China Roundup

21/03/2018

Some of the first effects of the Communist Party of China’s decision to effectively allow Xi Jinping to remain President for life have been seen in major changes to the bureaucracies that run environmental management, natural resource planning, and foreign aid in China, all announced in recent days.  We have a brief roundup of these and other climate finance related developments in the country.

An Environment Mega-Ministry

In the first shake-up, the Ministry of Environmental Protection (MEP) is transformed into a “superagency”, renamed the Ministry for Ecological Environment, and taking over responsibilities for environmental management previously held by the land, water and agriculture ministries, as well as the State Oceanic Administration. In a move that creates some uncertainty over the future approach to climate change policy, the new ministry will also take on this function from the state planning agency, the once seemingly all-powerful National Development and Reform Commission (NDRC), along with its responsibility for managing low-carbon growth.  Noting that the NDRC “had been a champion of climate policy,”  Greenpeace said the new ministry “could aid coordination … but much more detail, including who heads which department, is needed to tell if it is a net positive move.”

Natural Resources Oversight Beefed Up

Meanwhile, a new Ministry of Natural Resources will aggregate responsibilities for management of China’s grasslands, forests, wetlands, water and maritime resources, and urban and township planning. Two former ministries/agencies will be scrapped.  The ministry will be overseeing programmes that are of critical importance to the government, including a major push on reforestation to help combat desertification that is threatening arable land that is very scarce in China.  It will also be managing sensitive policy issues and geographic areas, where competition over land rights between farmers and developers has led to both corruption and protests.   As well as looking to develop and protect China’s natural resources, the Ministry has been charged with finding ways of promoting paid use of them, suggesting more emphasis, for example, on ecosystem services.

For more climate finance news and comment, subscribe to our free weekly newsletter.

Quoted in the New York Times,Yanmei Xie, a policy analyst at a Beijing investment research firm, said that the possible benefits of the new set-up would not just be in potentially enhanced co-ordination. “The more important factor is that they are vested with the power to fulfil a mandate that is of top-level political importance,” she said.

Foreign Aid ‘with Chinese Characteristics’

On the foreign aid front, plans were announced for a new “international development cooperation agency”.  China has to date been a relative minnow in the provision of overseas aid, analysis suggesting that that official Chinese development assistance from 2000 to 2014 totalled $81 billion, less than a quarter of the $366 billion provided by the United States. Africa has been the main recipient in recent years,  absorbing half of China’s aid from 2010-12.

Combining the overseas aid responsibilities previously housed in the ministries of commerce and foreign affairs, the new agency will work directly under the State Council, China’s cabinet, and will be responsible for all aspects of foreign aid, from policy formulation to making grants and overseeing implementation.  But in a twist reflecting the fact that this is aid ‘with Chinese characteristics,’ as it were, it will also be responsible for promoting China’s giant (and highly commercial) Belt and Road initiative.  The linkage to commerce has been standard Chinese practice, with a sizeable proportion of the country’s overseas finance being provided is made in the form of loans or export credits. Infrastructure-for-resource deals have also been commonplace, especially in Africa.

As we went to press Devex came out with “5 Questions” about the new agency.

Dr Jekyll and Mr Hyde

Meantime, while the government cracks down on polluters at home, Chinese banks continue to be exuberant financiers of coal abroad, with the massive new Thar coal field in Pakistan and what would be Kenya’s first ever coal plant (but just one of hundreds of China-financed coal plants worldwide) being recent recipients of their largesse.

If overseas coal finance is the vicious ‘Mr Hyde’ aspect of China’s massively conflicted climate policy/personality, the virtuous ‘Dr Jekyll’ side is revealing new ambitions in the field of clean tech.  As our Featured Resource this week, ClimateScope’s latest update  shows, China remains by far the largest investor in renewables, and the global leader in solar technology, a local firm just 7 years old, CATL, is now vying with Tesla to become the world’s leading energy storage provider.   Started as a manufacturer of cheap and cheerful batteries for consumer goods, CATL has become a key component in China’s drive to take global leadership of the battery industry, in anticipation of the ever-faster moving switch to electric vehicles (EVs), whose numbers are expected to increase 5-fold in China alone (to 5 million) by 2020. CATL’s planned manufacturing growth is expected to also increase 5-fold, but over a much shorter period, putting its capacity on a par with Tesla’s giant new factory in the US.  See the full story in the FT (registration/paywall).

Leave a comment or join the conversation by following us on TwitterFacebook or Linkedin.

TAGS / , ,

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.