{"id":2484,"date":"2016-05-16T06:30:37","date_gmt":"2016-05-16T11:30:37","guid":{"rendered":"https:\/\/www.bu.edu\/gdp\/?p=2484"},"modified":"2022-07-13T16:27:30","modified_gmt":"2022-07-13T20:27:30","slug":"fueling-growth-and-financing-risk-the-benefits-and-risks-of-chinas-development-finance-in-the-global-energy-sector","status":"publish","type":"post","link":"https:\/\/www.bu.edu\/gdp\/2016\/05\/16\/fueling-growth-and-financing-risk-the-benefits-and-risks-of-chinas-development-finance-in-the-global-energy-sector\/","title":{"rendered":"Fueling Growth and Financing Risk: The Benefits and Risks of China\u2019s Development Finance in the Global Energy Sector"},"content":{"rendered":"<figure id=\"attachment20754\" aria-describedby=\"caption-attachment20754\" style=\"width: 646px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" src=\"\/gdp\/files\/2016\/05\/pramod-kumar-sharma-v3y0ELDhx3I-unsplash-636x424.jpg\" alt=\"\" width=\"636\" height=\"424\" class=\"size-medium wp-image-20754\" srcset=\"https:\/\/www.bu.edu\/gdp\/files\/2016\/05\/pramod-kumar-sharma-v3y0ELDhx3I-unsplash-636x424.jpg 636w, https:\/\/www.bu.edu\/gdp\/files\/2016\/05\/pramod-kumar-sharma-v3y0ELDhx3I-unsplash-1024x683.jpg 1024w, https:\/\/www.bu.edu\/gdp\/files\/2016\/05\/pramod-kumar-sharma-v3y0ELDhx3I-unsplash-768x512.jpg 768w, https:\/\/www.bu.edu\/gdp\/files\/2016\/05\/pramod-kumar-sharma-v3y0ELDhx3I-unsplash-1536x1024.jpg 1536w, https:\/\/www.bu.edu\/gdp\/files\/2016\/05\/pramod-kumar-sharma-v3y0ELDhx3I-unsplash-2048x1365.jpg 2048w\" sizes=\"(max-width: 636px) 100vw, 636px\" \/><figcaption id=\"caption-attachment20754\" class=\"wp-caption-text\">Photo by Pramod Kumar Sharma via Unsplash.<\/figcaption><\/figure>\n<p><span style=\"font-weight: 400;\">In just over a decade, Chinese policy banks have emerged as global leaders in development finance in general and in finance for energy projects in developing country governments in particular. China has founded or co-founded two new multilateral development banks (MDBs) and at least 13 regional and bilateral funds that will increase Chinese development finance abroad by orders of magnitude. Such a stepwise increase in global development finance arrives just in time, as the world faces major infrastructure and energy gaps and has just committed to increasing finance for sustainable development on a global scale.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, China\u2019s global energy portfolio is heavily exposed to country, macroeconomic, climate, and social risks. To mitigate such r<\/span><span style=\"font-weight: 400;\">isks and meet the broader sustainable development challenge for the 21st Century, China\u2019s development finance will need to shift the composition of its global energy lending in a significant manner.<\/span><\/p>\n<p><a href=\"https:\/\/www.bu.edu\/gdp\/files\/2017\/08\/Fueling-Growth.FINAL_.July_.pdf\" target=\"_blank\" rel=\"noopener noreferrer\"><b><i>A working paper<\/i><\/b><\/a><span style=\"font-weight: 400;\"> by <\/span><a href=\"https:\/\/www.bu.edu\/gdp\/profile\/kevin-p-gallagher\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">Kevin P. Gallagher<\/span><\/a><span style=\"font-weight: 400;\">, <\/span><a href=\"https:\/\/www.bu.edu\/gdp\/profile\/rohini-kamal\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">Rohini Kamal<\/span><\/a><span style=\"font-weight: 400;\">, <\/span><a href=\"https:\/\/www.bu.edu\/gdp\/profile\/yongzhong-wang-visitor-scholar\/\" target=\"_blank\" rel=\"noopener noreferrer\"><span style=\"font-weight: 400;\">Yongzhong Wang<\/span><\/a><span style=\"font-weight: 400;\"> and Yanning Chen provides the first estimates of China\u2019s global development finance institutions in general and China\u2019s policy bank lending to foreign governments for energy.\u00a0<\/span><\/p>\n<h5><b>Key Findings:<\/b><\/h5>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">China\u2019s national development banks already lent as much to foreign governments for energy as all the major Western-backed MDBs combined.<\/span><\/li>\n<li aria-level=\"1\"><b><span style=\"font-weight: 400;\">Between 2007 and 2014 Chinese banks doubled the amount of energy financing available to national governments, adding another $117.5 billion dollars in energy finance for foreign governments.\u00a0<\/span><\/b><\/li>\n<li aria-level=\"1\"><span style=\"font-weight: 400;\">Chinese energy finance is exposed to significant country and macroeconomic risk, in contrast with the Western-backed development banks across the world.<\/span><\/li>\n<li aria-level=\"1\"><span style=\"font-weight: 400;\">Chinese development banks are also heavily exposed to climate and social risk, with <\/span><span style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">energy loans highly concentrated in fossil fuel extraction and power generation, especially coal. Using conservative estimates of the climate and local health costs of coal plant emissions, we calculate that the yearly social cost o<\/span><\/span><span style=\"font-weight: 400;\">f Chinese overseas coal-fired power plants amounts to $29.7 billion. Assuming a power plant lifetime of 30 years, total social cost could range from $117 billion to $892 billion.\u00a0\u00a0<\/span><\/li>\n<\/ul>\n<ul><\/ul>\n<p><span style=\"font-weight: 400;\">The authors argue that diversifying China\u2019s global energy portfolio toward cleaner energy technologies will help Chinese policy banks mitigate the risks associated with primary commodities and meet broader sustainable development goals. However, it will be a significant challenge for the Chinese banks and the newly created China-backed funds to shift toward a more sustainable energy portfolio.<\/span><\/p>\n<a href=\"https:\/\/www.bu.edu\/gdp\/files\/2017\/08\/Fueling-Growth.FINAL_.July_.pdf\" class=\"button\">Read the Working Paper<\/a>\n<a href=\"https:\/\/www.bu.edu\/gdp\/files\/2017\/08\/FuelingGrowth.CN_.pdf\" class=\"button\">\u9605\u8bfb\u4e2d\u6587\u62a5\u544a\u5168\u6587<\/a>\n","protected":false},"excerpt":{"rendered":"<p>In just over a decade, Chinese policy banks have emerged as global leaders in development finance in general and in finance for energy projects in developing country governments in particular. China has founded or co-founded two new multilateral development banks (MDBs) and at least 13 regional and bilateral funds that will increase Chinese development finance [&hellip;]<\/p>\n","protected":false},"author":10886,"featured_media":20754,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1149,72,105,30],"tags":[212,394,2249,2246,649,696,176,409,641,208,396,429,1514,1774,2247,195,415,2248],"_links":{"self":[{"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/posts\/2484"}],"collection":[{"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/users\/10886"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/comments?post=2484"}],"version-history":[{"count":6,"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/posts\/2484\/revisions"}],"predecessor-version":[{"id":21315,"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/posts\/2484\/revisions\/21315"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/media\/20754"}],"wp:attachment":[{"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/media?parent=2484"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/categories?post=2484"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bu.edu\/gdp\/wp-json\/wp\/v2\/tags?post=2484"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}