a focus on developing financial products for industrial green upgrades.