Bottom-up Market-facilitation and Top-down Market Steering: Comparing and Conceptualizing Green Finance Approaches in the EU and China

Mathias Lund Larsen*

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review


To address environmental problems, efforts to green financial systems are proliferating across the globe. However, green finance policy approaches differ substantially and in ways left unexplained in current literature. Focusing on the EU and China as the most active and influential in green finance, the paper provides a comparative analysis and conceptualization of their approaches. The analysis is based on the dissection of policy documents, a review of stakeholder statements and articles, and insights from semi-structured interviews and participant observation. The paper finds that in terms of similar characteristics, both parties seek inclusive expertise input, establish thematic committees, and initiate green finance efforts through financial system-wide guidelines. In terms of different characteristics, the paper finds that through a consultation-based, transparent, and limited mandate approach, the EU is characterized by longer time horizons and organic growth. This can be contrasted with the Chinese technocratic, closed-door, and non-limited mandate approach, characterized by rapid rollout and command-and-control growth. These findings can be conceptualized as a bottom-up market-facilitating approach in the EU and a top-down market-steering approach in China. The different approaches help explain current difficulties in coordination between the EU and China and imply that cooperation is only possible through compatibility rather than harmonization. The findings show that different governance models can actively use the state to pursue sustainable development, and second that such an active state can function in very different ways towards the same goals.
Original languageEnglish
JournalAsia Europe Journal
Issue number1
Pages (from-to)61-80
Number of pages20
Publication statusPublished - Mar 2023

Bibliographical note

Published online: 28 Jan 2023.

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