IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v122y2018icp313-321.html
   My bibliography  Save this article

Energizing development finance? The benefits and risks of China's development finance in the global energy sector

Author

Listed:
  • Gallagher, Kevin P.
  • Kamal, Rohini
  • Jin, Junda
  • Chen, Yanning
  • Ma, Xinyue

Abstract

This paper provides the first estimates of China's global developmental finance institutions in general and China's policy bank lending to foreign governments for energy in particular. According to the China Global Energy Finance database, between 2000 and 2017, China Development Bank (CDB) and China Export-Import Bank (CHEXIM) provided $225.75 billion in overseas energy development finance. We find that: China's ‘policy banks’ and funds have doubled the availability of global development finance –and hold more assets than the major Western-backed MDBs operating in developing countries. With the onset of a new family of funds and multilateral development banks co-financed by China, China is poised to be the largest development lender in the world as Western-backed MDBs appear stagnated in their ability to increase their capital bases. China's global energy portfolio is heavily exposed to country, macroeconomic, climate, and social risks, however. To mitigate such risks and meet the broader sustainable development challenge for the 21st Century, China's development finance will need to shift the composition of its global energy lending in a significant manner.

Suggested Citation

  • Gallagher, Kevin P. & Kamal, Rohini & Jin, Junda & Chen, Yanning & Ma, Xinyue, 2018. "Energizing development finance? The benefits and risks of China's development finance in the global energy sector," Energy Policy, Elsevier, vol. 122(C), pages 313-321.
    • Handle: RePEc:eee:enepol:v:122:y:2018:i:c:p:313-321
    DOI: 10.1016/j.enpol.2018.06.009
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421518303975
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2018.06.009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Deborah Bräutigam & Kevin P. Gallagher, 2014. "Bartering Globalization: China's Commodity-backed Finance in Africa and Latin America," Global Policy, London School of Economics and Political Science, vol. 5(3), pages 346-352, September.
    2. Stefano Battiston & Antoine Mandel & Irene Monasterolo & Franziska Schütze & Gabriele Visentin, 2017. "A climate stress-test of the financial system," Nature Climate Change, Nature, vol. 7(4), pages 283-288, April.
    3. Philip M. Fearnside & Salvador Pueyo, 2012. "Greenhouse-gas emissions from tropical dams," Nature Climate Change, Nature, vol. 2(6), pages 382-384, June.
    4. Kevin P. Gallagher & Amos Irwin, 2014. "Exporting National Champions: China's Outward Foreign Direct Investment Finance in Comparative Perspective," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 22(6), pages 1-21, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Haider Mahmood & Maham Furqan & Omar Ali Bagais, 2018. "Environmental Accounting of Financial Development and Foreign Investment: Spatial Analyses of East Asia," Sustainability, MDPI, vol. 11(1), pages 1-16, December.
    2. Gregory T. Chin & Kevin P. Gallagher, 2019. "Coordinated Credit Spaces: The Globalization of Chinese Development Finance," Development and Change, International Institute of Social Studies, vol. 50(1), pages 245-274, January.
    3. Chen, Xu & Li, Zhongshu & Gallagher, Kevin P. & Mauzerall, Denise L., 2021. "Financing carbon lock-in in developing countries: Bilateral financing for power generation technologies from China, Japan, and the United States," Applied Energy, Elsevier, vol. 300(C).
    4. Alfredo Schclarek & Jiajun Xu, 2021. "Panda Bond Financing of the Belt & Road Initiative: An Analysis of Monetary Mechanisms and Financial Risks," Asociación Argentina de Economía Política: Working Papers 4519, Asociación Argentina de Economía Política.
    5. Li, Zhongshu & Gallagher, Kevin P. & Mauzerall, Denise L., 2020. "China's global power: Estimating Chinese foreign direct investment in the electric power sector," Energy Policy, Elsevier, vol. 136(C).
    6. Liu, Tiansen & Song, Yazhi & Xing, Xinpeng & Zhu, Yue & Qu, Zhengyu, 2021. "Bridging production factors allocation and environmental performance of China’s heavy-polluting energy firms: The moderation effect of financing and internationalization," Energy, Elsevier, vol. 222(C).
    7. Jin, Yi & Gao, Xiaoyan & Wang, Min, 2021. "The financing efficiency of listed energy conservation and environmental protection firms: Evidence and implications for green finance in China," Energy Policy, Elsevier, vol. 153(C).
    8. Kong, Bo & Gallagher, Kevin P., 2021. "The new coal champion of the world: The political economy of Chinese overseas development finance for coal-fired power plants," Energy Policy, Elsevier, vol. 155(C).
    9. Werner, Deborah & Lazaro, Lira Luz Benites, 2023. "The policy dimension of energy transition: The Brazilian case in promoting renewable energies (2000–2022)," Energy Policy, Elsevier, vol. 175(C).
    10. Schclarek, Alfredo & Xu, Jiajun & Amuchastegui, Pedro, 2022. "Panda bond financing of the Belt and Road Initiative: An analysis of monetary mechanisms and financial risks," Research in International Business and Finance, Elsevier, vol. 61(C).
    11. Quitzow, Rainer & Thielges, Sonja & Goldthau, Andreas & Helgenberger, Sebastian & Mbungu, Grace, 2019. "Advancing a global transition to clean energy: The role of international cooperation," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 13, pages 1-18.
    12. Paul Bertheau & Robert Lindner, 2022. "Financing sustainable development? The role of foreign aid in Southeast Asia's energy transition," Sustainable Development, John Wiley & Sons, Ltd., vol. 30(1), pages 96-109, February.
    13. Grimoux, Valentin, 2018. "China’s Energy Policy & Investments and their Impact on the Sub-Saharan African Region," ESP: Energy Scenarios and Policy 276177, Fondazione Eni Enrico Mattei (FEEM).
    14. Alice Nicole Sindzingre, 2021. "Economic Relationships Between Sub-Saharan Africa and China: An Alternative Theoretical and Policy Paradigm?," Post-Print halshs-03625159, HAL.
    15. Cheng, Si & Wang, Banban, 2023. "Impact of the Belt and Road Initiative on China's overseas renewable energy development finance: Effects and features," Renewable Energy, Elsevier, vol. 206(C), pages 1036-1048.
    16. Ma, Binfeng & Wang, Xiaofang, 2023. "How does green floating bond and financial sector readiness promote green economic growth evidence from China," Resources Policy, Elsevier, vol. 85(PB).
    17. Miquel Muñoz Cabré & Kevin P. Gallagher & Zhongshu Li, 2018. "Renewable Energy: The Trillion Dollar Opportunity for Chinese Overseas Investment," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 26(6), pages 27-49, November.
    18. Zhen Liu & Trong Lam Vu & Thi Thu Hien Phan & Thanh Quang Ngo & Nguyen Ho Viet Anh & Ahmad Romadhoni Surya Putra, 2022. "Financial inclusion and green economic performance for energy efficiency finance," Economic Change and Restructuring, Springer, vol. 55(4), pages 2359-2389, November.
    19. Valentin Grimoux, 2018. "China’s Energy Policy & Investments and their Impact on the Sub-Saharan African Region," Working Papers 2018.27, Fondazione Eni Enrico Mattei.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sierra, Jazmin & Hochstetler, Kathryn, 2017. "Transnational activist networks and rising powers: transparency and environmental concerns in the Brazilian National Development Bank," LSE Research Online Documents on Economics 79089, London School of Economics and Political Science, LSE Library.
    2. Kitano, Naohiro, 2016. "Estimating China’s Foreign Aid II: 2014 Update," Working Papers 131, JICA Research Institute.
    3. Lamperti, Francesco & Bosetti, Valentina & Roventini, Andrea & Tavoni, Massimo & Treibich, Tania, 2021. "Three green financial policies to address climate risks," Journal of Financial Stability, Elsevier, vol. 54(C).
    4. Weth, Mark A. & Baltzer, Markus & Bertram, Christoph & Hilaire, Jérôme & Johnston, Craig, 2024. "The scenario-based equity price impact induced by greenhouse gas emissions," Discussion Papers 30/2024, Deutsche Bundesbank.
    5. Serhan Cevik, 2024. "Climate change and energy security: the dilemma or opportunity of the century?," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 26(3), pages 653-672, July.
    6. Cortez, Maria Céu & Andrade, Nuno & Silva, Florinda, 2022. "The environmental and financial performance of green energy investments: European evidence," Ecological Economics, Elsevier, vol. 197(C).
    7. Lane, Philip R., 2019. "Climate Change and the Irish Financial System," Economic Letters 1/EL/19, Central Bank of Ireland.
    8. Xu, Jiajun & Ru, Xinshun & Song, Pengcheng, 2021. "Can a new model of infrastructure financing mitigate credit rationing in poorly governed countries?," Economic Modelling, Elsevier, vol. 95(C), pages 111-120.
    9. Simon Dikau & Nick Robins & Matthias Täger, 2019. "Building a sustainable financial system: the state of practice and future priorities," Financial Stability Review, Banco de España, issue Autumn.
    10. Xia, Ying & Chen, Muyang, 2023. "The Janus face of stateness: China's development-oriented equity investments in Africa," World Development, Elsevier, vol. 162(C).
    11. Agarwala, Matthew & Burke, Matt & Klusak, Patrycja & Mohaddes, Kamiar & Volz, Ulrich & Zenghelis, Dimitri, 2021. "Climate Change And Fiscal Sustainability: Risks And Opportunities," National Institute Economic Review, National Institute of Economic and Social Research, vol. 258, pages 28-46, November.
    12. Osbat, Chiara & Conflitti, Cristina & Eiglsperger, Martin & Goldhammer, Bernhard & Kuik, Friderike & Menz, Jan-Oliver & Rumler, Fabio & Moreno, Marta Saez & Segers, Lina & Wieland, Elisabeth & Bellocc, 2023. "Measuring inflation with heterogeneous preferences, taste shifts and product innovation: methodological challenges and evidence from microdata," Occasional Paper Series 323, European Central Bank.
    13. Huang, Bihong & Punzi, Maria Teresa & Wu, Yu, 2022. "Environmental regulation and financial stability: Evidence from Chinese manufacturing firms," Journal of Banking & Finance, Elsevier, vol. 136(C).
    14. Moliterni, Fabio, 2018. "Do Global Financial Markets Capitalise Sustainability? Evidence of a Quick Reversal," SAS: Society and Sustainability 274853, Fondazione Eni Enrico Mattei (FEEM).
    15. Irene Monasterolo & Monica Billio & Stefano Battiston, 2020. "The importance of compound risk in the nexus of COVID-19, climate change and finance," Working Papers 2020:15, Department of Economics, University of Venice "Ca' Foscari".
    16. Simon Dikau & Nick Robins & Matthias Täger, 2019. "Building a sustainable financial system: the state of practice and future priorities," Financial Stability Review, Banco de España, issue Autumn.
    17. Doumpos, Michalis & Zopounidis, Constantin & Gounopoulos, Dimitrios & Platanakis, Emmanouil & Zhang, Wenke, 2023. "Operational research and artificial intelligence methods in banking," European Journal of Operational Research, Elsevier, vol. 306(1), pages 1-16.
    18. Alexander D. Chapman & Stephen E. Darby & Hoàng M. Hồng & Emma L. Tompkins & Tri P. D. Van, 2016. "Adaptation and development trade-offs: fluvial sediment deposition and the sustainability of rice-cropping in An Giang Province, Mekong Delta," Climatic Change, Springer, vol. 137(3), pages 593-608, August.
    19. repec:hal:wpaper:hal-03458299 is not listed on IDEAS
    20. Donato Masciandaro & Riccardo Russo, 2022. "Central Banks and Climate Policy: Unpleasant Trade–Offs? A Principal–Agent Approach," BAFFI CAREFIN Working Papers 22181, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    21. Trinks, Arjan & Mulder, Machiel & Scholtens, Bert, 2020. "An Efficiency Perspective on Carbon Emissions and Financial Performance," Ecological Economics, Elsevier, vol. 175(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:122:y:2018:i:c:p:313-321. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.