To call Ma Jun the most important person in China might seem hyperbolic. After all, the country has plenty of brainy bureaucrats and tech wizards, not to mention, in Xi Jinping, one of the most ambitious and powerful leaders of the modern era.
Yet this quietly spoken mainlander may go down in history as a real agent of change. In recent years, Ma has emerged as the world’s most visible authority on green finance, an asset class that is set to define the 2020s. And he has almost single-handedly convinced China – dirty, industrial China, generator of more carbon dioxide than any other nation – to become an avowed green pioneer.
When Asiamoney meets Ma at the Kerry Centre in Beijing, he is on good form. He spent the day doing what he does: making speeches based on hard data and a dash of nostalgia for a greener past and a cleaner future. When he speaks, people listen.
The obvious starting point is air quality. It’s a fine May day outside, unusual for a city usually shrouded in pollution, but Ma bats the opening gambit away.
“Water and soil pollution present a far greater problem,” he says. “Three quarters of [China’s] water is heavily contaminated, and a fifth of the arable land. Just to clean up our land will cost Rmb70 trillion ($10 trillion).”
That is a simply colossal sum, equivalent to the combined annual GDP of France, India and Brazil, though it will come as no surprise to citizens of or regular visitors to China. This is the downside to being the workshop of the world.
But Ma feels no self-pity and pulls no punches. There is, after all, plenty of blame to go around. China’s government is slowly weaning itself off a long and damaging addiction to growth-at-all-costs, while its banks are just catching on to the idea of lending to clients who don’t foul the land, rivers and sky.
“There is a responsibility for the financial sector to act,” he says. “Banks have to realize that if they lend badly, they will either get penalized by the regulator, or by loan losses.”
In 2013, Ma gave a keynote speech at an international conference in Beijing on the day the level of PM2.5 micro-particulates – the toxic ones that get embedded in lungs and cause cancer – topped 1,000 for the first time. “Everyone was coughing in the audience,” Ma remembers.
It was a wake-up call and China treated it as such, introducing red alerts that shut factories and forced cars off roads on smoggy days. In his role as the chief economist of the People’s Bank of China’s research bureau, Ma worked tirelessly to transform the institution into a clarion voice on green finance.
And it worked. It was the first central bank to accept green bonds as collateral when banks borrow from it. In 2017, working with the Bank of England and the Banque de France, the PBoC unveiled the so-called Network for Greening the Financial System, an unofficial mechanism designed to force banks to lend better and greener.
Ma points to the strides China has made. It’s the largest producer of electric vehicles and generator of renewable energy. In 2018, it accounted for 18%, or $30.2 billion, of all global green bond sales, second only to the US, according to the Climate Bonds Initiative.
A new and pioneering insurance scheme lets homeowners claim against firms who fail to build energy-efficient apartments, incentivizing green construction.
As ever, Beijing tests ideas before rolling them out nationwide. In the eastern province of Jiangsu, the central bank is, Ma notes “promoting green bonds by subsidising 30% of interest payments. That is more progressive than anywhere in the world.”
He also points to a digital platform developed by the PBoC’s local office in Huzhou, a city 100 kilometres west of Shanghai, that matches green projects with green bank loans.
“It’s sort of like speed-dating for green finance,” he says. “People worry about green-washing in this space. Well, this allows everyone to see the status of the loan, and to view environmental impact assessments.”
This is just the start of the green finance revolution. Ma, who also heads up the Centre for Finance and Development at Tsinghua University, points to discrepancies in how a green bond or loan is defined.
Unlike Europe, China allows capital raised via green bonds to be used to build power stations fuelled by ‘clean’ coal. This, Ma says, is a “controversial issue” that will take “a long time to sort out”.
Nor does he cleave to the view that all bonds should be inherently ‘green’. Within a few years, he predicts roughly 20% of all loans and bonds to be green.
“But 100%? That would be tricky, as you would need to change the definition of everything.”
In any case, he reckons that about 70% of bonds are neither green nor “brown and dirty” but “neutral, neither polluting nor improving the environment very much”.
It’s hard to think of anyone who has done more to sell investors on the benefits of green finance, or to improve the reputation of his homeland. If China is to become a soft power as it develops, it will surely help to be seen as a leader in cleaning up its act.Yet that is a long way off. A quick glance at the World Air Quality Index the day we meet, reveals that the highest level of particulate matter found anywhere in the world, is floating in the air in Linfen, an industrial city in southwest China.