{"id":60060356,"date":"2024-11-19T18:56:04","date_gmt":"2024-11-19T18:56:04","guid":{"rendered":"https:\/\/dialogue.earth\/?p=60060356"},"modified":"2024-11-25T12:58:53","modified_gmt":"2024-11-25T12:58:53","slug":"will-china-assume-more-responsibility-for-global-climate-finance","status":"publish","type":"post","link":"https:\/\/dialogue.earth\/en\/climate\/will-china-assume-more-responsibility-for-global-climate-finance\/","title":{"rendered":"Will China assume more responsibility for global climate finance?"},"content":{"rendered":"\n

Climate finance is high on the agenda at COP29, which is currently taking place in Baku, Azerbaijan. The escalating climate crisis has led the UN to estimate that developing countries need approximately USD 6 trillion<\/a> to enact their climate change action plans by 2030.<\/p>\n\n\n\n

The talks in Baku are centred around the New Collective Quantified Goal on Climate Finance (NCQG), which will be a critical measure of the conference\u2019s success. The NCQG builds on a 2009 commitment made by developed countries at COP15, to provide USD 100 billion in climate finance to poorer nations annually by 2020. Key issues under discussion at COP29 include the ultimate funding targets, developing countries\u2019 priorities and needs, and the design of financing mechanisms.<\/p>\n\n\n\n

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Recommended<\/span><\/span><\/div><\/a>\n\n\n\n

So far, developed countries including Switzerland and Canada have used COP29 to propose expanding the contributor base, mobilising more nations to join. Emerging economies such as China, the United Arab Emirates and South Korea (not included in COP15\u2019s USD 100 billion commitment) are now seen by the international society as capable and responsible for making more significant contributions to climate finance.<\/p>\n\n\n\n

China is under the brightest spotlight. Recent studies by several thinktanks indicate that since its Belt and Road Initiative was launched, China has contributed over USD 30 billion<\/a> to global climate finance. According to the World Resources Institute, this puts China on a par with the United Kingdom, to become the joint fifth-largest<\/a> provider of climate finance after Japan, Germany, the United States and France.<\/p>\n\n\n\n

The Belt and Road Initiative<\/span>
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First announced by Xi Jinping in 2013, the Belt and Road Initiative (BRI) is a global infrastructure development strategy designed to boost trade and economic growth. \u201cBelt\u201d refers to the Silk Road Economic Belt \u2013 a series of overland routes linking China to Europe via Central Asia and the Middle East; \u201cRoad\u201d acknowledges the 21st-century maritime Silk Road \u2013 a sea route connecting China\u2019s southern coast to the Mediterranean via East Africa. A vast range of projects, including motorways, ports, power plants and factories, have been called a part of the Belt and Road Initiative. You can read our BRI reporting here<\/a>.<\/p>\n<\/div><\/div><\/div>\n\n\n\n

Speaking in Baku on 12 November, the Chinese Vice Premier Ding Xuexiang highlighted that, since 2016, China has provided and mobilised over CNY 177 billion<\/a> (approximately USD 24.5 billion) in project funding to support other developing countries in addressing climate change. He also called for developed countries to increase their financial support and technology transfers to developing countries. However, this figure was absent from Chinese official media reports the following day, sparking speculation that China might be wary of its statements being taken out of context, and potentially misrepresenting its stance on NCQG.<\/p>\n\n\n\n

What is China\u2019s position on the NCQG negotiations? What role does it play in global climate finance? And, to avoid a zero-sum game underpinned by China-US tensions regarding the scope of contributors, what considerations should guide the NCQG design? This article seeks to clarify these questions.<\/p>\n\n\n\n

China\u2019s contributions to global climate finance<\/h2>\n\n\n\n

According to the Organisation for Economic Co-operation and Development (OECD), for nine years there was a consistent gap between climate financing targets and the actual funds received by developing countries, between 2013 and 2021. It was not until 2022 that developed countries surpassed the USD 100 billion annual target for the first time, providing USD 115.9 billion<\/a> in climate finance for developing nations. This was two years behind schedule \u2013 and even then, the figure was questioned<\/a>.<\/p>\n\n\n\n

China is emerging as an important source of funding for climate finance in developing countries. According to a recent study<\/a> by the Center for Global Development (CGD), a thinktank based in London and Washington DC, China has contributed about USD 3.8 billion annually in climate finance to developing countries since the implementation of the Belt and Road Initiative in 2013, through bilateral, multilateral and regional financing mechanisms. By 2021, China had contributed a total of USD 34.3 billion in climate finance.<\/p>\n\n\n\n

What is climate finance?<\/span><\/span>
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Globally, there is no unified definition of climate finance. The Organisation for Economic Co-operation and Development (OECD) defines climate finance as possessing these distinct components:<\/p>\n\n\n\n

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  • Bilateral public climate finance provided by institutions, notably bilateral aid agencies and development banks.<\/li>\n\n\n\n
  • Multilateral public climate finance provided by multilateral development banks and multilateral climate funds.<\/li>\n\n\n\n
  • Climate-related, officially supported export credits, provided by developed countries’ official export credit agencies.<\/li>\n\n\n\n
  • Private finance mobilised by bilateral and multilateral public climate finance.<\/li>\n<\/ul>\n<\/div><\/div><\/div>\n\n\n\n

    China\u2019s climate finance goes mainly to developing countries in Asia and Africa. The CGD\u2019s research shows that about half of it is invested mainly in the energy sector, followed by transport, water supply and sanitation. In the energy sector, photovoltaic (solar power) projects accounted for 39% of the total, followed by hydro and wind projects at 25% and 16% respectively. Transport investments are dominated by urban light rail and metro. Investments in mining accounted for only 4%. Agriculture, forestry and fisheries accounted for only 1%.<\/p>\n\n\n\n

    According to the World Resources Institute\u2019s report, China channels its climate financing through four main avenues: bilateral public funds, multilateral public funds, export credits and mobilised private financing.<\/p>\n\n\n\n

    It is worth mentioning that China\u2019s overseas climate investment is mainly in the form of loans. Only 3% of the money was given as grants, far lower than the 39% level of developed countries.<\/p>\n\n\n\n

    Beata Cichocka, research associate of the CGD\u2019s European Development Policy and Leadership Programme, tells Dialogue Earth this is crucial:<\/p>\n\n\n\n

    \u201cAlthough China has provided some USD 27 billion in bilateral and regional climate-related finance since 2013, only the equivalent of USD 6 billion of this can be considered \u2018grant-equivalent\u2019 support [ie funding that is either not repayable, or comes with significant concessionality compared with market rates].\u201d<\/p>\n\n\n\n