Building a World Top Green and Sustainable Bond Hub

7 Hong Kong Should Develop a Roadmap to Support the Vision of Becoming a Top Green Finance Center that Connects China and the West establishment of a green finance standard system in the Greater Bay Area. In May 2023, the capital of Guangdong, Guangzhou Government issued the Action Plan of Financial Support for High-quality Development of the Real Economy in Guangzhou (2023), which mentioned deepening green finance cooperation in the Greater Bay Area. In early 2024, the Hong Kong Monetary Authority (HKMA) and the PBoC announced a cooperation plan aimed at deepening financial cooperation measures between Hong Kong and the Mainland. These include six measures, among which are expanding the range of collateral for Renminbi liquidity facilities to consolidate Hong Kong’s position as an international financial center and a hub for offshore Renminbi business, and promoting closer financial ties within the Greater Bay Area. 1.2 Hong Kong’s Advantages in Developing a Top-tier Green Finance Center In addition to the above-mentioned strong policy support, Hong Kong itself has several advantages in developing into a top China-West green finance center. First, as an international financial center, Hong Kong’s connectivity with the world is of great importance in the national dual circulation strategy. In the Report to the 20 th National Congress of the Communist Party of China launched in October 2022, President Xi Jinping clearly states that it is necessary to foster a new dual circulation development plan, which allows the domestic and overseas markets to reinforce each other, with the domestic market as the mainstay. By maintaining its standards aligned with the international level while combining mainland practices, the city can greatly stimulate the mainland offshore green financial market. In Hong Kong, mainland issuers can benefit from world-class financing opportunities where global investors can harness mainland investment opportunities. Hong Kong has also become the world’s biggest Renminbi offshore hub, where more than 70% of the international Renminbi payment deals are being settled. Thus, the city can play a significant role in the dual circulation strategy. Second, Mainland China and Hong Kong continuously optimize the mechanism to connect financial markets in Mainland China and elsewhere through Hong Kong. With the implementation of plans such as Outline of the 14th Five-Year Plan (2021-2025) for National Economic and Social Development, Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area, and the Arrangement between the National Development and Reform Commission and the HKSAR Government for Advancing Hong Kong’s Full Participation in and Contribution to the Belt and Road Initiative, the Mainland and Hong Kong Governments have developed various plans to improve financial market connectivity. Approaches include the Renminbi Qualified Foreign Institutional Investor (RQFII) in December 2011, the Shanghai-Hong Kong Stock Connect Program in November 2014, the Shenzhen- Hong Kong Stock Connect Program in December 2016, Bonds Connect Northbound Trading in July 2017, Bonds Connect Southbound Trading in September 2021, and Guangdong-Hong Kong-Macao Greater Bay Area Cross-Border Wealth Management in September 2021. Continuing their collaboration, Mainland China and Hong Kong have strengthened financial market connectivity. In May 2023, the PBoC, Securities and Futures Commission (SFC), and HKMA initiated mutual access between the Mainland and Hong Kong interest rate swap markets. In October 2023, the National Development and Reform Commission (NDRC) and the HKMA signed a Memorandum of Understanding to support cross-border financing by Chinese enterprises and promote the development of the Hong Kong bond market, while