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Chinese Overseas Investment Policy: Implications for Climate Change

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  • Kelly Sims Gallagher
  • Qi Qi

Abstract

President Xi Jinping launched the Belt and Road Initiative (BRI) in 2013. In total capital, China is now the largest investor in least‐developed countries and in developing Asia, and the fifth‐largest investor in Africa. Motivated by concerns about the climate change consequences of China’s overseas investments, this paper identifies and evaluates Chinese policies governing China’s overseas investments and analyzes how those policies influence environmental outcomes in recipient countries. Policies governing domestic investments are analyzed in order to clarify inconsistencies between domestic and overseas policies. Key findings are that the Chinese government’s environmental policies governing domestic investments are more stringent than those governing overseas investments. Chinese environmental overseas investment policies are mostly voluntary in nature so long as firms comply with host country regulations. Disclosure and transparency of information about China’s investments is opaque. Even if there is a failure to comply with host country regulations, there do not appear to be serious enforcement consequences. Finally, China encourages overseas investments in clean energy as well as exploration and development of higher carbon industries and fails to specifically restrict or prohibit investment in carbon‐intensive and fossil fuel industries in its overseas investments, revealing a discrepancy between policy for domestic and overseas investment.

Suggested Citation

  • Kelly Sims Gallagher & Qi Qi, 2021. "Chinese Overseas Investment Policy: Implications for Climate Change," Global Policy, London School of Economics and Political Science, vol. 12(3), pages 260-272, May.
    • Handle: RePEc:bla:glopol:v:12:y:2021:i:3:p:260-272
    DOI: 10.1111/1758-5899.12952
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    References listed on IDEAS

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    1. Tancrède Voituriez & Wang Yao & Mathias Lund Larsen, 2019. "Revising the ‘host country standard’ principle: a step for China to align its overseas investment with the Paris Agreement," Climate Policy, Taylor & Francis Journals, vol. 19(10), pages 1205-1210, November.
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    4. Tancrède Voituriez & Wang Yao & Mathias Lund Larsen, 2019. "Revising the ‘host country standard’ principle: a step for China to align its overseas investment with the Paris Agreement," Post-Print hal-02567887, HAL.
    5. Joel Backaler, 2014. "China Goes West," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-29393-0, December.
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    Cited by:

    1. Ali Rıza Güngen, 2023. "New Multilateral Development Banks and Green Lending: Approaching Scalar Complexities in the Global South," Development and Change, International Institute of Social Studies, vol. 54(2), pages 251-279, March.
    2. Mathias Lund Larsen & Tancrède Voituriez & Christoph Nedopil, 2023. "Chinese overseas development funds: An assessment of their sustainability approaches," Post-Print hal-04052167, HAL.
    3. Lin Ni & Lei Li & Xin Zhang & Huwei Wen, 2022. "Climate Policy and Foreign Direct Investment: Evidence from a Quasi-Experiment in Chinese Cities," Sustainability, MDPI, vol. 14(24), pages 1-19, December.
    4. Bhandary, Rishikesh Ram & Gallagher, Kelly Sims, 2022. "What drives Pakistan’s coal-fired power plant construction boom? Understanding the China-Pakistan Economic Corridor’s energy portfolio," World Development Perspectives, Elsevier, vol. 25(C).
    5. Mathias Lund Larsen, 2023. "Bottom-up market-facilitation and top-down market-steering: comparing and conceptualizing green finance approaches in the EU and China," Asia Europe Journal, Springer, vol. 21(1), pages 61-80, March.

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