In the 1990s, trade was the defining issue of the US-China economic relationship. Today, as much as any other issue, the environment binds the two giants of the global economy together.

This week, leaders from the international financial community are gathering in Shanghai for preparatory meetings in advance of the G20 summit in Hangzhou this September. Among the most prominent items on the agenda is green finance– public and private investment in environmental protection and climate change mitigation.The US-Chinese economic relationship stands at a critical point. For three decades, China has enjoyed unprecedented growth fueled by government-led investment and the export of manufactured goods, many of them to the American market. China’s leadership is now navigating a difficult transition from an investment-led to a consumer-driven model. In a nation of 1.4bn people with a $10tn economy, this transition is a significant challenge.

Green finance offers an important avenue for China to demonstrate its commitment while delivering positive results for its citizens. China’s environmental challenges are serious. Rapid urbanisation has left nearly two-thirds of China’s groundwater unfit for human consumption and a fifth of its arable land contaminated.