Mechanisms and Practices of Green Finance in Promoting Sustainable Economic Transition in China

Lingqi Shi

doi:10.54097/41618468

Authors

Lingqi Shi

DOI:

https://doi.org/10.54097/41618468

Keywords:

Green Finance, Sustainable Development, ESG, China, Low-carbon Transition, Carbon Neutrality, Financial Innovation

Abstract

With the transformation of China to high-quality economic development and ecological civilization, green finance has become a key force to combine capital allocation with environmental goals. Green finance is widely defined as financial activities that support environmental sustainability, including green credit, bonds, insurance, carbon market and environmental, social and governance investments. Since the green financial reform and innovation pilot zone was launched in 2017, China has rapidly expanded its green financial infrastructure with the support of regulators and digital platforms. This paper studies the mechanism of green finance promoting sustainable economic transformation in China, focusing on policy framework, institutional coordination, financial instruments and regional implementation. According to literature analysis, policy comments and regional case studies (Zhejiang, Guangdong and Yellow River Basin), this paper reveals that green finance promotes resource efficiency, innovation and decarbonization, but it faces obstacles such as data fragmentation, regional differences, limited inclusiveness and green cleaning risks. This study emphasizes the importance of multi-stakeholder governance, regulatory standardization and digital ESG infrastructure in overcoming these obstacles. Finally, the paper puts forward the policy path to strengthen China's green financial ecosystem and its international compatibility, which can provide reference for other emerging economies seeking low-carbon transition.

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