Advancing China's Sustainable Blue Economy 2025

274.4 Challenges and policy gaps Financing sustainable ocean initiatives presents several challenges, including high upfront costs, uncertain returns, lack of precedent deals, poor data and a high- risk governance environment. Market dynamics, such as fluctuating commodity prices, further affect the viability of ocean-based industries (OECD, 2016)71. Additionally, insufficient technical capabilities and data, misalignment between costs and benefits, lack of unified standards and lagging policies hinder financial support for the marine economy, complicating risk identification, capital allocation and product innovation. From a financial market perspective, substantial investment needs for the marine sector’s sustainable transition remain unmet due to funding gaps, an imbalanced financing structure, and a lack of innovative financial tools. The high uncertainty and costs of emerging green technologies, such as carbon capture, green shipping and tidal energy, lead financial institutions to be conservative, impeding large-scale investments and international cooperation. Policy frameworks often remain fragmented, lacking clear incentives and standardized guidelines for financial institutions to engage in blue financing. The absence of a unified classification system for blue assets and insufficient risk assessment mechanisms further hinder the scaling up of financial support. Creating financial instruments and incentives, such as blue bonds, public-private partnerships, and redirecting subsidies toward sustainable practices, can attract investment and drive the SBE. 71 OECD, The Ocean Economy in 2030, 2016, https:/ /www.oecd.org/content/dam/oecd/en/publications/reports/2016/04/the-ocean-economy-in-2030_g1g6439e/9789264251724-en.pdf .At the financing policy level, it is essential to create technical standards or a blue finance taxonomy at the national level to define and identify blue industries and activities. China’s lack of national guidelines on blue finance leads to assessment bias and restricts large-scale development. Comprehensive and standardized blue information disclosure, referencing international standards like TNFD, is needed to assess and rank the environmental benefits of enterprises, incentivizing financial institutions to invest in blue projects. De-risking mechanisms for blue financing and investment need to be designed to attract the private sector. Lack of understanding of the marine economy leads to underestimating risks of marine ecological degradation, loss of marine biodiversity, and other marine crises on their own finances and overestimating investment risks in blue projects. Standardizing the technical application of methods for accounting for the value of marine ecological products and developing a blue carbon market can incentivize early investments. Issuing blue bonds, like the Bank of China’s 2020 issuance, can boost SBE investments. China currently lacks incentive policies for financial institutions to support SBE activities. Integrating sustainability considerations into marine protected area assessments and creating local government incentive mechanisms for sustainable projects are necessary. Accelerating an SBE can advance other agendas, such as addressing the 1.5°C climate target gap, and unlocking climate finance that contributes to the SBE. Financing new technologies in research and academic institutions is also key to addressing ocean challenges. Financial policy should provide incentives for adopting ocean- positive technologies and support research institutions in developing technologies that limit environmental harm or generate positive contributions to the marine environment. narvik/iStock.com