This paper investigated the evolution of Green Credit policy in China and the progress of its implementation by Chinese banks. Confronted with increasing degradation of the environment and the poor energy and resource efficiency in China, Chinese government introduced the Green Credit policy in 2007 to tackle these problems by adopting market-based mechanisms to channel capital to energy-saving and environmental protection companies and projects while curbing credit loans to companies and projects with poor environmental performance. The results of this paper show that a top-down system of Green Credit policy has taken shape in China, and Green Credit has proved to be an effective tool in combating environmental degradation and spurring sustainable finance in China with encouraging initial results. This study also reveals that in providing loans to energy-saving and environmental-friendly enterprises, state-owned banks made noticeable progress and did much better than joint-stock banks. Joint-stock banks in general were more conservative and cautious in providing loans to environment-friendly enterprises. The only exception is Industrial Bank, which adopted the Equator Principles in 2008. In exiting or withdrawing loans for “two high” sectors, there is a wide variation among banks, and there is no significant difference between state-owned banks and joint stock banks or between banks which are EPFIs and which are Non-EPFIs in this part.