China has pledged to stop funding coal plants around the world but loopholes mean new ones are still being built.
Some suggest that weak transparency requirements in China for public investments will allow the country to continue investing in projects that go against climate action goals. “If you look at the annual reports of state-owned enterprises, there are no geo-locations of projects, no indication of where money is specifically being spent and no clear evaluation criteria,” says Wawa Wang, from the NGO Just Finance International.
Analysis by Just Finance International found that Chinese state-owned enterprises entered into overseas coal power contracts worth more than $18bn in 2021. These projects were signed before Xi’s pledge and it is unclear how many of the contracts will be fulfilled, but clearly China is finding it challenging to end its relationship with coal so quickly. Internationally, it is about soft power. “Coal diplomacy as opposed to climate diplomacy has been a leading strategy for well over a decade,” says Wang. And domestically, it is about ensuring a steady energy supply is always available to power China’s booming economy.