China has issued the first 85.5 billion yuan ($13.4 billion) batch of low-cost loans to financial institutions to promote green projects and corporate efforts to cut carbon emissions, the central bank said on Thursday.

Under the carbon emission reduction facility (CERF), the first of its kind to be rolled out by the People’s Bank of China (PBOC), financial institutions can apply for low-cost funding to back the loans they issue to finance companies’ emissions reduction efforts.

The CERF is part of China’s broader goal of bringing carbon emissions to a peak before 2030 and achieving carbon neutrality by 2060, as well as to shelter the economy from the economic fallout of the COVID-19 pandemic.

Under the CERF, the PBOC will provide financial institutions with funds equal to 60 per cent of a loan’s principal at a one-year lending rate at 1.75 per cent. That would be at a discount to the seven-day reverse repo rate of 2.2 per cent.

The bank has also officially rolled out low-cost loans to support companies’ efforts to use clean coal, Sun Guofeng, head of the PBOC’s monetary policy department, said a news conference. He did not say how much has been provided already.

The CERF could lead to 1 trillion yuan per year being invested in projects related to clean energy after the monetary tool is fully rolled out in 2022, according to reports from Huatai Securities and Everbright Securities.

But banks are required to certify the loans have been issued to firms that can help the economy adopt cleaner energy or improve energy efficiency. As targeted monetary policy tools, Sun said both the CERF and the special clean coal loans can contribute to the overall credit supply and stable credit growth.

In the next year, “China will give full play to monetary policy tools’ dual functions, that is, in terms of (adjusting the money supply’s) volume and the structure,” Sun said.

 The chairman of China’s securities regulator, Yi Huiman, said China will stabilize and reform its capital markets next year, state-backed Xinhua News Agency reported on Thursday. Yi said China will reform its stock market next year to adopt a comprehensive registration-based IPO system, which is currently only adopted by the newly established Beijing Stock Exchange, ChiNext and STAR Market.

“The conditions to employ a comprehensive registration-based IPO system are gradually being met,” Yi told Xinhua. “We are stepping up efforts to formulate a market-wide registration system reform plan ... to ensure its smooth implementation.” Yi also said China will accelerate the reform of its offshore listing system and strengthen its cooperation with international securities regulation.

In terms of regulation, the China Securities Regulatory Commission (CSRC) will step up scrutiny of fund raising and M&A activities in some sensitive areas, Yi told Xinhua.

He added that China will try to defuse debt default risks and eliminate their spillover effects.

Debt woes in China’s $5 trillion property sector, including China Evergrande Group, is being widely watched by global financial markets concerned about broader contagion. (Reporting by Jason Xue and Andrew Galbraith; editing by John Stonestreet and Hugh Lawson)

China’s factory activity likely neither grew nor shrunk in December, a Reuters poll showed, amid disruptions from COVID-19 outbreaks and as the economy lost momentum in the fourth quarter.

The official manufacturing Purchasing Manager’s Index (PMI) is expected to fall to 50 in December, from 50.1 in November, according to the median forecast of 24 economists polled by Reuters on Thursday. A reading below 50 indicates contraction from the previous month, above 50 expansion.

“We expect NBS manufacturing PMI to moderate to 49.9 in December from 50.1 in November,” said analysts at Goldman Sachs in a note this week, referring to the National Bureau of Statistics.

“(The) COVID outbreak in Zhejiang province since mid-December probably affected industrial activities, and container throughput data also pointed to weaker trade growth in December compared with November,” they said.

The wealthy Zhejiang province, on China’s eastern coast, saw a small-scale COVID-19 outbreak earlier this month, which has now subsided. Some firms were forced to suspend production.

The world’s second-largest economy, which staged an impressive rebound from last year’s pandemic-induced slump, has lost momentum since the second half as it grapples with a slowing manufacturing sector, debt problems in the property market and sporadic small COVID-19 outbreaks.

Analysts expect a further slowdown in fourth quarter gross domestic product (GDP) growth.

China’s central city of Xian reported on Thursday more than 100 new cases of COVID-19, taking its tally of locally transmitted infections to the highest in any Chinese city this year.