Chinese investments lacking alignment to NDCs

Most Chinese deals in energy and transportation from 2014 to 2017 were tied to carbon-intensive sectors and did not show a strong alignment with the low-carbon priorities included Belt and Road Initiative (BRI) countries’ NDCs.

The Belt and Road Initiative (BRI) is a development strategy involving infrastructure development and investments in countries in Europe, Asia and Africa, referring to road, rail and sea transportation.

The analysis, from the World Resources Institute, focusses on four major types of investment: syndicated bank loans by CDB, China Eximbank, and the four biggest state-owned commercial banks; energy-sector loans exclusively provided by CDB and China Eximbank; equity investments by the Silk Road Fund (SRF); and cross-border investments by Chinese enterprises.

The analysis found a clear trend of increasing Chinese investments in BRI countries over time. From 2015 to 2017, the volume of energy and transportation syndicated loans in which major Chinese banks participated was three times as large as in the period from 2012 to 2014. However, most Chinese deals in energy and transportation were still tied to traditional sectors and did not show a strong alignment with the low-carbon priorities included in BRI governments’ NDCs. From 2014 to 2017, 91 per cent of the energy-sector syndicated loans in which the six major Chinese banks included in this study participated, and 61 per cent of the energy-sector loans financed entirely by China Development Bank and/or China Eximbank were in fossil fuels. Over the same period, 93 per cent of energy-sector investments by the SRF were also in fossil fuels, and 95 per cent of cross-border energy investments by Chinese state-owned enterprises (SOEs) were in fossil fuels as well.

In contrast, nearly two-thirds (64 per cent) of cross-border energy-sector investment by Chinese privately owned enterprises (POEs) were in renewable energy.

Full analysis here.

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