Follow the Smog: What China's African Investments Reveal

 

One Belt, One Road: China's Strategy for a New Global Financial Order - Monthly Review

Introduction

Chinese Development Finance in Africa - Gellers and Jeffords

The influx of China's money into the African continent is among the most significant financial issues of the 21st century, with all sides having their opinion on the matter. In this post, we are going to explore whether China's investment decisions depend on the environment or if the relationship between the two is purely accidental.

General Information

Environmental Determinants of Chinese Development Finance in Africa - Gellers and Jeffords (2019)

The question that Gellers and Jeffords sought to answer was rather straightforward: do environmental conditions affect China's decision to invest in an African country via its 21st century "Belt and Road" policy? It turns out that they do. After analysis of China's investment decisions, Gellers and Jeffords found that pollution, resource endowment, and environmental conditions are all significant factors that determine where China is investing and they are independent of such parameters as trade relationships, good governance, and the need of the recipient state.

In light of the evident importance of environmental considerations in China, this contradicts the assumption that environmental considerations are less important than economic interests, being a product of the decision-making process and not an element thereof. Moreover, in light of this example, China's development financing system is not indifferent to the environment. It has environmental consciousness, whatever the eventual result on the ground may be.

Green Finance and Emerging Trends

Green Bond Standards and AIIB Safeguards – AIIB (2016)

On this basis, China utilizes the Green Bond Standards and the safeguards introduced by the Asian Infrastructure Investment Bank in order to develop its environmental image. Furthermore, the guidelines of Chinese policy banks regarding conducting environmental impact assessments of their foreign projects point to the emergence of a real environmental governance system.

Conclusion

The extent to which these measures actually yield any results on the ground remains to be seen, and this is precisely the issue that Gellers and Jeffords' model will explore further. Thanks for reading, and see you in the next post!

References

Gellers, J. C., & Jeffords, C. (2019). Environmental Determinants of Chinese Development Finance in Africa. Journal of Environment and Development, 28(2), 111–141. https://journals.sagepub.com/doi/10.1177/1070496518825282

Asian Infrastructure Investment Bank (AIIB). (2016). Environmental and Social Framework.

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