Former official of the People’s Bank of China says China can take up position abdicated by US.
China is well-positioned to take a stronger global leadership role on climate change as the United States reneges on previous commitments, a former central bank economist said – but he warned its approach must be built on the principle of mutual benefit to be effective.
“Trump’s withdrawal from the Paris Agreement shook global confidence in climate action, and the world is now looking for new leaders,” said Ma Jun, formerly chief economist at the research bureau of the People’s Bank of China and co-chair of the G20 Sustainable Finance Working Group.
“China’s economic scale provides the basis for its leadership, but the right approach is crucial. It must look beyond short-term gains and focus on shared interests.”
Ma, founder and president of the Beijing-based Institute of Finance and Sustainability, suggested a green free-trade initiative targeting sharp reductions in tariff and non-tariff barriers on goods and services that carry environmental benefits.
To fast-track the plan, he suggested deploying it under the existing framework of the Regional Comprehensive Economic Partnership (RCEP) – the world’s largest free-trade pact, encompassing all 10 countries in the Asean bloc plus China, Japan, South Korea, Australia and New Zealand.
Early findings from Ma’s team projected that such an arrangement could accelerate the green transition across all RCEP economies while delivering economic benefits like GDP growth, export expansion and job creation.
He called the proposal a multilateral “win-win scheme”, contrasting it with the European Union’s Carbon Border Adjustment Mechanism (CBAM) which imposes tariffs on imports based on their carbon footprint.
“CBAM is a ‘stick’ that penalises developing countries for not sacrificing domestic growth and development for emissions cuts,” Ma said.
“But a green free-trade arrangement is a ‘carrot’ – incentivising economies to advance their green transition.”
He warned the approach under the CBAM risked harming incomes and employment in developing economies and exporting carbon-intensive goods, adding “such unilateral measures could lead to retaliation and yet more protectionism.”
China’s fast-growing new energy industry is facing mounting trade barriers – especially in the West, where politicians accuse it of exporting its industrial overcapacity and undercutting local manufacturing.
Ma called these firms’ global expansion an “unstoppable trend” but emphasised the bigger opportunity would lie in capital moving overseas.
“Bringing Chinese investment abroad – building factories, hiring local workers and setting up R&D centres – holds greater potential,” he said.
“Simply exporting products is becoming less viable as trade barriers tighten, leaving fewer ways around them.”
Addressing concerns over China’s dominance in new energy manufacturing under his green free-trade proposal, Ma stressed that the initiative would also include green services – a sector where economies like Japan, South Korea, Singapore and Australia hold competitive edges – and ensure benefits for countries that are not producing powerhouses.
Edward Yau, a former secretary for commerce and economic development in Hong Kong and an advocate of Ma’s preferred approach, said the city could serve as a prime trade and finance services hub within this framework.
“Hong Kong can play a pivotal role in promoting trade and investment, managing supply chains and facilitating logistics for modern manufacturing and processing across multiple locations,” Yau said.
Source: South China Morning Post, Mar 18, 2025 https://www.scmp.com/economy/policy/article/3302841/chinese-economist-calls-bold-action-fill-climate-leadership-vacuum
China Environment News 