China’s Global Energy Finance (CGEF) 2019

In 2019, overseas energy financing by China’s two policy banks with global operations, the China Development Bank (CDB) and the Export-Import Bank of China (CHEXIM), was at its lowest level since 2008. 

In a new policy brief, Xinyue Ma, Kevin P. Gallagher and Yanan Guo examine China’s global energy finance in 2019, using the China’s Global Energy Finance Database, managed by the Boston University Global Development Policy Center (GDP Center).

Main findings: 

• From 2000-2019, CDB and CHEXIM provided a total of 270 loans in the energy sector to other countries, totaling approximately $251 billion. 
  • 73 percent of the $251 billion went to Belt and Road Initiative (BRI) countries. 
  • The oil sector received the largest amount of loans, followed by coal and hydropower. 
  • Hydropower projects are the most frequently supported source of energy, making up 33 percent of the 270 projects supported by CDB and CHEXIM, followed by coal projects. 
• Africa received the greatest number of projects financed by the two banks (32 percent), followed by Latin America and the Caribbean and Southeast Asia. 
• East European and Central Asian countries received the largest amount of loans due to the development of oil and gas projects in the region. 
• Coal finance provided by CDB and CHEXIM is the most concentrated in Asia, while Africa received the largest amount of hydropower finance. 
• Non-hydro, renewable energy projects only received 2.3 percent of the total energy finance by Chinese policy banks and 6.7 percent of the 270 projects. 
• In 2019, China’s policy banks issued only three loans for energy projects totaling $3.2 billion, down 71 percent from the $11.08 billion in lending to foreign governments in 2018.
• While the scale of Chinese financing for overseas energy has declined considerably, the composition of such lending has largely stayed the same. 
  • Two of the three Chinese loans in 2019 went to hydropower projects, the Gurara hydropower project in Nigeria and the Koukoutamba hydropower project in Guinea, both provided by CHEXIM. The other loan was for a coal power plant in Turkey, provided by CDB. 
  • All three projects are designed to address key development gaps. However, even though the smaller number of projects could be interpreted as a reflection of stricter risk management at the banks, the projects are not free from controversies, especially the Koukoutamba Dam and the Hunutlu Thermal Power Plant. Both projects have become increasingly controversial due to potential pollution, health, environmental and climate impacts.