China's capital market supports "decarbonization, adaptation, and resilience" goals internationally as it emerges as a growing channel for global climate finance through selling Panda bonds -yuan-denominated bonds issued by overseas institutions in China's capital market and Dim Sum bonds — yuan-denominated bonds issued outside the Chinese mainland, said a report by the London-based Climate Bonds Initiative (CBI) shared with the Global Times on Tuesday.

The report showed that the volume of yuan-denominated green, social, sustainability, and sustainability-linked (GSS+) bonds, particularly Panda and Dim Sum bonds, is increasing. Since the first green Panda bond in 2016 and the first green Dim Sum bond in 2019, both markets have expanded steadily.

As of end-2025, GSS+ bonds account for 6 percent of total Panda bonds issued, reaching 64.2 billion yuan, and of which 84 percent is aligned with Climate Bonds methodology, a standard the organization draws to define sustainable finance. The GSS+ Dim Sum market is considerably larger, with cumulative issuance reaching 328 billion yuan, of which 253.3 billion is considered aligned with Climate Bonds methodology.

While GSS+ bonds now still represent a relatively small share of total Panda and Dim Sum bond issuance, their growth signals a structural shift: sustainable finance is becoming embedded in cross-border yuan capital markets rather than remaining a niche segment, the report stressed.

"Yuan-denominated GSS+ bonds are moving beyond a niche market and emerging as a credible financing channel for emerging markets and developing economies. Landmark transactions by Global South sovereigns such as Egypt, as well as international corporates such as Suzano, demonstrate that the market is becoming accessible to a broader range of issuers," Xie Wenhong, head of China Programme of CBI, told the Global Times on Tuesday.

While Panda bonds connect foreign issuers to China's onshore investor base, Dim Sum bonds offer offshore yuan access through Hong Kong Special Administrative Region (HKSAR) and a more international investor mix. Meanwhile, Free Trade Zone (FTZ) bonds are emerging as a hybrid channel that could bridge onshore policy priorities with offshore-style structuring and investor participation, according to the report.

Xie said that China's continued opening of its bond market is creating an additional pool of capital for global climate finance, while also offering a potentially lower-cost alternative to euro- and US dollar-denominated financing. "Panda bonds, Dim Sum bonds and FTZ bonds serve the differentiated financing needs of international borrowers, including a growing number from emerging markets, while China's domestic GSS+ bond market offers depth, liquidity and access to an increasingly sophisticated investor base," Xie said.

According to Xie, this creates a mutually reinforcing opportunity: international issuers can diversify their funding sources, while Chinese investors gain greater access to high-quality sustainable assets globally. The opportunity is particularly relevant for emerging-market issuers that are deepening trade and investment ties with China and can benefit from China's sustained support for green transition as part of their own domestic development agendas.

Across both Panda and Dim Sum bonds markets, green bonds dominate, accounting for around 60-64 percent of total GSS+ volume, followed by sustainability bonds, with approximately 30 percent, according to the report.

With regards to the future role of yuan-denominated Chinese capital market in global climate financing, Xie highlighted particular potential in the combination of yuan financing with China's strengths in renewable-energy manufacturing and green supply chains. "As Chinese solar, battery, electric vehicle (EV) and grid technologies are deployed globally, yuan-denominated sustainable finance could increasingly help finance the same transition that these technologies enable," Xie said.