China Projects Power Through \'Climate Aid\'

 Alan Neuhauser
  15th-Oct-2018

CHINA, WHICH FOR YEARS has asserted its global influence through investments in foreign infrastructure projects like coal-fired power plants and highways, is increasingly offering assistance to other countries for what it portrays as "green" projects designed to ease impact on the environment.

From high-speed rail projects in Latin America to solar farms and hydro-dams in Africa, this so-called "climate aid" is seen as cause for concern – both about the environmental friendliness of the projects Beijing underwrites and about its underlying geopolitical intentions.

The American Security Project warned in a report last week that China is "using climate-related aid as a new element of leverage."

"The developing of these relationships is another of these key strategic moves by China to be a part of nations' planning and agendas and how they think about their futures, both economically and diplomatically," says Esther Babson, who compiled the report as program manager for climate security at the D.C.-based think tank.

The climate-related outlays are a mere fraction of China's broader investment in its "Belt and Road Initiative," the country's key foreign policy project that involves hundreds of billions of dollars of infrastructure funding for cash-starved countries in an effort to create a global trade network with Beijing at its center.

However, China has come under intense scrutiny – and pressure from the Trump administration – for engaging in or supporting predatory lending practices that it's then used to exploit developing nations.

In such "debt-trap diplomacy," Beijing offers cheap loans for projects such as new power plants or airports but with a high risk of default if the host country can't keep up with the interest payments. That gives China an opening to seize control of the project, giving them a foothold in a foreign land.

An analysis in March by the nonpartisan Center for Global Development concluded that eight countries were exposed to unusually high levels of debt to China: Djibouti, Kyrgyzstan, Laos, the Maldives, Mongolia, Montenegro, Pakistan, and Tajikistan. Three months earlier, then-Secretary of State Rex Tillerson declared that China's lending practices encouraged "dependency using opaque contracts, predatory loan practices, and corrupt deals that mire nations in debt and undercut their sovereignty, denying them their long-term, self-sustaining growth."

Analysts and news accounts have attributed at least some of Venezuela's catastrophic economic crisis to ruinous debts the country has accrued to China. Malaysia's prime minister recently likened the relationship to colonialism and announced he was cancelling two planned projects with China worth billions of dollars for fear the country would not be able to pay back the debt.

But with climate change, the developing world is facing mounting pressure to address its causes and effects – often at great expense. The International Monetary Fund's most recent World Economic Outlook, for example, said the economies of such low-income countries are increasingly at risk and urged that action be taken to protect their infrastructures and output against "weather shocks."

That has raised fears about the potentially exploitative nature of China's offer of "climate aid," especially as the U.S. under President Donald Trump has reconsidered its international role, looking strategically at things like economic assistance and trade agreements and potentially alienating allies and partners.

"For China and their growing influence in these regions, it's a huge signal that they're trying to take over the leadership roles that the U.S. previously held," Babson says.

Trump, at the United Nations General Assembly last month, suggested that countries in line for American assistance would be vetted to determine if they "have our interests at heart," a line some interpreted as meaning the administration is positioning itself for an "aid war" for influence between the U.S. and China. The Senate on Wednesday passed on a 93-6 bipartisan vote a bill that included $60 billion in development funding to match a similar pledge by China last month.

"Part of it does go back to what Secretary Tillerson termed predatory lending practices by China, looking at the fact that there are at least eight countries the IMF said will never be able to repay their debt from the Belt and Road initiative," says Elizabeth Economy, a senior fellow and director for Asia studies at the Council on Foreign Relations.

The green credentials of Chinese aid, however, have long been in doubt. Although China, for example, in 2016 issued some $36 billion in "green bonds" – sold to finance environmentally conscious projects – and another $37.1 billion last year, a bulk of the bonds financed decidedly non-climate-friendly projects, including new or refurbished coal-fired power plants. More than a third of the bonds last year, in fact, reportedly fell short of international green standards, and multiple Chinese-backed projects overseas have come under fire for failing to uphold environmental standards or even perform an environmental assessment at all. In terms of energy projects, about 80 percent of Chinese investment is in coal.

China in recent years has become the world's manufacturing hub for solar panels and wind turbines and it's built enormous solar farms domestically and in nations such as Pakistan. But though its leaders "claim environmental sensibility in some respects, when you dig down, when they say they're doing the right thing, you see that they're not," Economy says.

Even if China's rhetoric – including its efforts to herald what it's described as a "green" Belt and Road Initiative – is fooling no one, however, it's plunged ahead in painting itself green anyway, if for no other reason than the market opportunities its companies can exploit, from solar and wind to new growth potential for nuclear power plants.

"For China it's more trade than aid," says Jennifer Turner, director of the China Environment Forum at the Wilson Center, a think tank. "It's all about markets. China has captured the market on solar PV panels, so some of the investment overseas is trying to replicate that success. It's their global infrastructure strategy."

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