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Updated Tuesday, September 25, 2007 0:00 am TWN, Reuters

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Chinese state-run banks told to invest more on green projects

BEIJING -- China’s cash-rich state-run commercial banks should invest more in energy-saving and renewable projects, an academic and a government official said Sunday.

Big state banks should divert 2 to 3 percent of their annual loans to green production, as funding on these projects falls well below the amount required, said Yang Fuqiang of the U.S.-based Energy Foundation, which advises Beijing on energy-saving policy.

“It should not be about making money only. They should think of making money long-term,” Yang told Reuters on the sidelines of a seminar on how China’s financial sector can help achieve energy efficiency.

Yang said this was his foundation’s proposal to China’s financial regulators and it would be the government’s job to come up with policies to encourage banks to follow it.

Beijing has already called banks such as Bank of China and China Construction Bank Corp to tighten lending to polluters, but Yang said these big banks have yet to show any enthusiasm for green projects and lagged behind smaller banks such as China Industrial Bank Co. Ltd. and Huaxia Bank.

Li Fuan, an official with China Banking Regulatory Commission, also told the seminar that Chinese banks should start to pick up a new concept already popular in the developed nations of investing for sustainable growth and social responsibility.

Energy Foundation’s Yang said China’s current investment on energy saving was only 20 percent of the funds needed.

Beijing has called for spending of 7,000 billion yuan (US$928 billion) on new energy, renewables and environmental-friendly projects between 2005 and 2020, or 40 percent of total energy investment for the period, but the actual investment committed fell way short of that target, Yang said.

China should also promote the country’s burgeoning fund and hedge fund industries to look more at green projects.

“China has rarely had a problem finding money for exploring energy, but when it comes to energy saving, funding becomes difficult,” said Yang.

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