China's Contributions to Climate Finance: Goals, Gaps, and Achievements to Date

Abstract

The scale and nature of China’s contributions to climate finance is a crucial topic in international climate negotiations. Despite this importance, little academic scholarship exists on the subject. Drawing on project-level data as well as Chinese-language sources not previously described in the English academic literature, we provide what we believe to be the most comprehensive scholarly assessment to date of China’s contributions to overseas climate finance from official sources. Specifically, we identify goals and objectives of these contributions; describe their sectoral, geographic, and source composition; and assess trends and challenges. Key findings include the salience of export promotion and other non-climate goals in official Chinese climate finance; a notable geographic concentration on sub-Saharan Africa, Southeast Asia, and the Pacific Island countries; a strong project-level focus on energy-saving and energy-efficiency projects such as LED lighting and solar-powered streetlamps; an emphasis on South-South training and capacity building and the creation of “Low Carbon Development Zones”; and a pronounced shift in focus from multilateral to China-led bilateral financing patterns after 2017.

Drawing on Chinese-language sources as well as project-level data, this study aims to present the most comprehensive English-language analysis to date of China's contribution to climate finance. China's role in climate finance is a topic of increasing relevance in light of the COP-29 climate conference, where parties aim to set a New Collective Quantified Goal on Climate Finance. This study produces the following headline findings: 

1. The Chinese government committed approximately 3.4 billion USD to climate finance from 2012 to 2017, but very little of this has been spent to date. Government-provided climate finance totaled only some 160 million USD as of 2021. 

2. Though subject to significant uncertainty, financing from Chinese official sources for climate mitigation and adaptation totaled on the order of 18.6 billion USD from 2004 to 2021, or approximately 1.6 billion USD annually from 2010-2021. 

3. The vast majority of Chinese-provided climate finance is commercial rather than grant-based and is provided by policy banks, led by the China Development Bank and Export-Import Bank of China; and state-owned banks. 

4. The Chinese government has provided at least 100 million USD to multilateral climate project finance in partnership with the Inter-American Development Bank and African Development Bank, principally for solar energy projects. 

5. Most Chinese climate finance is devoted to climate mitigation, specifically power sector projects. Of these, nuclear energy and hydropower account for the largest share of financing volume. 

6. Adaptation projects account for an insignificant share of total Chinese-provided climate finance by volume, and only about 15% of the total number of climate-financed projects. 

7. Training and capacity-building is a major programmatic focus of Chinese climate-financed projects, but these account for a de minimis share of total financing volume. 

8. Chinese climate-financed projects and initiatives are regionally focused on Africa, Southeast Asia, and the Pacific Island regions. 

9. Chinese climate finance initiatives were originally rooted in multilateral climate initiatives, but since 2017 have been increasingly linked to the Belt and Road Initiative and China-led initiatives; and increasingly reflect geopolitical tensions and developments.

Keywords: China, climate finance, South-South cooperation