There is More to BRI than Debt Traps. It Exports China’s Carbon Emissions To Poor Nations.
In facing the most significant challenge the world has ever faced, China appears to have stumbled.
With a population of over 1.4 billion, the second-largest global economy, the most considerable polluter, and one of the fastest-growing economies, China’s climate action will determine whether the world’s temperature curve bends to 1.5°C as stipulated by the Paris Agreement.
The greenhouse gas (GHG) emissions from China exceeded a quarter of the global total in 2019. The nation emitted around 12 GtCO2 in the 12 months to March 2021, a new record. China’s Nationally Determined Contributions (NDCs) lack the ambition needed to demonstrate its commitment to combating climate change in the global arena.
China has committed to halting its carbon emissions before 2030 and becoming carbon neutral by 2060, among other highlights. It is not clear how effectively these commitments will lead to 1.5°C compatibilities. As far as non-carbon GHG emissions are concerned, these commitments are carbon-centric.
In this case, however, our central goal is to draw attention to China’s potential to export its carbon emissions to the BRI countries. The BRI emits significant GHG emissions in the host countries for which these nations are held accountable. Yet, Chinese constituencies reap a considerable portion of the economic benefits from these projects.
Since BRI primarily focuses on building conventional infrastructure rather than green infrastructure, it is inherently carbon-intensive.
Among other things, the construction of highways, rail lines, power plants, and ports results in emissions of greenhouse gases. Although China has been promoting renewable energy at home, most projects related to the BRI are using coal, with more than 60% of the energy financing stream coming from the China Development Bank and the Export-Import Bank of China.
Among six Chinese central banks, 91 per cent of energy-sector syndicated loans to BRI countries were for fossil fuels between 2014 and 2017.
China has instead transferred its dirty, least efficient coal technologies to the BRI nations instead of liquidating them in its quest to transition to a green economy.
Due to excess industrial capacity and environmental violations, China’s sunset industries, such as copper and aluminium smelting, cement, papermaking, iron and steel production, etc., seek a new home through the BRI.
A second example is China’s high-speed rails, which reached saturation due to their carbon-intensive nature. CDB and China EXIM and some state-owned commercial banks are the two principal lenders for the BRI.
Those loans are not technically development-oriented, but they are expected to generate a commercial return and are not conditional upon political or economic reform. Despite the COVID-19 pandemic unleashed one of the worst humanitarian crises in the world, China is unwilling to cancel debt and instead prefers to reschedule repayments, extend the maturity of debt and open credit lines.
Beijing’s claim that such projects can be competitively bid and have foreign partnerships is hollow since most BRI projects go to Chinese firms. A study of companies taking part in the BRI initiatives revealed that 89 per cent hail from China, 7.6 per cent are local companies headquartered in the host nation, and 3.4 per cent hail from foreign countries, primarily from countries other than the one where the project is underway.
Some BRI ventures are reportedly hiring Chinese workers instead of locals. It is well-documented that China has a significant presence in Africa. According to the end of 2019, more than 182,000 Chinese worked there.
As of 2019, approximately one million Chinese were officially employed overseas, and many more worked unofficially. Nationalities of the workforce on BRI projects may vary by region, however.
To accommodate the domestic oversupply, Chinese state-owned businesses will likely employ a more significant proportion of the workforce for large-scale infrastructure projects. There have been reports of pitiful working conditions wherever local labour is hired. Chinese work is not exempt from this.
The relative vulnerability of Chinese workers may explain the relative preference for Chinese labour in certain regions. Upon completion of BRI, the host nations were supposed to become globally competitive economies, increase their GDP, and reduce their trade costs.
This would result in the accelerated growth of their economies. By compounding the host nations’ debt problems and making them untenable by nature, BRI has instead created a debt crisis in those countries.
The pandemic crisis has further exacerbated this situation. The BRI was supposed to lead to economic growth. BRI nations participating in such development would have had fewer financial issues to deal with.
Despite the carbon budgets of the host countries having been drained, it appears that the carbon-intensive BRI has managed to capture the economic gains that come from these emissions for which they are held accountable.
According to these calculations, carbon dioxide emissions result from the financial activities of the host nations and not those of China.
Consequently, banks, firms, and the workforce of Chinese descent are appropriating the interest payments from BRI debt, profits from executing BRI projects, and employment opportunities created by these projects and incomes that result.
BRI projects have missed a significant opportunity to put carbon emissions to good use. As a result, the quality of employment created is nowhere near decent.
Using their carbon budgets for BRI, the host nations could have significantly benefited their economies, created profits, provided decent work for their citizens, provided the proper assistance. Developing countries need economic aid from the global community because the BRI offers a credible alternative to the Chinese assistance model.
To reduce China’s carbon footprint in BRI projects, the international community must exert constructive pressure. The impact of climate change is upon all. Therefore, these less-developed BRI nations will be unable to manage environmental and economic trade-offs with ease.
China needs to ensure BRI yields real development gains for the host nations to take advantage of the carbon budget. The Chinese government must also promise to turn BRI into a ‘green’ initiative, something it has so far avoided.
EDITED AND PROOFREAD BY NIKITA SHARMA
