Setting 'green' boundaries for Chinese green finance: Multi-level governance and regulatory stringency

This article focuses on setting 'green' boundaries for green finance in China-the scope of eligible 'green' projects to be supported by Chinese green finance. China started building its green finance system in 2015, and 23 provinces issued guidelines on green finance between 2016 and 2020. Applying multi-level governance as our analytical framework, this study collects data from a broad range of publicly available sources, including 64 policies issued by Chinese state ministries, provinces or pilot zones, transcripts of relevant press conferences, and streamed speeches given by relevant stakeholders in online workshops. We explain who governs the 'green' boundary of Chinese green finance, how it is governed, and the implication for regulatory stringency. We identify three levels of regulators involved in setting green boundaries-central ministries through the horizontal allocation of overlapping mandates, provinces through vague references and priority lists, and green finance pilot zones through vertical knowledge co-production. We argue that continuous multi-level negotiation and coordination dynamics determine the 'green' boundary in Chinese green finance, which further influences regulatory stringency. While several provinces and a pilot zone did temporarily prioritise industries with local competitive advantages (as exemplified by clean coal) as eligible to be supported by green bonds, the central government disapproved of such practices by its strong coordinating authority. The regulatory stringency was also safeguarded by the influence of transnational networks and China's decarbonisation objectives.