September 2

By Julia O’Malley

Chinese companies in Central Asia do not attach due importance to environmental requirements, do not inform the population about their intentions, do not report the results of environmental monitoring of their activities. State-owned companies of the People’s Republic of China are destroying the environment in countries around the world through infrastructure projects characterized by high levels of corruption.

China has the highest greenhouse gas emissions and is a major source of mercury pollution and a major consumer of animal and wood products. Chinese state-owned companies are bringing neglect of nature to other countries through Belt and Road Initiative (BRI) infrastructure projects, which are often accompanied by corruption.

Recently, on several continents, projects supported by China have led to the eviction of local residents, deteriorating water resources, contamination of adjacent territories and the destruction of vulnerable ecosystems. According to a study published in the journal Nature Sustainability in May 2018, Belt and Road projects can lead to “irreversible environmental degradation.” In November 2017, WWF announced that BRI projects could have implications for nearly 265 endangered species, including antelopes, tigers and giant pandas.

Under the Belt and Road Initiative, China is inviting developing countries to develop new infrastructure projects that are often corrupt, poorly supervised and poor in performance. As noted in many reports, violations of workers’ rights and overwhelming debt obligations are also common. In Latin America, there may be a link between Chinese infrastructure investment and illegal wildlife trade.

As a result of the lack of clear environmental guidelines for Chinese projects, countries have to deal with the consequences of projects that do not meet international standards. According to the Associated Press, Chinese state-owned companies, including China National Petroleum Corporation, are funding projects in South Sudan. These projects result in the contamination of soils and soil waters with toxic chemicals. This affects the health of the population living nearby. In particular, there is an increased number of birth injuries.

One Chinese-funded oil company is also involved in corrupt practices: Citing a report from Washington-based monitoring group The Sentry, the Associated Press reports that the company was spending funds to maintain the luxurious lifestyle of high-ranking officials, rather than spending those funds allocated for the development of projects.

In the period 2000-2018. Chinese corporations and state banks have funded 777 overseas energy projects. Coal projects, which account for 40% of generating capacity, contribute to 235 million tons of carbon dioxide annually – 2.6% of all emissions from the energy sector outside of China. At the same time, two-thirds of the power plants that are being built today with the participation of China in South Africa, Zimbabwe, Kenya, Tanzania and Ghana are classified as “dangerous” and “very dangerous” for the environment.

The funds allocated by Beijing as part of the Belt and Road strategy are being actively mastered by the Chinese themselves. For example, there is a widespread scheme where the Development Bank of China or the Export-Import Bank of China provide loans, the State Grid Corporation of China is involved in the creation of infrastructure, and the State Energy Investment Corporation is responsible for generating electricity.

In order to avoid criticism, the Chinese side avoids financing the coal energy of foreign countries directly, but does it through intermediaries and partners. In 2018, the Beijing-controlled Asian Infrastructure Investment Bank (AIIB) channeled US $ 150 million to the International Finance Corporation’s Emerging Asia Fund, which later channeled these funds to a cement plant in Burma, which includes the creation of a coal-fired power plant with long life cycle (more than 50 years).

Beijing also seeks to occupy the niches freed up as a result of Tokyo and Seoul’s refusal to finance foreign coal energy. At the end of 2020, the relevant bills were submitted to the parliaments of Japan and the Republic of Korea. According to these decisions, major representatives of the business circles of these countries, such as Kookmin Bank and Samsung Group, also reoriented to “green initiatives”.

At the same time, financial institutions controlled by the Chinese leadership refuse to take on additional commitments and develop comprehensive strategies to respond to climate change. At last year’s “Finance in Common Summit”, the AIIB leadership refused to sign a joint declaration of all state development banks in the world, which includes important provisions on environmental protection.

At the same time, AIIB and the Silk Road Fund (SRF) are investing in overseas infrastructure without due diligence on human rights and environmental standards. Banks hide information about their plans until the launch of projects and avoid prior consultations with community experts. At the same time, there are no really functioning mechanisms for dialogue with the local population, as well as for the consideration of complaints from victims.

In this regard, despite the declared intentions to take a leading role in the fight against global warming, Beijing, in order to advance its interests within the framework of the Belt and Road strategy, deliberately encourages the AIIB and SRF to covertly finance projects that pollute the environment. The Western community should pay close attention to this issue, especially since the climate problem has again become one of the priorities of the United States with the arrival of the new President of this country, J. Biden.