We gather the numbers to know from the week’s biggest economic news stories so you can impress your friends.
During the three-day leaders’ summit that kicks off on Friday, the Group of Seven (G7) developed nations is set to unveil a Clean Green Initiative (CGI). The huge infrastructure investment plan aims to go toe-to-toe with China’s Belt and Road Initiative (BRI) and counter Beijing’s growing global influence with a rival bit of chequebook diplomacy.
“This initiative is about equalising the terms of foreign investment between Chinese and Western companies,” Lauren Johnston, research associate at the SOAS China Institute, told Al Jazeera. “Chinese companies – especially state-owned enterprises – may have access to financing that Western companies find more difficult to obtain.”
Although the CGI’s exact scope is still unknown, it will likely expand on the Blue Dot Network, the Indo-Pacific infrastructure development initiative backed by the United States, Australia and Japan, which prioritised each project’s financial transparency and environmental sustainability alongside its impact on economic development.
Part soft-power exercise, part domestic stimulus, China’s ambitious and amorphous BRI has sunk trillions of dollars into projects in 68 countries, predominately in Asia and Africa, since its launch in 2013.
Critics say it has bankrolled and built ecological carbuncles the world over, locking countries into unsustainable infrastructure, technology and resource extraction at a time when they should be adopting less-polluting power sources.
“China is facilitating national government priorities around the world that are not in line with long-term climate and development goals,” Rebecca Ray, a senior researcher at Boston University’s Global Development Policy Center, told Al Jazeera, noting that many BRI projects wouldn’t pass the environmental and social safeguards demanded by Western-dominated multilateral development institutions.
Greening up or greenwashing?
In an address to the United Nations last year, President Xi Jinping promised China would bring CO2 emissions to a peak before 2030 and aim to be carbon neutral by 2060.
However, when the world’s biggest polluter laid out its 14th Five-Year Plan in March, it only set one carbon goal: cutting emissions by 18 percent per unit of gross domestic product over five years, equitable to its goal in 2016.
And at the 2019 Belt and Road Forum, Xi stressed the importance of reducing the BRI’s environmental impact; with the newly-founded BRI Green Coalition subsequently giving each funding proposal a red, amber or green traffic light mark in a bid to discourage the funding of polluting projects.
Earlier this year, the Financial Times reported that Bangladesh’s desire to repurpose a $3.6bn BRI infrastructure loan to coal projects – a move motivated by a coal-rich country keen to secure cheap energy sovereignty – brought negative pressure on China. The resulting furore led to Beijing actually making good on its promises of a greener BRI, telling Bangladeshi authorities they would no longer back its coal projects.
The BRI was already moving away from funding coal projects, which peaked at $6.9bn in 2017 and halved in 2019, according to data compiled by Boston University. Last year, they accounted for a mere half a billion dollars in funding.
But despite this pivot and China’s increasing strength in renewables, there has not been a commensurate leap in its financial backing of green power projects.
Beijing’s oft-stated goals may be more hot air than wind power ($1.1bn invested since 2011; none since 2017) and solar ($2.2bn since 2010, nearly of half of which was in 2012), with a paltry $493m invested in geothermal and $60m in biomass generation. These are dwarfed by the $48bn China invested in oil, $44.3bn in coal and $41.2bn in hydropower generation projects since the BRI’s launch, according to Boston University researchers.
China has cemented its dominance over critical rare-earth elements (REEs) that are used in energy storage and transmission as well as key high-tech and defence components. The country is home to over a third of known REE reserves and its mines extracted more than 60 percent of the global REE total in 2019, according to the US Geological Survey.
It is also the world’s largest importer of REEs, leveraging its position in resource-rich areas of the developing world, especially those with access to cobalt, a rare mineral that is an essential part of every lithium battery.
“[China is] pretty well-placed in these supply chains and that obviously concerns US policymakers,” Kevin Acker, research manager at the Johns Hopkins School of Advanced International Studies China Africa Research Initiative, told Al Jazeera.
Acker cited a resource-for-infrastructure deal China struck in the Democratic Republic of the Congo (DRC) before BRI as an example. In that 2008-2009 project, Chinese companies developed “copper and cobalt mines with an Export-Import Bank line of credit to fund the mining operation and infrastructure projects,” he said.
The DRC produces 70 percent of the world’s cobalt, around a quarter of which comes from artisanal mines that often extract the mineral by hand in conditions Human Rights Watch described as “dire”.
But it is unclear whether the G7’s CGI will have enough money behind it to bring more pressure to bear on Beijing to bolster the BRI’s environmental and social impact standards.
“My eyes will be on whether it turns into something beyond branding. We’re still waiting for the $100bn that was committed at Copenhagen five years ago,” Ray said.
And how the West will win the battle for hearts and minds in the developing world, as well as meet much-needed sustainable goals, may lie in having a bit of empathy. China better understands what it’s like to be a poor country in need of financing or a reliable electricity supply, Johnston said.
“They get that you need to turn the light on first,” she said. “We need to be able to work out how they can turn the light on in a green way.”