China makes unprecedented move to address pressing global issue: 'Long-awaited'

China is the world's top producer of planet-warming pollution, but a major financial step could help to counteract that.

The country is releasing what Reuters described as its "long-awaited debut global green sovereign bond" in a series of sales. The bond, which is being issued on the London Stock Exchange, will invest $825 million into green initiatives.

The Chinese Finance Ministry published the bond's framework in February, describing it as a way to "attract international funds to support domestic green and low-carbon development."

Particularly, the priorities and areas of focus named are climate change mitigation, climate change adaptation, natural resource conservation, pollution prevention and control, and biodiversity conservation.

When a person purchases a government bond, they are effectively lending the issuing government money to pursue its investments. They receive modest interest payouts over time, called coupon payments, and at the end of a fixed amount of time, they receive the initial investment amount in return, in full.

As of now, the Chinese green bonds are set to come in both three- and five-year maturities, with fixed interest rates likely below 2%. The process is being overseen by eight banks across China and Europe.

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As more countries look to invest in the green transition of migrating products, infrastructure, and systems to be carbon-neutral and renewable, the green bond market has soared. Reuters estimated its worth at approximately $3 trillion.

While Chinese companies have been significant investors in this market, this bond marks the first time the country's government is getting involved.

Reuters spoke with an investor who had been part of a meeting between British Finance Minister Rachel Reeves and China's Vice Premier He Lifeng in Beijing, where they discussed "pragmatic cooperation" on a number of financial and climate issues.

According to that investor, the money raised from this green bond will support projects like strengthening China's electric vehicle charging network and preserving its national parks.