World Resources Institute World Resources Institute

Emerging Actors in Development Finance: Where Does China Stand?

Xiaomei Tan, Ph.D.Senior AssociateInternational Financial Flow and the Environment ProjectWorld Resources Institute

October 20th, 2010

Structure

Overview of China’s overseas direct investment (ODI); Major players in China’s ODI; Current policy framework relevant to environmental and

social standards; What the international society can do?

Trend of China’s overseas direct investment (ODI)

In 2009:China’s annual ODI accounted for 5.1% of global annual ODI;Ranked first among developing countries; Ranked fifth globally

Source: China Statistics Yearbook, 2006; 2007;2008; 2009 China Foreign Investment Annual Report

Which sectors does China’s ODI focus on?

Source: China Statistics Yearbook, 2006; 2007;2008

What regions does China’s ODI focus on?

Source: China Statistics Yearbook, 2006; 2007;2008

China’s ODI in Africa

Major players in China’s ODI

MOC: Ministry of Commerce; SASAC: State-owned Asset Supervision and Administration Commission;NDRC: National Development and Reform Commission;SAFE: State Administration of Foreign Exchange; MOF: Ministry of Finance; CBRC: China Banking Regulatory Commission;

Procedure for certificates of approval

Source: GEI, Environmental Policies on China’s Investment Overseas

Top three banks financing China’s ODI

Type Business scope Overseas Lending, 2009

Major project, 2009

EXIM Bank of China

Policy bank Mechanical and electric equipments, new and high tech products

174.2 billion $1680 million Ecuador Coca Codo Sinclair Dam

China Development Bank

Policy bank Infrastructure and energy

40.4 billion $35 million Malawi Cotton Project

Bank of China

Commercial bank

Construction contract and export processing

80.7 billion $1300million Angola oil well purchase

Source: 2009 EXIM Annual Report; 2009 China Development Bank Annual Report; 2009 Bank of China Annual Report

Environmental protection policy related to financing

Year Name of policy/regulations Agency that drafted the regulation

1995 Regulations on Implementing Financing Policy to Promote Environmental Protection

People’s Bank of China (PBC)

2007 Provisions on Implementation of Environmental Regulations to Prevent Credit Risks

Ministry of Environmental Protection (MEP); PBC; China Banking Regulatory Commission (CBRC)

2007 Provisions on Strengthening the Social Responsibilities of Banking Institutes

CBRC

2007 Provisions on Financing Energy Efficiency Projects

CBRC

2008 Cooperation Agreement with IFC on Green Financing

MEP

2009 Guidelines on Corporate Social Responsibility of Banking Institutions

China Banking Industry Association

Source: China Banking Regulatory Commission (CBRC) website

Largest state-owned enterprises ranked by ODI

Revenue, 2009 Energy Bases

China National Petroleum Corp. (CNPC)

$ 187.43 billion • Sudan (16.19 Mt with pipe)•Kazakhstan (5 Mt with piple)•Venezuela (3 Mt)•Indonesia

China National Offshore Oil Corp. (CNOOC)

$32.25 billion • Indonesia•Australia•Nigeria

SinoHydro $15.72 billion • South America•Africa•South-east Asia

Source: 2009 Petroleum China Annual Report; 2009 CNOOC annual report ; SinoHydro Corporation Website

Environmental protection policy related to ODIs

Year Name of policy/regulations

Agency that drafted the regulation

2005 Approval Rules for Overseas Investment

Ministry of Commerce(MOC)

2007 Guidelines on Sustainable Management of Overseas Forests for Chinese Enterprises

Bureau of Forestry (BOF) and MOC

Currently being built

Guidelines on Environmental Actions of Chinese Overseas Enterprises

Ministry of Environmental Protection (MEP), MOC and State-owned Asset Supervision and Administration Commission (SASAC)

Source: Ministry of Commerce (MOC) website

What the international society can do?

Provide analytical excellence and technical expertise; Offer best practice examples; Direct engagement with key decision-makers; Convene discussions with NGOs, the private sectors

and policymakers on China’s ODI.