Deep decarbonisation of China's steel industry requires financing across the full value chain, not just steel production, a new report from the Climate Bonds Initiative finds. A high green premium and the lack of unified standards for defining and procuring green steel continue to limit uptake at scale. China's transition finance frameworks expand from production to cover the broader steel value chain, creating opportunities to boost demand, lower costs, and accelerate decarbonisation.

Labelled debt is emerging as a key financing channel. Hebei, the country's top steel-producing province, has granted CNY46.9bn (USD6.9bn) in transition loans by end-2025, offering lower rates and longer tenors. Nationally, 12 steel-related labelled bonds were issued in 2025, with seven worth CNY7bn (USD1bn) earmarked for scrap processing and EAF construction.

Near-term priorities include stronger demand-side incentives from policymakers, including public procurement and alignment with international green steel standards; a pipeline of bankable transition projects from steel companies; and continued innovation in financing tools from financial institutions across the value chain.

Wenhong Xie, Head of China Programme, Climate Bonds Initiative:

“China's steel sector demonstrates how quickly capital can be mobilised when policy direction is clear. Yet financing remains concentrated in steelmaking technologies and production processes. Achieving deep decarbonisation will require capital to flow across the entire value chain, from low-carbon raw materials and enabling infrastructure to downstream buyers prepared to create demand for low-carbon steel. Given the scale of its steel industry and market, China will play a decisive role in shaping the development of the global low-carbon steel market. This report provides insights for policymakers, financial institutions and steel companies as they navigate the next phase of China’s steel transition.”