China's central bank has come out to warn about Beijing’s climate change ambitions to transition to carbon neutrality, underlining systemic financial risks from exiting carbon-intensive industries.
China’s exit from high carbon industries could lead to a reevaluation and trigger systemic risks, according to a report by state-owned «Shanghai Securities News», citing a central bank official at a recent Shanghai-based event.
Wang Xin, head of research at the People’s Bank of China (PBoC), said that focus should be placed on leverage ratios at the macro level with the need for more comprehensive and accurate risk assessments and stress tests.
In addition, authorities will also explore the establishment of a mechanism that serves as a risk warning for financial institutions and trigger early intervention from deposit takers and insurers, he added.
Carbon Neutrality by 2060
The PBoC comments follow declared commitments by Beijing to reach peak carbon emissions by 2030 and achieve carbon neutrality by 2060 as part of global efforts to combat climate change.
Despite their ambitions, climate analysts were reportedly disappointed that China did not increase its target in its latest five-year plan compared to the last one and it also did not provide specific sub-targets.
