China's financial landscape in 2025 was marked by three parallel developments: the rapid ascent of green credit, the continued deepening of the domestic bond market, and a sizable current account surplus alongside notable capital outflows. Viewed together, these shifts reveal a financial system reallocating capital internally while navigating an increasingly complex external environment.

Green lending in China is no longer a niche policy instrument—it has become a structural pillar of the banking system.

By the end of 2025, the outstanding balance of green loans in local and foreign currencies reached 44.8 trillion yuan (approximately USD 6.46 trillion), representing a 20.2% year-on-year increase, according to the People's Bank of China (PBOC).

The longer-term trajectory is even more telling. During the 14th Five-Year Plan period (2021–2025):

• Green loans grew at an average annual rate of 30.2%,

• Outpacing total lending growth by 21.1 percentage points,

• With their share in overall loan balances rising sharply from 6.7% to 16.2%.

This shift indicates a systematic reorientation of credit toward low-carbon and environmentally sustainable sectors.

The capital markets have reinforced this transition. Over the same five-year period, cumulative green bond issuance reached 5.2 trillion yuan, with 2.4 trillion yuan outstanding, consolidating China's position among the world's largest green bond markets.

Looking ahead, the PBOC has signaled further expansion of green financial support—broadening eligible carbon-reduction sectors, enhancing mechanisms to unlock environmental asset value, and encouraging orderly financial participation in the national carbon market.

Green finance is evolving from policy encouragement into financial architecture.

Parallel to the growth of green finance, China's overall bond market continued to expand in scale and function.

By the end of 2025, the total custody balance of the bond market reached 196.7 trillion yuan (approximately USD 28 trillion).

Government bonds remained the primary driver of net financing:

• Net government bond financing totaled 13.8 trillion yuan,
  an increase of 2.5 trillion yuan compared with 2024.

Corporate bonds also saw moderate expansion:

• Net corporate bond financing reached 2.4 trillion yuan,
  up 482.3 billion yuan year on year.

Foreign participation, while steady, remained proportionally limited. Overseas institutions held 3.5 trillion yuan in Chinese bonds at year-end, accounting for 1.8% of total market holdings. Meanwhile, 56 new overseas institutions entered the interbank bond market during the year, and Panda bond issuance totaled 183.06 billion yuan.

The data suggest continued institutional deepening and funding diversification, even as cross-border capital participation remains measured rather than dominant.