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China is facing an urgent soil contamination problem. According to the National Soil Pollution Survey carried out in 2014, over 16 per cent of total soil in China is contaminated.

Estimates of the cost of cleaning these contaminated soils run up to USD 1.3 trillion, more than 10 per cent of China’s annual GDP. According to the 12th Five-Year Plan, the Chinese central government budgeted for less than USD 5 billion, leaving a considerable gap for private funding to invest. The challenges are two-fold. The first is how to make soil remediation a worthwhile investment for holders of private capital. The second is to ensure that the limited investments from the public purse are used optimally—namely that they are deployed in such a manner as to leverage the maximum private investment. To meet both challenges, the full range of innovative financing vehicles and “new finance” approaches will need to be assessed and tested—something that has never before been undertaken at this scale.

By examining seven different types of soil remediation projects, this report presents the state-of-play of the current situation of soil remediation financing in China. 

This report is a part of a series of outputs of a four-year project, Financing Models for Soil Remediation. The overall objective of the project is to harness the full range of green finance approaches and vehicles to manage the associated risk and fund the remediation of contaminated soils.