Blue finance for marine environmental governance in China: financial functions, institutional constraints, and policy pathways

Many marine environmental governance projects involve long investment horizons, substantial positive externalities, limited commercial returns, and difficulties in verifying environmental performance. Consequently, conventional financing models often fail to meet these long-term capital needs. Drawing on international blue finance standards, peer-reviewed literature, Chinese policy documents, and representative cases, this study employs a mechanism-oriented narrative review and policy analysis to develop an analytical framework comprising “compound pressures on marine ecosystems–governance tasks and financing needs–three financial functions–intermediate financial effects–multidimensional governance outcomes.” The analysis indicates that blue finance, through resource allocation, risk management, and value discovery and price formation, has the potential to improve capital availability, optimize risk–return profiles, and create conditions for realizing ecological value in marine environmental governance projects. Information disclosure, performance verification, and feedback mechanisms can further facilitate the dynamic alignment of financial resources with governance objectives. However, the governance outcomes of blue finance cannot be inferred solely from financing volumes. They depend on institutional conditions such as taxonomies, data infrastructure, monitoring, reporting and verification (MRV) systems, risk-sharing mechanisms, and equitable benefit-sharing arrangements. Blue finance in China is progressing from local product experimentation toward the development of national standards and regional piloting. Nevertheless, further improvements are needed in establishing a unified taxonomy, expanding the supply of long-term capital, strengthening risk management infrastructure, and developing mechanisms for ecological value realization. Future efforts should advance the regulatory and standards framework for blue finance, strengthen institutional coordination between finance and marine environmental governance, and improve capital allocation efficiency, the credibility of environmental performance, and social inclusiveness, thereby supporting marine environmental governance and the sustainable transition of the marine economy.