By Hugo Jones and Lukas Fiala
Apocalyptic images reach us from China this week. The immense flooding in Henan province has come with tragic human cost, a typhoon has edged onto China’s eastern coast, and Shanghai is facing torrential rains and winds. These events have already stirred discussions among Chinese citizens and media about the consequences of climate change.
There is a growing awareness that dust storms, firestorms, and floods are set to increase in frequency and intensity as global warming continues. The human and economic cost of these will almost certainly affect the way China approaches environmental policy domestically. But how should we interpret China’s environmental approaches abroad?
A common narrative argues that China seeks to export its carbon emissions into poorer countries as its own economy moves up the global value chain. Such is the need to funnel China’s “coal addiction” into the developing world. Indeed, 70% of all coal plants worldwide rely on Chinese funding and, since 2000, China has been the leading exporter of coal equipment. In contrast, so the story goes, G7 countries recently committed to phasing out financing for coal-fired power. Taken at face value, this would suggest that China is the driving force behind an increasingly coal-hungry Global South. This perspective, however, needs to be qualified.
In a recent policy brief, Xinyue Ma and Kevin Gallegher from Boston University’s Global Development Policy Center show that whilst China is the largest public financier of overseas coal-fired power plants, it accounts for only 13% of total overseas coal finance (public and private). In real terms this amount is set to decline. Since 2017, far more coal-fired powered capacity linked to China has been suspended than constructed. In fact, China did not finance a single coal project in the first half of 2021. The IIGF Green BRI Center predicts an acceleration of green projects and finance along the BRI in late 2021 in line with the country’s overall decarbonization goals.
To put this into perspective, US investors collectively account for 58% of institutional investments in the global coal industry, led by mutual fund company Vanguard ($86 billion) and asset management firm BlackRock ($84 billion). How convenient that the aforementioned G7 pledge excludes private finance from commitments to restrict international investments in coal.
This double-standard that is often adopted when it comes to China’s energy footprint abroad reminds critical readers of similar contradictions in discussions on bilateral lending and debt relief. In both cases, U.S. and European private sectors have a significant role to play, but only China is called out for a lack of transparency. While Beijing admittedly does not do much to mitigate such confusion – the political bark of Wolf Warrior diplomacy is not really a constructive diplomatic strategy and China’s opaque policy mechanisms and reluctance to engage in multilateral solutions in favor of closed-door bilateral negotiations do not exactly shed light on Beijing’s intentions – the Global North has an equally poor record of putting principles before profit.
Climate change will affect all of us, but most urgently the developing world. It’s high time to stop blaming China and step up the plate to find far-sighted solutions together with stakeholders from the Global South. If we fail to do so, scenes such as those in Henan will become much more common across the globe in the coming years.
Lukas Fiala is the China Foresight Project Coordinator at LSE IDEAS and Hugo Jones is a Program Assistant LSE IDEAS. LSE IDEAS is the foreign policy think tank at the London School of Economics.