Chinese Overseas Development Funds: An Assessment of their Sustainability Approaches

Mathias Lund Larsen*, Tancrède Voituriez, Christoph Nedopil Wang

*Corresponding author for this work

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Abstract

A growing number of emerging economies receive significant parts of their overseas finance and investment from Chinese state-owned or state-linked institutions. While academic research has focused on how Chinese policy and state-owned banks approach sustainable development issues, Chinese sovereign-backed overseas development funds are a critical yet overlooked component. This paper addresses this knowledge gap by providing the first comprehensive overview of such funds regarding their scope, activities and capitalization, as well as by assessing the funds' policy approach to sustainability. Qualitative and quantitative data are collected from databases, funds' websites, newspaper articles and public statements in both Chinese and English to identify common features between funds and to analyse their sustainability policies in comparison with global best practices. The paper specifically analyses the funds' sustainability approaches rather than impact due to a lack of comprehensive data on the funds' investments. First, the paper finds that given their number, announced capital size of US$213 billion, geographic scope and sectorial focus, including on high-emissions projects such as mining, energy and heavy industry, the funds are influential players in global development finance. Second, regarding the funds' approaches to sustainability, the paper finds that the funds lack transparency about their policies and practices, which is a key component of sustainable fund management practices. Third, based on an in-depth analysis of available information, we identify a lack of sustainability in the funds' mandates, an absence of safeguards, limited project pipeline disclosure and no sustainability performance assessment. Lastly, the paper provides four policy recommendations on how to improve the funds' sustainability approaches based on the unique way they are governed by different parts of the Chinese state apparatus.
Original languageEnglish
JournalJournal of International Development
Volume35
Issue number8
Pages (from-to)2373-2396
Number of pages24
ISSN0954-1748
DOIs
Publication statusPublished - Nov 2023

Bibliographical note

Published online: 29 March 2023.

Keywords

  • China
  • Development funds
  • Overseas investment
  • Sustainable finance

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