The central bank on Tuesday announced plans to introduce green bonds to allow financial institutions to raise funds for green projects.
The People's Bank of China (PBOC) said the green bond will widen financing channels for projects in clean energy and environment protection.
The bank stressed that the funds should only be used to support green projects, with strict information disclosure and independent assessment.
To keep the sustainable development of such bonds, the central bank said it will issue supporting policies, facilitate approvals, champion tax breaks and subsidies, and encourage more capital flow from social security, welfare and enterprise annuity funds.
The PBOC hopes the move will direct commercial banks to improve the credit system for green projects through relending, financial discount and guarantee.
Meanwhile, a corporate bond market will be established for green industries, and the trading quotas of energy, water and emissions will be promoted.