China’s Belt and Road Initiative (BRI) is not the green project that Beijing claims it is. Leading up to the first BRI forum in May 2017, the Chinese government published official documents declaring BRI would promote the Paris Agreement and UN Sustainable Development Goals (Chen 2019). At the forum itself, Chinese Communist Party General Secretary Xi Jinping advertised BRI as a “vision of green development and a way of life and work that is green, low-carbon, circular, and sustainable” (Xinhua 2017). BRI, which promises sustainable development for all participating countries, hinges on the truth of this premise. General Secretary Xi accrued significant international support and global participation for BRI with this claim. China established the International Green Development Coalition on the Belt and Road in partnership with the United Nations Environment Programme, increasing BRI’s international legitimacy (Liqiang 2019).

However, evidence abounds of the environmental harm the Chinese government wreaks beyond its borders. China has long been the world’s largest exporter of coal power equipment, exporting twice as much as Japan, its nearest competitor (United Nations 2020). Chinese banks are financing more than 70 percent of all coal plants outside of China, with Chinese firms constructing many of them, including in countries like Egypt and Pakistan that previously burned little to no coal (Quartz 2019). At current rates, Chinese coal equipment exports and financing make it virtually impossible to limit global warming to safe levels, which would require retiring one coal plant per day globally (Hilton 2019). BRI’s environmental damage is not limited to the energy sector. Transportation infrastructure, mining, and land reclamation for mega-cities carry their own environmental and climate risks that are harder to quantify (Elkind 2019).

Beijing’s environmental hypocrisy

Chinese fossil fuel projects abroad highlight a fundamental hypocrisy. In 2017, Beijing halted plans for 100 domestic coal plants, recognizing the need to curtail domestic pollution. Concerns over air and water pollution pushed China to develop air quality standards and environmental protection regulations that include specific, enforceable guidelines (Kaiman 2014).

In contrast, Chinese foreign investment laws regarding environmental protections are voluntary, lacking monitoring and enforcement (Losos et al. 2019). Chinese banks and companies face little consequence for disregarding environmental standards overseas. For example, one Chinese company building a dam in Laos copied much of the project’s environmental impact assessment from another Chinese project (Beech 2019). The lack of due diligence seems the norm for Chinese state-sponsored endeavors abroad. Even when Chinese firms do conduct environmental impact assessments for BRI projects, they often occur too late in the project cycle to yield actionable insights (Losos et al. 2019). China may now be loosening domestic environmental standards in a bid to boost COVID-19 economic recovery, but these relaxed regulations are still more robust than the standards for Chinese firms abroad (Hale and Hook 2020).

Beijing’s successive Belt and Road Forums appear to address these environmental concerns, but only cursorily. The official documents from the first forum—including an ecological and environmental cooperation plan, and a vision and action plan for energy development—are broad, nonbinding, and aspirational. They do not rule out emission-intensive projects (Belt and Road Portal 2017). During the second Belt and Road Forum, China developed Green Investment Principles, signed by all major Chinese banks involved in BRI (Ewing 2019). However, the principles—which include embedding sustainability in corporate governance; adopting green supply chain management; and utilizing green financial instruments—are similarly voluntary, which suggests they will have little impact given BRI’s track record.

China’s dirty investment tactics

Chinese policy banks—the institutional banks fashioned to implement Chinese economic, industrial, and trade policies abroad—finance pollution. Nearly 40 percent of China Development Bank and Chinese Ex-Im Bank, the two most important policy banks, spending on power generation went toward coal between 2013 (when BRI was announced) and 2019, according to data collected by Boston University’s Global Development Policy Center (Gallagher 2019). Both banks fund coal projects more than all other power generation combined, when measured in projected generation (see Figure 1). As a result, Beijing directly funded a projected 168 terawatt-hours per year of coal generation in that same time period. That amount could power a high-income country like Sweden or a populous one like Poland (Enerdata 2019).

Figure 1. Projected Electricity Generation Funded by Chinese Development Finance

 

This increase in coal-fired generation comes with a substantial increase in carbon dioxide emissions. Chinese policy banks will drive an additional 210 million metric tons of carbon dioxide emissions annually once all the plants financed during this time period come online (see Figure 2). If those emissions came from a single country, it would instantly become one of the top 30 highest emitters (Global Carbon Atlas 2019). Simply put, China is leading the global power sector in the wrong direction.

Figure 2. Projected Emissions Funded by Chinese Development Finance

 

Projected emissions from Chinese policy bank investments swung as high as 63 million metric tons annually, though the overall level of BRI project investment drastically fell in 2019, in part due to backlash from recipient countries. If it were not for Chinese government support, Chinese coal power suppliers would not be as successful in the global export market, and global emissions would be lower.

Contradicting climate goals

BRI directly threatens the climate goals of many countries. Chinese-financed power projects have raised the average emissions per kilowatt-hour in 15 of 41 countries (see Table 1). Further, Chinese banks financed fossil fuel projects in nearly half of those 41 countries. Making matters worse, Chinese-financed, coal-fired power plants built overseas often use low-efficiency, subcritical coal technology, which has higher emissions than any other form of power generation (Hilton 2019).

The picture is even worse in countries where China has concentrated its efforts with more than one power project (see bolded countries in Table 1). In roughly half of those countries, Chinese projects increased the grid’s emissions intensity. Chinese policy banks make it harder for countries to lower their emissions and combat climate change.

 

Although Beijing did not fund any fossil fuel projects in more than half of these countries, nearly all other policy-bank-financed projects are hydroelectric dams, which carry their own environmental risks (Teese 2018). For example, Chinese companies are building or financing roughly half of the more than 300 new dams in the Mekong River basin (Beech 2019). Those hydropower projects portend displacement and food insecurity for millions in Southeast Asia, even though the region will likely not need all of the new power generation (Beech 2019). The Mekong River Council expects hydropower developments will lead to a reduction of up to 40 percent in fisheries and reduced soil fertility, threatening reduced agricultural productivity and poverty (ASEAN Post 2018). In general, BRI endangers thousands of ecologically sensitive areas and hundreds of species around the globe, risking spillovers into fisheries, farming, and agriculture (Lechner et al. 2018, Teese 2018). BRI investments in transportation infrastructure could also lead to significant deforestation and wildlife habitat loss (Losos et al. 2019).

The environmental risk to US interests

Chinese-financed power plants under BRI are decades-long capital investments that threaten to lock the world into an untenable emissions trajectory while displacing US global leadership. The United States, the largest provider of official development assistance, might have to contend with increased instability and a chaotic global landscape that threatens its national security and economic relations amid worsening climate change. BRI makes it impossible to safely limit global warming, which scientists agree will be economically disastrous. Decreased labor productivity, the spread of communicable diseases from higher temperatures, diminishing agricultural yields amid drought and desertification, and extreme weather events will cost trillions. Experts estimate the damage will slash more than 7 percent from global GDP by the end of the century (Kahn et al. 2019). Even worse, BRI primarily targets the least-developed countries, many of which lack effective environmental protections. The Chinese government’s lack of environmental and social governance abroad encourages short-term economic rent-seeking over long-term sustainable development. China is not solely responsible for global emission increases, but it should be held accountable for emissions growth and environmental harm under BRI.

Further, BRI projects entail more costs than environmental damage alone—they serve Chinese strategic interests at the expense of global labor standards, human rights, and corruption. For example, Prime Minister Imran Khan of Pakistan remains silent on the mass internment of Uighurs in Xinjiang, instead chastising Western countries for Islamophobia (Dhume 2019). Khan has openly acknowledged that Pakistan’s economic relationship with China dissuades him from criticizing Beijing (Council on Foreign Relations 2019). The United States should work with international partners such as Pakistan to offer alternatives; formulate a strategy to highlight BRI’s environmental impact; and encourage China to be a more transparent, environmentally responsible provider of development assistance.

Sounding a green alarm

The United States should pursue a three-pronged strategy to engage BRI countries, partners and allies, and China itself. In the short term, the United States should highlight and seek to limit BRI’s environmental damages. In the medium term, the United States should work with allies to offer non-Chinese energy infrastructure investments. In the long term, the United States should pursue policies that would convince Beijing to apply the same binding domestic standards abroad as China does at home and to funnel its development assistance through the China International Development Cooperation Agency.

The United States should not allow China to freely and falsely claim the mantle of global green leadership. Naming and shaming are critical to this effort. The US State Department should highlight the negative environmental and social impacts of BRI projects. All BRI countries have signed onto the Paris Agreement and will suffer from climate change. Unsurprisingly, the way Chinese policy banks do business runs counter to those countries’ self-interest.

The United States can leverage its convening power and position in multilateral forums, including the United Nations and the International Renewable Energy Agency, to bring attention to China’s counterproductive role. Specifically, the United States should track and publicize whether China is adhering to the same standards in BRI countries as it sets at home, and to the pledges it made during the second Belt and Road Forum, including the Green Investment Principles. If the United States firmly communicates BRI’s environmental costs, Beijing’s reputation should suffer accordingly.

In tandem with naming and shaming, the US Agency for International Development and the State Department should boost technical assistance to BRI countries, enhancing their capacity to conduct independent environmental impact assessments and audits for Chinese infrastructure projects. The State Department’s Bureau of Energy Resources and its Bureau of Oceans and International Environmental and Scientific Affairs should work closely with target countries to strengthen domestic environmental protections both bilaterally and within existing regional architectures including the African Union and the Association of Southeast Asian Nations.

The United States should also consider pay-for-performance models that have proved effective in inducing developing countries to bolster environmental protections. For example, Norway’s pledge of up to $1 billion in results-based payments for reduced deforestation stemmed forest losses in Indonesia (Seymour 2019). Such an approach has also been effective in improving global health outcomes (Eichler and Levine 2009). Leveraging these successful experiences, the US Agency for International Development could implement similar performance incentives based on air quality, biodiversity, and land-use outcomes.

Forming a green infrastructure team

In the medium term, the United States should develop a consensus approach with allies and partners to offer development assistance and financing mechanisms that fill global infrastructure gaps with high-quality alternatives that truly promote sustainable development. The United States should join and strengthen the partnership between Australia, India, and Japan—three of its strongest allies in the Indo-Pacific—to internationalize new standards regarding “quality infrastructure” (Harris 2019). The partnership’s messaging centers on principles for development assistance, to which the United States adheres and China does not, including environmental and social governance standards, local job creation, and transfer of expertise (Sonoura 2017).

Even with the creation of the US International Development Finance Corporation, the United States cannot compete dollar-for-dollar with BRI, under which China has already disbursed hundreds of billions in construction contracts and investment (Joy-Pérez and Scissors 2018). In comparison, the US agency can only invest a revolving fund of $60 billion at any given time. However, the Development Finance Corporation should take advantage of two new congressionally authorized powers: the ability to make equity investments and to support projects with non-US investors. The Overseas Private Investment Corporation, the Development Finance Corporation’s predecessor, was constrained by the reality that few US firms have a risk appetite large enough to engage in building the myriad ports, roads, and railways to close the infrastructure gap in Sub-Saharan Africa and Southeast Asia, especially when there are safer returns in more familiar markets. The Development Finance Corporation should insure and take equity stakes in sustainably designed Japanese-led and European-led projects to make them more attractive than the cost-cutting, environmentally harmful Chinese competition.

While the United States should start in the Indo-Pacific, where it has strong allies that share concerns over China’s expanding influence, it should expand its quality-infrastructure coalition globally by incorporating multilateral institutions including the United Nations and the World Bank. The United States should accordingly increase its financial commitments to the UN Environmental Programme, Green Climate Fund, and Global Environmental Facility while encouraging allies to do the same. This strategy helps pool and coordinate the amount of money competing with Chinese policy banks while increasing pressure on China to make more responsible energy investments amid a growing backlash to BRI (Tweed et al. 2019). If the United States partners with allies that share concerns over Chinese development finance, it can amplify its message, enhance its credibility, and increase the amount of non-Chinese development finance available for power generation and other infrastructure projects that are clean and sustainable.

Convincing Beijing

In the long term, policymakers should find ways to disincentivize China from offshoring its pollution and poor business practices. However, US policymakers will encounter obstacles in this endeavor. The primary reason China supports coal abroad is self-interest: Beijing sees coal power equipment exports as a solution for industrial overcapacity. China tripled its domestic coal consumption between 2000 to 2013 to cheaply fuel its sharp economic growth, but now public concerns over pollution and the precipitously declining costs of wind and solar are pushing the Chinese government away from coal.

Beijing must keep its legacy coal manufacturers afloat to maintain economic and political stability, because the Chinese coal industry—and its steel industry, which depends on coal—supply roughly 12 million Chinese jobs (Yao and Meng 2016). Chinese workers in both industries resorted to protest when their jobs were threatened.

Further, Chinese coal and steel companies held more than $1.5 trillion in debt, much of which they could not repay, as recently as 2016 (Stanway 2016). Chinese state banks own about one-third of this debt. If too many of China’s steel and coal companies go out of business without a closely managed phaseout, the banks might fail as well, dragging down the Chinese economy with them (Campanella 2017). Targeting development finance toward coal projects abroad helps Beijing kill two birds with one stone—limiting domestic pollution while keeping Chinese jobs afloat.

The United States should consider the important role domestic concerns play in Beijing’s development assistance plans and pursue strategies that help the Chinese government assuage those domestic concerns. For example, the US Energy Department could implement a joint research project to transition coal and steel workers in both the United States and China into roles in the clean energy economy, like solar panel and wind turbine production and installation.

Despite these obstacles to moving China away from coal, this strategy can succeed. General Secretary Xi has admitted that BRI’s first phase failed in terms of environmental outcomes. BRI power investments flagged in 2019, primarily due to backlash from recipient countries leading up to the second Belt and Road Forum.

Second, the Chinese government likely does not want to be held accountable for the environmental malpractice of renegade Chinese state-owned enterprises that have taken advantage of BRI’s loose standards, administration, and funding. For example, a Chinese state-owned firm in 2018 completed Cambodia’s largest hydroelectric dam under the BRI flag, after the Asian Development Bank passed on funding it because of the potential for severe environmental impact. When the Chinese-built dam began filling its reservoirs, five nearby villages completely flooded (Beech 2019). Insofar as the Chinese Communist Party values China’s international reputation, it would want to limit the possibility of future similar disasters. Before its slowdown, BRI was such a massive enterprise that many Chinese firms were able to secure state funding for their own self-interested aims in the absence of proper oversight.

To address these problems, the United States should encourage China to apply its own binding domestic environmental standards to its projects abroad and to funnel its development assistance through the China International Development Cooperation Agency. The National People’s Congress formally established the development agency in 2018 to plan and coordinate China’s vast, dispersed foreign aid architecture and to delineate commercial deals from development finance (Rudyak 2019). The agency presents an opportunity for the United States to provide technical expertise that helps China accomplish its aim of formalizing its development aid architecture in a way that limits environmental damage. The US Agency for International Development should lead engagement with the China International Development Cooperation Agency and press it to adopt high standards of sustainability if possible.

Charting clear skies ahead

When the new administration begins its term, it should quickly direct State Department officials to name and shame BRI’s environmental record at the next UN climate summit, Clean Energy Ministerial, and International Renewable Energy Agency meetings—and scope a congressional request for increased funding for environmental technical assistance for the next fiscal year. Second, leadership from the Departments of State and Commerce should begin consultations with strategic partners on coordinating sustainable infrastructure assistance. Third, senior officials from the US Agency for International Development should meet with Chinese counterparts to discuss strengthening the China International Development Cooperation Agency if it were to play a central role in Chinese development assistance architecture.

It would be a significant achievement for the United States to convince China to be more transparent and rules-based in its development finance. Chinese development finance likely has an even more harmful impact than the data indicate, given the opacity of the Chinese government. More transparency would allow the United States and its partners to engage China on BRI’s true environmental impact. If the United States succeeds in this strategy, global prosperity would grow and Beijing’s ability to deploy foreign aid for strategic aims would diminish.

 

Disclosure statement

No potential conflict of interest was reported by the author.

Funding

This research received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors.

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