China's commitment to cease overseas coal financing has not translated into increased funding for renewable projects, as the nation's development banks recorded zero new energy sector loans for the second consecutive year in 2022, according to researchers at Boston University.
In 2021, President Xi Jinping announced China's decision to halt financial support for overseas coal projects and allocate more funds to green and low-carbon energy initiatives in developing nations. However, while new lending for fossil fuels has ceased, the Global Development Policy Center (GDP Center) at Boston University revealed that China's development banks registered no new energy sector loan commitments in both 2021 and 2022.
“China's support for overseas coal projects was already on the decline before Xi's 2021 pledge,” noted Cecilia Springer, Non-Resident Fellow at the GDP Center and lead author of the report. “However, the other half of the pledge – to step up support for green and low-carbon energy – has yet to solidify.”
Between 2000 and 2022, the China Development Bank (CDB) and the Export-Import Bank of China (CHEXIM) provided a total of 331 loans amounting to $225 billion for energy projects. The majority of these loans supported exploration and extraction activities, with nearly three-quarters directed towards coal, oil, and gas projects.
Despite a decline in financing from these banks since 2016, the GDP Center report emphasized that China's energy lending still surpasses that of any other global lender, including the World Bank.
At the recent Belt and Road summit, China introduced the Green Investment and Finance Partnership (GIFP) to promote green energy. President Xi pledged approximately $100 billion in annual financing to support the energy transition in Belt and Road countries. While acknowledging this as a positive step, Springer remarked that it remains a “drop in the bucket” toward meeting the Paris Agreement goals. However, she also highlighted the significance of China committing to increased financial resources after a period of reduced development finance levels. The GDP Center's database indicated that China's fossil fuel lending commitments since 2013, coinciding with the Belt and Road project announcement, amounted to $55.4 billion, with $20 billion allocated to coal-fired power generation.