By Li Wangming    Source: CRI    Published: 2016-5-12

On April 29th, 2016, the inaugural International Forum for China-Japan-ROK Public Diplomacy and Trilateral Cooperation was held at the Diaoyutai State Guesthouse. During his opening remark, Mr. Zhang Yesui, the Vice Minister of Foreign Affairs called on the three countries to study establishing a China-Japan-ROK Cooperation Fund and other important initiatives to provide more support for trilateral cooperation. One important issue among China-Japan-ROK cooperation is sustainable development. Since China is changing its traditional growth model and waging a war against air, water and soil pollution, the experience and expertise on sustainable development from Japan and ROK could be very relevant and valuable. A tentative suggestion is, the three countries could consider establishing a green fund to further strengthen trilateral cooperation.

I. China-Japan-ROK Trilateral Cooperation is Gaining Momentum

Since its inception in November 1999, China-Japan-ROK trilateral cooperation has been making steady progress. Besides Trilateral Summit, the three countries have also developed 20 Ministerial Meetings, more than 50 Inter-governmental Meetings, over 100 Cooperative Projects and other cooperation mechanism. In September 2011, the Trilateral Cooperation Secretariat was established to further institutionalize and strengthen such cooperation.

However, the trilateral cooperation has not always been smooth sailing. The 5th Trilateral Summit was held in Beijing on May13th, 2012. Since then the Summit was halted by more than three years because of history, territory and other disputes. It was not until November 1st, 2015, Premier Li Keqiang, President Park Geun-hye and Prime Minister Shinzo Abe gathered together and attended the 6th Trilateral Summit. This Summit was very important, which marked the complete restoration of trilateral cooperation after so many ups and downs, twists and turns.

After the 6th Trilateral Summit, a Joint Declaration for Peace and Cooperation in Northeast Asia was issued, which highlighted the importance of public diplomacy and decided to continue the consultations on a trilateral forum on public diplomacy to enhance understanding and friendship among the peoples of the three countries.

To organize such a trilateral forum is not easy, however, It only took the three countries less than six months to bring the forum from consultation into implementation, which is a clear indication of the commitment and dedication of the three countries to improve bilateral relations and strengthen trilateral cooperation. High-ranking politicians, such as Mr. Xu Jialu of China, Mr. Nikai Toshihiro of Japan, Mr. Goh Kun of ROK delivered keynote speeches, other government officials, prominent scholars and business leaders shared their insights on how to upgrade the trilateral cooperation to a new level.

At present, China, Japan and ROK are the leading economies in Asia and the world, with 20% of global population, 20% of global GDP and 36% of global economic increase. In 2015, the trade volumes of the three countries reached 625.7 billion USD, and the people-to-people exchange rose to 24 million visits. The importance of trilateral cooperation could never be overemphasized, the healthy and steady development of trilateral ties will not only benefit the three country, but deliver positive energy to the peace and prosperity of Asia and beyond.

II. Green Funds are Widely Adopted to Promote Sustainable Development

China, Japan and ROK have already made a lot of progress on environment protection. Tripartite Environment Ministers Meeting has been held for 18 times since its inception in 1999. In April 2015, a five-year joint action plan on environment cooperation was launched to address the problems and challenges in air quality improvement, biodiversity and other nine priority areas. Two circular economy demonstration zones were established in Dalian and Caofeidian to enhance trilateral cooperation on sustainable development. All these efforts laid a solid foundation for trilateral environment cooperation, however, more work need to be done.

During his keynote speech on April 29th, Mr. Goh Kun, the former Prime Minister of the ROK emphasized the very importance of trilateral environment cooperation. He called on the three countries to build a community of shared environment in Northeast Asia, hold Trilateral Environment Summit regularly, and tackle the climate change, sandstorm, air pollution and other challenges together. To turn the leaders’ vision into reality, green finance tools, such as green loan, green bonds, green IPO, green funds could be utilized to provide the money needed. Since Mr. Zhang Yesui proposed establishing a China-Japan-ROK Cooperation Fund, and the latest 13th Five-Year Plan also urged to establish a green development fund, there won’t be a better time than now for the three countries to consider establishing a green fund to strengthen trilateral environment cooperation. In fact, green funds are widely adopted to promote sustainable development around the world.

In 2012, the UK government established the Green Investment Bank (GIB) to back green projects and mobilize private capital into the UK’s green economy. GIB is a bank in name, but operates more like an investment fund. GIB does not take deposits, but invests in green and profitable projects with government funding, such as energy efficiency, waste and bio-energy, offshore wind, and onshore renewables.

In March 2016, the Australia government launched a one billion AUD Clean Energy Innovation Fund to help reduce the carbon emission. The fund will invest 100 million AUD per year for ten years starting in July 2016 to support clean energy technologies make the leap from demonstration to commercial deployment.

In September 2015, the US and China also announced to jointly establish a Green Building Energy Efficiency Fund to accelerate the development of environmentally sustainable buildings in China through the deployment of U.S. technology and expertise, and to support China’s transition into a low-carbon economy.

III. Next Step Policy Recommendations

China has been advocating the development of green finance in recent years. Under the auspices of the People’s Bank of China, the China Society for Finance & Banking established a Green Finance Committee to promote relevant academic research, financial innovation and policy implementation. Most of the large financial institutions in China are the members of the Green Finance Committee, with a total financial asset under management exceeding 135 trillion Yuan. China also co-chaired a G20 Green Finance Study Group to deliver a synthesis report on the country experiences, development barriers and possible policy options of green finance. All these green finance efforts are conducive to the establishment of a green fund to strengthen China-Japan-ROK trilateral environment cooperation.

Firstly, the governments of China, Japan and ROK could consider establishing a Trilateral Green Funds under the leadership of Tripartite Environment Ministers Meeting. Since the environment cooperation could be affected by the bilateral or trilateral relations, to ensure steadfast political support will be very important to the successful operation of the green funds.

Secondly, besides government funding, the Trilateral Green Funds should adopt a Public-Private-Partnership (PPP) structure and welcome the participation of private sector. Government spending on environment protection, pension funds, banks, securities companies, insurers, private enterprises from the three countries could work together to mobilize as much capital as possible for green investment.

Thirdly, the Trilateral Green Funds could focus on the following green investment opportunities. For examples, Deploy technology and expertise from Japan or ROK to tackle air, water and soil pollution in China; Accelerate the development of electric cars, nuclear power plants and other green industries; Facilitate the merger and acquisition of the energy-saving and environment protection industries of the three countries; Promote the R&D and commercialization of emerging green technologies; Provide the necessary guarantee to help the small and medium-sized enterprises to explore new market in the three countries.

Fourthly, strengthen the policy coordination and cooperation in the financial markets. The three countries could work together on the green IPO and green bonds standards, so that the stock exchanges and OTC markets could provide an exit for the investment from Trilateral Green Funds, and the booming green bond market could be utilized to raise money for the green funds. Besides that, the government of the three countries could also consider providing market access, taxation reduction, fiscal subsidy, red tape cutting and other policy options to help the green funds develop into a shining success.

Li, Wangming, the Project Manager of Chongyang Institute for Financial Studies, Renmin University of China.