China provides more than 100 countries with long-sought financing for roads, railways, power plants, ports and other infrastructure projects
Boston: China is shaping the future of economic development through its Belt and Road Initiative, an ambitious multi-billion dollar international initiative to better connect with the rest of the world through trade and infrastructure.
Through this venture, China is providing more than 100 countries with long-sought financing for roads, railways, power plants, ports and other infrastructure projects.
This gigantic effort could generate broad economic growth for the countries concerned and the world economy. The World Bank estimates that the gross domestic product of recipient countries could increase by up to 3.4% thanks to Belt and Road financing.
But development often expands human movements and economic activity to new areas, which can foster deforestation, illegal wildlife trafficking and the spread of invasive species. Past initiatives have also sparked conflicts by encroaching on indigenous lands. These projects were often approved without the recognition or consent of local indigenous communities.
In a recently published study, our team of development economists and conservation scientists mapped the risks that China’s overseas development finance projects pose to indigenous lands, endangered species, protected areas and natural resources. potential critical habitats for the conservation of global biodiversity. We have found that over 60 percent of China’s development projects pose risks to wildlife or indigenous communities.
Various projects and risks
Our study examines 594 development projects funded by the China Development Bank and the Export-Import Bank of China. We have created a database to track the characteristics and locations of the projects that these two “political banks” supported between 2008 and 2019. During this period, the banks have committed over US $ 462 billion in funding to the government. development in 93 countries, about as many as the World Bank, the traditional global leader in development finance, was committed at that time.
Almost half of the projects funded by these two shores are located in potential critical habitats. These are areas that could be essential for conservation and require special protection considerations, according to the International Finance Corporation, a unit of the World Bank that promotes private investment in developing countries.
One in three projects is part of existing protected areas and almost one in four overlaps with lands owned or managed by indigenous peoples. In total, we calculate that China’s development finance portfolio could impact up to 24% of the world’s endangered amphibians, birds, mammals and reptiles.
The greatest risks are found in South America, Central Africa and Southeast Asia. All the projects that Chinese political banks are funding in Benin, Bolivia and Mongolia overlap with existing protected areas or potential critical habitats. Over 65% of Chinese development projects in Ethiopia, Laos and Argentina are located on indigenous lands.
On average, risks to Indigenous lands are greatest due to mining and transportation projects, such as mines, pipelines and roads. The biggest threats to nature are energy projects, especially dams and coal-fired power plants. For example, a cascade of seven hydroelectric dams along the Nam Ou River in Laos displaced indigenous communities who depended on local ecosystems for their livelihoods.
How the World Bank is tackling these risks
China may be the world’s largest country-to-country development lender, but it is not the only source of finance for emerging economies. The World Bank, an international organization funded primarily by rich countries, has been one of the main sources of development finance over the past 40 years, but its approach is markedly different from that of China.
In the 20th century, critics attacked the World Bank for funding projects that caused environmental damage and social conflict. But over the past 30 years, it has adopted a series of environmental and social reforms designed to steer lending towards more inclusive and sustainable development projects. This year alone, the bank has pledged to align its lending with the Paris Agreement on climate change by 2023.
China’s rapid economic growth since the 1980s has made it one of the world’s leading polluters. Today, its leaders strive to improve the environmental performance of their country.
China has created a national system of protected areas and pledged to make its national economy carbon neutral by 2060. But it has not made any of these reforms in its overseas loans.
Comparing the projects funded by the World Bank from 2008 to 2019 with our list of Chinese loans, we found that on average, Chinese projects pose a significantly higher risk to nature and indigenous lands, mainly in the area of energy.
The World Bank also has a worrying proportion of loans in high-risk areas. Notably, the roads, railways and other transport projects it funded during this time pose risks to biodiversity almost equivalent to those posed by similar projects funded by China.
For example, in 2016, the World Bank funded a major road project across the Democratic Republic of the Congo, including the territory of indigenous peoples, exposing them to loss of property and livelihoods, as well as violence. . An official internal investigation revealed that “serious damage” had occurred and called on the World Bank to manage future projects with more caution.
Making the financing of sustainable development
China has the opportunity with the Belt and Road Initiative to improve infrastructure networks around the world in a manner that is both sustainable and inclusive. It recently released the “Green Development Guidelines for Foreign Investment and Cooperation,” a set of voluntary guidelines developed by Chinese experts from universities, government and non-government organizations, and international experts. .
This report urges Chinese investors to respect the environmental standards of the host country. When these standards are lower than those of China, the guidelines recommend using international environmental standards.
In a promising step, President Xi Jinping announced to the UN on September 21, 2021 that China will not build new coal-fired power plants abroad. Equally important, he announced that China would “step up its support to other developing countries in the development of green and low-carbon energy.”
Such a powerful change can open up access to renewable energy in the developing world. However, our study shows that investments in low impact sectors can still pose risks to vulnerable ecosystems and communities. We believe that these climate commitments should be complemented by similar social and environmental performance standards that take into account local risks to biodiversity and indigenous peoples.