How can China meet its climate adaptation challenges?

At the recent COP30 climate conference in Brazil, 160 diesel generators were positioned outside the Amazonian venue, rumbling night and day, ladening the tropical air with fumes. Inside, huge ventilation units lowered the temperature but added to the noise.

Adaptations like these aren’t just taking place temporarily and on a small scale. One priority of the Belém conference was how to ensure countries adapt to climate change impacts in the long term.

Debate over funding this process, and how to track its progress, was particularly fierce. Would developing countries secure more money to take action on the ground? Could a common framework be created for measuring national progress to inform funding decisions?

China’s role in all this has drawn particular attention. The largest developing country is shifting from reacting to climate impacts to proactively adapting to them. How does China’s adaptation strategy differ from those in the west? With its need for funding rising rapidly as climate change bites, how can China mobilise the necessary financing?

Dialogue Earth asked experts from China and elsewhere these questions, exploring the choices and challenges the country faces on adaptation, financing methods and evaluating progress.

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In many countries, subsidies are being used inefficiently or incorrectly. Those governments need to look at these and gradually redirect funds from ‘brown’ activities towards climate mitigation and adaptation.

Shao Danqing, researcher, Macro and Green Finance Lab

Adaptation with Chinese characteristics

A week before COP30 began, China submitted its latest climate action plan, known as a Nationally Determined Contribution, under the Paris Agreement. For the first time, it included language on climate adaptation, with a “climate-adapted society” to be mostly in place by 2035. Behind this lies a shift from reactive adaptation to a dual focus on proactive adaptation and mitigation (meaning efforts to cut greenhouse gas emissions), creating a path to adaptation with Chinese characteristics.

Rebecca Nadin is director of global risks and resilience at the think-tank ODI Global and advised on the adaptation priorities mentioned in China’s five-year economic plan for 2016-2020.

She says both China’s latest adaptation strategy, published in 2022 and covering actions up to 2035, and the EU’s latest adaptation strategy, published in 2021, stress data-driven risk assessment and regional adaptation, but they differ regarding governance and to some extent focus.

The EU, she says, takes a decentralised approach. Its priorities include local empowerment, mainstreaming adaptation across sectors, and nature-based solutions. China’s strategy, by contrast, is highly centralised, with adaptation integrated in the five-year economic plans and a focus on hard adaptation measures. For instance, it emphasises early-warning and disaster-preventions systems, such as flood control and other major infrastructure. This aligns with China’s national development priorities, she said.

“China allocates significant resources, especially for large-scale infrastructure, but EU adaptation finance is more diversified, supporting a wider range of sectors – health, urban resilience, agriculture – and cross-border cooperation,” she said.

Industries key to China’s adaptation process will require over CNY 2 trillion (US$280 billion) in funding every year between 2026 and 2030, according to the non-profit Huzhou Green Finance Institute. That is more than 1.2 per cent of the country’s GDP, with more than half of it (57 per cent, or CNY 1.16 trillion) needed for infrastructure.

China will need to invest more in adaptation for traditional infrastructure like buildings and water management, says Huzhou Green Finance Institute researcher Chen Yingjie. But there is also still not enough support for adaptation in other fields, including electricity, transportation, finance, education, health and social work, according to her team’s research.

“As climate change worsens, water management, agriculture and infrastructure face the most direct and obvious physical risks. Those sectors are very vulnerable and risks there will be transmitted onwards, to key sectors such as manufacturing and services, creating systemic impacts on the real economy,” she said.

The priorities for adaptation funding identified by her team were agriculture, forestry, fishing, health, electricity, heat, and gas and water management, along with transportation, warehousing and postal services.

The funding gap

The UN Environment Programme’s Adaptation Gap Report 2025 puts developing nations’ funding requirements for 2035 at US$310-365 billion. This is a giant leap from the US$26 billion that was transferred from developed to developing nations for adaptation in 2023.

At COP30, it was agreed that developed nations would raise adaptation support to US$120 billion by 2035.

For China, meanwhile, financial support from developed nations and preferential loans from multilateral development banks are both falling.

Between 2020 and 2022, China received only US$530 million in international funding for climate adaptation, all for reconstruction after the 2021 Henan floods.

The Chinese government has pointed out that climate funding flowing into China for those three years totalled US$2.6 billion – only 0.6 per cent of the country’s own spending on climate mitigation and adaptation.

In other words, China has spent US$436.7 billion on climate measures over those three years, at an annual average of US$145.6 billion. There isn’t yet any data on China’s climate adaptation spend, but internationally adaptation accounts for less than 10 per cent of total climate spending, according to a study published by the Climate Policy Initiative in 2024.

Shao Danqing is a researcher at the Macro and Green Finance Lab, a think-tank based at Peking University’s National School of Development. She told Dialogue Earth that China’s adaptation work is mostly funded by public money, but limited government budgets and a lack of enthusiasm from private investors means a severe shortfall.

“So why is there more of a gap for adaptation than for mitigation? It’s because adaptation, when compared with mitigation, is less likely to be commercially sustainable and therefore investable,” she explained.

Closing the funding gap

China will need an average of CNY 1.6 trillion (US$226 billion) a year for climate adaptation between 2021 and 2060, according to a 2024 government document. That will mean mobilising climate and green finance on an unprecedented scale.

The country’s climate financing system has two strands. The first is led by the People’s Bank of China, which is creating a system of green finance and transition finance. The second is a set of city-level climate finance trials run by the Ministry of Ecology and Environment.

Each has a different emphasis, says Shao Danqing. The bank’s effort is focused on the supply side of investment. It aims to make investments greener by creating standards, regulatory frameworks and supporting policies for green and climate finance. The ministry, meanwhile, is looking more at the demand side, at actual practice on the ground. It is using city-level pilots to encourage local governments to set up project databases and related investment and financing mechanisms.

The 2025 revision of the Green Finance Taxonomy, led by the bank, labelled some project categories as contributing to emissions reduction for the first time, but did not indicate if any contribute to adaptation.

According to the bank, green loans worth CNY 36.6 trillion were issued in China in 2024. Of that, CNY 12.25 trillion went to projects with direct emissions reductions and CNY 12.44 trillion to projects with indirect reductions. Totalled, that accounts for 67.5 per cent of all green loans. It’s hard to say, though, how much is going to adaptation work.

The ministry’s 2022 taxonomy for its climate-financing trials did cover both mitigation and adaptation but, overall, climate-finance systems in China remain focused on mitigation.

According to Shao Danqing: “Most projects are mainly about mitigation. Some might also have adaptation benefits, but that isn’t highlighted.” In agriculture, she gives the examples of reusing rather than burning straw, techniques to conserve water when irrigating, and smart agriculture.

How to evaluate adaptation?

Coming up with effective indicators to chart progress on adaptation is a global challenge. There was progress at COP30 where the first global set of indicators on adaptation – 59 of them – was adopted.

Xi Wenyi is a research associate with the World Resources Institute’s Climate and Energy Program. She told Dialogue Earth that quantitative targets in China’s adaptation strategy are mainly related to ecosystems, such as area of protected land, forest coverage and length of restored coastline.

More work on those targets is urgently needed. Another issue, though, is how to evaluate the benefits of adaptation work. Climate adaptation measures reduce climate vulnerability, making society and the economy more resilient. A typical example is an early-warning system. If the government can issue a warning in advance of floods, businesses and schools can shut down and prepare, reducing economic losses. In that case, the net benefit is easy to see and understand.

“But if the disaster being warned of doesn’t happen, it’s harder to evaluate the avoided losses,” said Chen Yingjie of Huzhou Green Finance Institute. Nevertheless, adaptation measures reduce physical risk and so cut investment and construction costs, as well as insurance premiums. The long-term benefits should not be overlooked, she said.