While President Trump rolls back environmental protections and announces the withdrawal of the United States from the Paris climate accord, China is trying to position itself as the world’s climate leader, pledging to cooperate with other countries to build an “eco-civilization”. China has established the largest solar panel farm in the world, plans to close over 100 coal-fired power plants, and is committed to spending at least $361 billion on renewable energy by 2020.
All of this is laudable and sorely needed. But if China truly wants to be a climate leader it needs to address its global climate footprint, not just pollution within its borders.
China’s lending in Latin American and Caribbean countries provides a telling example of how the country has outsourced its emissions.
The Chinese Development Bank and the China Export-Import Bank provided more than $141 billion in loan commitments to Latin America and the Caribbean from 2005 to 2016, far surpassing lending from multilateral banks to the region. These loans have gone mainly to projects with significant environmental effects like oil drilling, coal mining, hydroelectric dam construction and road building. Over half of all public-sector lending from China to Latin America, some $17.2 billion in 2017, went to the fossil-fuel industry.
Chinese direct investment in Latin America follows a similar pattern: $113.6 billion was invested from 2001 to 2016, about 65 percent of which went to commodity-oriented transactions.
Many of the extraction projects are in areas, like the Amazon rain forest, that must be preserved for combating climate change. The Amazon is the world’s largest terrestrial carbon sink and plays a critical role in regulating the global climate. Expanding fossil-fuel production in this region results in more emissions and deforestation.
Chinese money is fueling the growth of fossil-fuel industries in places like the Yasuní Biosphere Reserve in the Ecuadorean Amazon, believed to be the most biodiverse place in the world and the home to indigenous peoples living in voluntary isolation. Some of the $17.4 billion in financing provided by China to Ecuador since 2010 has gone to oil-for-loan deals, meaning they must be paid through the sale of oil or fuel — and nearly all of Ecuador’s reserves are in the Amazon rain forest. Meanwhile, Chinese investment in genuine sustainable-energy projects in Ecuador is scant.
In the Brazilian Amazon, China has committed significant funding, through development financing and direct investment by state-run companies, for the Brazilian government’s efforts to construct a new commodities corridor through the Amazon basin, facilitating the expansion of industrial agribusiness into remote, pristine rain forest.
This kind of investment in Brazil also empowers the country’s powerful agribusiness lobby, known as the ruralistas. President Michel Temer’s administration has advanced the ruralistas’ goal of dismantling environmental safeguards by essentially providing a rubber stamp for even more dirty energy projects in places like the Amazon.
Another example comes from Patagonia, home of the largest ice fields in the Southern Hemisphere outside of Antarctica. There, the Chinese firm Gezhouba is pursuing the construction of a $4.7 billion hydroelectric dam complex, with financing from the China Development Bank, the Bank of China and the Industrial and Commercial Bank of China. The dams may damage the glaciers in Argentina’s Los Glaciares National Park, a Unesco World Heritage Site.
China is worsening the climate crisis with its financing elsewhere as well. From 2000 to 2015 China extended $94.4 billion in loans to Africa, fueling extractive industries like oil, minerals and timber; the expansion roads and ports to get those raw materials to market; and dirty energy like large dams and power plants. Beijing is building and financing some 50 new coal plants across Africa.
China has begun to consider a different path in its overseas environmental and social policies — at least on paper. In 2012 the government approved the Green Credit Directive, which requires Chinese banks to “effectively identify, measure, monitor and control environmental and social risks associated with their credit activities” and recommends that funds be suspended or terminated where “major risks or hazards are identified”. While these guidelines are rarely followed, they show that there is concern among the leadership about the environmental and social impact of the country’s investments abroad.
Such concern is well placed. In Nicaragua, Ecuador and Peru, community protests against Chinese operations have led to the killings of local residents, imposition of states of emergency and legal actions against Chinese companies.
China should approach its international projects with the same concern for the environment that its starting to show at home. Beijing should refrain from supporting extraction in areas of global ecological importance, and instead heavily invest in clean, renewable energy projects. Civil society groups should keep the pressure on, and developing-country governments should incorporate such guidelines into bilateral agreements and project contracts.
Continuing to pursue fossil fuel development is a losing proposition in the face of low oil prices, growing competition from renewables, and the scientific imperative to leave 80 percent of known fossil fuel reserves in the ground to avoid a catastrophic two-degree Celsius rise in global temperatures.
A true climate leader would invest in the preservation of areas of global ecological importance rather than destroy them.
Paulina Garzón is the director of the China Latin-America Sustainable Investments Initiative. Leila Salazar-López is the executive director of Amazon Watch.