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China and global development: 20 things to read in December

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Written by Yue Cao, Yunnan Chen

Image credit:Asian Development Bank Image license:CC BY 2.0

Welcome to the December issue of the China and Global Development roundup. This issue is jointly written by Yue Cao and Yunnan Chen.

It’s been a few months since the last issue so we wanted to gift you with a few more resources to read published in the last few months, including ODI’s research on the Belt and Road Initiative (BRI) and Covid-19 in low-income countries, publications on BRI’s new environmental regulations and governance initiatives, and new datasets tracking Chinese overseas activities.

ODI’s research on China and global development

As mentioned in the previous issue of the round-up, ODI is publishing a series of reports on the BRI and Covid-19 in low-income countries and China’s contribution to global development. A new paper by Calabrese and Cao in World Development investigates how the Cambodian government and the previous government in Myanmar (under the National League for Democracy) leveraged the BRI for their own development objectives. This highlights the agency of host country governments in achieving desired outcomes in the context of the BRI and more generally infrastructure planning and implementation. The paper is part of a special issue on 'BRI: A New Development Paradigm in the Making?', featuring other great analyses.

Calabrese, Huang and Nadin published a report on the development risks and opportunities of the BRI in Ethiopia, exploring the job creation, increased production and exports, and infrastructure development opportunities of Chinese investments in Ethiopia. The report also identifies the risks of overreliance on China to the Ethiopian development process and to Chinese investors themselves.

Two new papers look at China’s approach to lending and contracting. The first paper from Rudyak and Chen looks at the heterogenous institutional landscape of China’s overseas lending, highlighting the diverging approaches to debt relief and restructuring that borrowers face for different loans and institutions. The second paper from Lui and Chen takes a practitioner lens to look at the evolution of China’s lending practices, in terms of its loan contracts and practices, and how some of the ominously-perceived clauses and opacity around loan confidentiality have emerged out of an organic process under particular institutional and legal constraints.

Turning to the multilateral development banks (MDBs), Humphrey and Chen survey the shift of China from a borrower member of the MDBs to a non-borrower and the reasons underpinning this change as well as the implications for the governance and operations of MDBs and global development. The report finds that China has utilised its membership in MDBs to build its profile as a responsible global power, as channels for diplomacy in different regions, as outlets for exporting capital and foreign exchange reserves, and as venues to build knowledge and experience on global best practices.

The BRI’s evolving environmental regulation

BRI projects have long been criticised for their weak environmental and social governance. In a special policy report released in September, the China Council for International Cooperation on Environment and Development reviewed the implementation of 32 national and local government policies related to the environmental management of BRI projects. It questions the effectiveness of these policies due to their voluntary nature, low standing in the Chinese legal system, lack of specific requirements for implementation, and the requirement to only comply with laws and regulations of host countries which are often minimal or inadequate. The report recommends stronger policy guidance and administrative measures to support existing practices, as well as lessons from international experience to green the BRI.

Addressing these governance shortcomings, the Chinese government has been gradually introducing stricter environmental regulations on overseas activities. In July, the Ministry of Commerce and Ministry of Ecology and Environment issued the Green Development Guidelines for Foreign Investment and Cooperation, focusing on both investment and trade. The policy, while still voluntary in nature, requests enterprises to ‘follow international green rules and standards’, going beyond past policies requiring the adoption of host country policies. In addition, the guidelines also request the greening of overseas projects across the whole project lifecycle, and the establishment of grievance mechanisms to better align with local needs. They also expand the scope of environmental protection and pollution control to include measures to protect the climate and biodiversity.

In October, the BRI International Green Development Coalition, under the Ministry of Ecology and Environment, published several reports assessing environmental aspects of BRI projects, including case studies on green cities, biodiversity conservation, green maritime connectivity and transport. They also published two technical papers on how to apply the ‘traffic light’ system on low-carbon, resilient investments, developed in Phase 1 of the Green Development Guidance for BRI projects for Enterprises and financial institutions and in the railways and highways sectors.

In November, the International Platform for Sustainable Finance released the Common Ground Taxonomy report comparing green taxonomies between the EU and China. While the report focused on the adaptation components of both parties’ taxonomies, the long-term objective is to harmonise and create interoperability of these taxonomies across jurisdictions.

New datasets on Chinese overseas activities

AidData published an update of its Global Chinese Development Finance dataset. This is a substantially larger and more granular dataset compared to version 1.0. Among the key improvements to the dataset are that it now covers all sectors, all regions, all low-income and middle-income countries and all types of financial and in-kind transfers from more than 330 Chinese entities between 2000 and 2017. The database uses the OECD-DAC’s definitions to categorise the different financial flows into Official Development Assistance (ODA) or Other Official Flows (OOF), and identifies the official Chinese financiers, co-financiers including foreign entities, recipient institutions, contractors, and entities providing guarantees, insurance and collateral. The high granularity of the upgraded database opens up new opportunities for original analysis.

Pouring over 23,000 press conferences of China’s Ministry of Foreign Affairs, Mochtak and Turcsanyi created a repository of press conferences’ official transcripts, organised around a question-response structure to map two decades of Chinese foreign policy discourse. The database is a great resource to understand the evolution of Chinese foreign policy priorities. The researchers have written an article in the Journal of Chinese Political Science presenting the database and demonstrating its applicability through two case studies on China’s diplomatic discourse towards the US under Hu Jintao and Xi Jinping, and analysing narratives concerning disputes in the South China Sea.