Interview with Daria Ivleva, adelphi
— What new research did you present at the Mistra Geopolitics breakfast seminar Can the EU and China save the Paris Agreement in 2020?
At adelphi, we have been looking into implications of the Chinese investment abroad on the decarbonization pathways of the “target” countries. Our starting point was the Belt and Road Initiative (BRI), a major investment and cooperation effort with over 120 countries China announced in 2013.
The BRI is a great case study of geopolitics of decarbonization – the work stream we concentrate on in the Mistra Geopolitics Programme. Getting a full picture of the interests that drive the initiative is certainly challenging, as the BRI projects unfold in different contexts and involve a multitude of actors. But many observers agree that geopolitical motives play an important role. At the same time, BRI investments will have an influence on future emission pathways.
To understand this more thoroughly we looked closely at Kazakhstan. In Kazakhstan, China invests quite heavily, and the economic cooperation between the two countries has been growing over the past decade. But can this potentially help Kazakhstan lower greenhouse gas emissions or will it lock in high-carbon pathways for the economy? And how does this connect to the geopolitics of Chinese investment abroad? I presented our preliminary answers to these questions during the breakfast seminar.
— Fascinating questions! Have you drawn any new insights from the perspectives of other researchers and practitioners at the seminar?
The relationship of China and the European Union was not the primary focus of our BRI research. Preparing for the seminar and during the panel discussion, I got to thinking about the dilemma the EU is facing: It is looking for a strong partner to raise global climate ambition, especially as it currently cannot count on the US federal government. But there are also conflicts of interest with China, and the question of incentives that the EU can offer is a difficult one. China’s recent pledge to achieve net zero emissions before 2060 sends a hopeful signal for international cooperation on climate.
The remarks of the panel regarding the changing geopolitical context were very instructive. It seems, finding a common ground on such issues as climate becomes more challenging for the EU and China, as the latter is increasingly seen as “systemic rival” by the former. Contentious issues perceived as high politics can simply overshadow climate topics. For me, the seminar painted a picture of an EU that is searching for a strong, coherent strategy that could incentivise cooperation with China on raising climate ambition without compromising European interests in other areas.
— Why is China so important when it comes to climate change and the Paris Agreement?
China is the world’s biggest emitter of greenhouse gases. The country’s commitment to carbon neutrality before 2060 caused both international praise and questions on how its current policies would need to change to implement this, not least with regard to its coal capacities. For example, the Climate Action Tracker (CAT) still rates China’s climate action as “highly insufficient”. Furthermore, according to CAT, the government’s recovery policies recognise that the economy is transitioning and contain green elements, but generally “remain carbon-intensive”. So, China still has to ensure it does its fair share for the Paris Agreement domestically, but its recently announced goals are an important step towards this, especially in light of the pandemic and in a challenging geopolitical context.
Additionally, China invests in infrastructure abroad, influencing the way other countries decarbonize. There is reason to believe that these investments are not just guided by economic rationale, but are connected to China’s ambitions as a global power. We do not have enough data yet to understand how this would shape global emission trajectories, but we need to keep these investment flows in mind to have a better picture of decarbonization (dis)incentives.
— What implications does China’s Belt and Road Initiative have for decarbonization?
China’s energy investments in other countries over the last two decades mostly went to fossil fuel projects, even though the renewables portfolio has been growing. Moreover, China builds transport corridors and industrial capacities, which will also increase emissions if this infrastructure continues to be high-carbon. Generally speaking, China’s investment spurs growth, and in the current economic model, it is emission-intensive growth. To be fair, this is probably true for much of the global infrastructure investment. To make the new infrastructure low-carbon, we need proactive policies both by China and by the BRI target countries.
— Can you give us an idea of the scale of China’s investment through the Belt and Road Initiative?
It differs quite a lot from country to country, and it is rather difficult to get coherent numbers on the BRI. There is no single source of data and reporting, no project pipeline. The Emerging Economies Forum (EMF) cites the total “loan commitments and disbursements of all Chinese banks to BRI countries” by the end of 2018 amounting to USD 580-600 billion. This is comparable to the total commitments and disbursements of the World Bank Group in the period of 2013 to 2018 (almost 630 billion). Most sources agree that the most investments go to the energy sector, followed by transportation. There is no doubt that the BRI represents an amount of financing significant enough in order to study its economic, political and environmental impacts very carefully.
— What does the Chinese investment look like in Kazakhstan?
In Kazakhstan, China has been investing long before Xi Jinping announced the BRI – choosing the Kazakhstani capital Astana to do so (now named Nur-Sultan). We see diverse projects: in energy, industry, transport, and agriculture. Most funds go to heavy industries, including petrochemicals, fossil fuels and transport infrastructure. Some projects invest in renewable energies, improve public transportation or build up manufacturing capacity. Overall, the majority of investments support the emission-intensive economic model of Kazakhstan although some low-carbon efforts add to the mix. There would likely be more opportunities for more low-carbon cooperation, if actively promoted by the government of Kazakhstan. For instance, low-emission transportation could provide a wide array of co-benefits, while also helping achieve the key goal of both Kazakhstan and China – transcontinental connectivity. But this is barely considered at the moment. Again, to “green” infrastructure and connectivity investments we would need ambitious, proactive policies. This is clearly an entry point for the EU to promote decarbonisation.
— Is China the biggest funder of infrastructure in Kazakhstan?
Not the biggest, but an important one, increasingly so during the last decade. Over the period of 2010-2018, China was the fourth biggest source of foreign direct investment (FDI) for Kazakhstan. At the same time, the United States, Russia, and several European countries are major investors, too.
The 55 projects that the Kazakhstani government agreed upon with China bilaterally after the announcement of the BRI add up to USD 27.6 billion. China does not necessarily provide the entire amount of financing for all of them. The government of Kazakhstan maintains that 15 of them, with a total cost of around 4 billion, were implemented between 2014 and 2019.
— What is your impression of how the BRI is perceived in Kazakhstan?
An interesting aspect is that the infrastructure programme of Kazakhstan, Nurly Zhol, is aligned with Chinese investments, and the text of the programme for 2020-2025 mentions the BRI explicitly. There seems to be a high level of agreement between the elites of the two countries with regard to investment priorities. Both are interested, for instance, in Kazakhstan becoming a transportation hub on the Asian continent, in developing the country’s heavy industry or the agricultural sector.
Several researchers point out that the public perception of the BRI in Kazakhstan is not as positive as the government’s perspective. In Autumn 2019, there were several protests against “Chinese expansion”. A central claim of the protesters was that China transfers old production capacities it no longer needs to Kazakhstan. The fact that comprehensive information on projects with Chinese involvement is not easy to obtain probably adds to the mistrust. For instance, the full list of the 55 projects was only made public in September 2019.
— Can you describe how you engaged with stakeholders to gather this information? Was it with Kazakhstani officials or also Chinese?
Our research is based on literature and document analysis, and it builds on other research meticulously gathering data on Chinese outward investment. To look at the Sino-Kazakhstani projects from the geopolitics of decarbonisation perspective, we used and complemented the data by the Central Asia Data-Gathering and Analysis Team (CADGAT). Our Chinese-speaking colleagues are familiar with the perspective of Chinese actors. Importantly, there are synergies with our work outside Mistra Geopolitics. We recently supported GIZ Kazakhstan with work on a long-term emission strategy that is being developed with the support of the German Environmental Ministry. Our interviews and sectoral consultations with stakeholders across all sectors of the economy gave us a better understanding of the political landscape and the drivers and constraints of decarbonization in Kazakhstan. Russian is my first language, which was definitely very helpful, as it is an official language in state institutions and because media coverage provides important information on the Sino-Kazakhstani cooperation.
— How might infrastructure investment plans in these countries be more green or climate-compatible?
Speaking from a European perspective, there are several avenues. The first one is engaging with China on green (multilateral) finance, on sustainable investment and sustainable, low-emission connectivity. Understanding the geostrategic component of China’s efforts is an important part of such engagement.
Furthermore, European diplomacy and development cooperation should help create demand for greener investment in target countries of the BRI. Only if Kazakhstani officials and politicians support a low-emission economic vision, can they seek green finance to implement their national development goals. We should also keep in mind that these countries, of course, pursue their own geopolitical agendas in cooperating with China or the EU – and this also interacts with decarbonization prospects.
Finally, to shift the investment flows to low-emission pathways, working with China and the BRI target countries, climate cooperation is not enough. It is about aligning all external policies of the EU and its Member States to protect the global commons. It is important that development, security and science cooperation as well as trade and investment relationships should support, not hinder a low-emission transition in partner countries.
— What would you say should be high on the agenda for EU-China relations in 2020 and beyond?
It is of course entirely clear that China and the EU have many urgent topics on their joint agenda. This was true before the pandemic, and it is outright obvious now. If I were to wish for one thing, it would to continue discussions on how the two parties can cooperate to preserve the global commons, including a liveable climate. Crises call for urgent solutions. But climate and environmental aspects must be part of these solutions, as ultimately they are essential for human security of the respective populations as a liveable environment is essential..
As both China and the EU have now outlined their visions of improving connectivity between Asia and Europe, they could be exploring common ground on how to coordinate efforts in order to make them more sustainable, for example, re-invigorating the EU-China Connectivity Platform.
— How would you say this strong focus on EU-China relations will affect our chances to get the world on track to meet the goals of the Paris Agreement?
The “systemic rival” description of China by the European Commission and the High Representative is often cited; but it shares a sentence with “cooperation partner”, “negotiation partner” and “economic competitor”. The different aspects of the EU-China relationship coexist, and EU’s climate diplomacy is making its way between these poles. A message of our Mistra Geopolitics work stream is that the interplay of geopolitics and decarbonization matters. Among others, it helps find a balance of interests and the right cooperation incentives. In this sense, the strengthening of geopolitical lens in European policymaking might help devise more effective cooperation strategies on climate and environment.
From our case study, specifically, we learn: China’s international ambition, expressed and implemented through the BRI, affects our chances to achieve the goals of the Paris Agreement. There is a lively debate about how Europe can position itself vis-à-vis this ambition and how it can remain a desirable cooperation partner, while protecting its values and interests. The implementation of the Paris Agreement should inform this debate as one of Europe’s key interests. For this, China remains indispensable. A geopolitical perspective can be a helpful tool to design better interaction modes, but should not become a guiding paradigm that puts a brake on cooperation.