Will China’s green guide burnish the belt and road’s environmental credentials?

Beijing wants state-owned enterprises to meet global green standards, not lax local laws, when operating overseas and improve communication to better address local environmental concerns. Are they ready?

Xiaojun Wang

Published: 2:30pm, 1 Aug 2021

Why you can trust SCMP

Last month, China published a “Green Development Work Guide for Overseas Investment and Cooperation”, mainly targeting state-owned enterprises (SOEs), but also copied to key players in its Belt and Road Initiative, such as the China Development Bank, the Export-Import Bank of China and the China Export & Credit Insurance Corporation.

Jointly put out by the Ministry of Commerce and Ministry of Ecology and Environment, this green guide aims for Chinese SOEs “to gain a proactive stance in global cooperation and competition”, in light of the trend where “green is the direction for scientific and industrial revolutions, carbon neutrality is a global concern, and global trade is rapidly adopting green rules”.

In other words, Beijing is telling its SOEs to focus on low-carbon initiatives and be more competitive in the global market.

The guide lists 10 points that SOEs are encouraged to follow in their overseas operations, ranging from more investment in renewable energy, and the establishment of green supply chains, to the construction of green infrastructure, and industrial and trade zones.

Two other points stand out for environmental groups in belt and road partner countries. One expects Chinese companies to follow higher international standards, instead of weak local ones, and the other encourages better communication with local communities and environmental groups.

01:11

Protest in Myanmar against China-backed Myitsone dam ahead of Aung San Suu Kyi’s Beijing trip

To identify potential environmental risks, Chinese enterprises “are encouraged to follow internationally accepted practices to conduct environmental impact assessments and due diligence”. To prevent environmental risks, they should “follow internationally accepted standards or Chinese standards, in case of no regulation or low standards in host countries”.

This is the first time Chinese SOEs have been told to aim high and go beyond the minimum. For a long time, when addressing complaints from locals about environmental damage and weak environmental impact assessments, they would argue that they “follow local relevant regulations and standards”.

As recently as February, China’s foreign ministry, when asked about China’s support for overseas coal power plants while making carbon neutrality commitments, took a defensive tone by passing the blame back to host countries, insisting that they “opt for coal-fired power generation first in light of their national conditions and available resources so that they could at least manage to have access to affordable electricity”.

Lax environmental regulations in host countries have been convenient excuses for Chinese SOEs. In Indonesia and Pakistan, which have few air quality standards, Chinese companies have built coal-fired power plants whose emission standards for pollutants would be completely unacceptable in China.

02:06

Chinese cash funds African coal plants despite environmental concerns

With the new guide, communities in host countries can now hold Chinese companies to a higher standard. They should also be prepared for more communication and consultation from Chinese SOEs. The green guide ends with a call for Chinese SOEs to “enhance communications with the governments, media, people and environmental groups in host countries”.

When I interviewed villagers in five Asian countries for my book, Belt and Road Through My Village, the lack of communication and transparency was their biggest complaint. The only contact many had had with a Chinese person in their village was when an engineer or technician collected soil or rock samples. Local environmental groups usually did not hear back from Chinese SOEs or embassies, despite phone calls, letters and even protests.

Chinese SOEs expect local government agencies and business partners, some of whom may not be the most reliable or credible themselves, to take care of all communication with local communities, and for social and environmental impact assessments.

In the case of the Kaliwa Dam in the Philippines, for example, construction started before the legally required Free and Prior Informed Consent process was completed with all indigenous communities. China, however, has ended up bearing the blame for pushing through the project and neglecting indigenous concerns.

Philippine Department of Public Works and Highways Senior Undersecretary Rafael Yabut (third from left) and Tan Qingsheng (second from right), charge d’affaires of the Chinese embassy in the Philippines, attend the ground-breaking ceremony of the Kaliwa Dam project in Rizal province, the Philippines, on June 29. Photo: Xinhua

Chinese SOEs must realise their overseas operations are crucial to China’s global image. As President Xi Jinping makes global commitments about carbon peak emissions and carbon neutrality, Chinese companies investing in coal-fired power plants in Bangladesh and Indonesia undermine this image-building effort by leaving local communities concerned about air quality and the climate crisis.

With the green guide, Beijing is telling SOEs that they are also responsible for showing green leadership and burnishing the environmental credentials of the “Built by China” brand. Chinese SOEs must hold themselves to higher international standards and proactively and directly communicate with local communities and environmental groups.

For some time, local communities and environmental groups have been eager to talk. The question now is: are Chinese SOEs ready?

Xiaojun Wang is executive director of Manila-based People of Asia for Climate Solutions

Post