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The new coal champion of the world: The political economy of Chinese overseas development finance for coal-fired power plants

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  • Kong, Bo
  • Gallagher, Kevin P.

Abstract

This study aims to explain why China has become a new coal champion of the world. From 2006 to 2019, our new data set shows that China has financed 14 percent of the newly installed coal fired power plants across 17 countries around the world. We deploy a ‘push and pull’ analytical model and combine both qualitative and quantitative analysis to examine the political economy of Chinese overseas finance for coal. Our analysis shows that the globalization of Chinese official development finance for coal-fired power is a function of both the pull by the demand from the 17 countries, which have turned to the Chinese policy banks for financial backing to build coal-fired power plants, and the push by the coal-fired power equipment manufacturing sector in China and the central government in Beijing, which have been confronted with a set of structural challenges following the 2007–2008 global financial crisis. Our findings carry some worrisome policy implications for the global effort to reduce CO2 emissions resulting from coal burning in the electric sector. Without changes on the demand side, and a profound re-alignment of forces within China, Chinese development finance for coal-fired power may prove relatively resilient.

Suggested Citation

  • 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).
    • Handle: RePEc:eee:enepol:v:155:y:2021:i:c:s0301421521002044
    DOI: 10.1016/j.enpol.2021.112334
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    References listed on IDEAS

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    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. Sucharita Gopal & Joshua Pitts & Zhongshu Li & Kevin P. Gallagher & James G. Baldwin & William N. Kring, 2018. "Fueling Global Energy Finance: The Emergence of China in Global Energy Investment," Energies, MDPI, vol. 11(10), pages 1-25, October.
    3. Miles Kellerman, 2019. "Correction to: The proliferation of multilateral development banks," The Review of International Organizations, Springer, vol. 14(1), pages 147-147, March.
    4. Christine Wong, 2011. "The Fiscal Stimulus Programme and Public Governance Issues in China," OECD Journal on Budgeting, OECD Publishing, vol. 11(3), pages 1-22.
    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. Lin, Jiang & Zhou, Nan & Levine, Mark & Fridley, David, 2008. "Taking out 1 billion tons of CO2: The magic of China's 11th Five-Year Plan?," Energy Policy, Elsevier, vol. 36(3), pages 954-970, March.
    7. 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.
    8. Miles Kellerman, 2019. "The proliferation of multilateral development banks," The Review of International Organizations, Springer, vol. 14(1), pages 107-145, March.
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    Cited by:

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    2. Andreas Klasen & Roseline Wanjiru & Jenni Henderson & Josh Phillips, 2022. "Export finance and the green transition," Global Policy, London School of Economics and Political Science, vol. 13(5), pages 710-720, November.
    3. 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.
    4. Katiyar, Rajesh & Panigrahi, Swayam Sampurna & Ghatak, Ranjit Roy & Singh, Ritu, 2024. "Exploring barriers towards effective coal supply-A non-core perspective using ISM-DEMATEL," Resources Policy, Elsevier, vol. 92(C).
    5. Lu, Yangsiyu & Springer, Cecilia & Steffen, Bjarne, 2024. "Cofinancing and infrastructure project outcomes in Chinese lending and overseas development finance," World Development, Elsevier, vol. 175(C).

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