"Outlier or New Normal? Trends in China’s Global Energy Finance" 11 March 2022

The 2022 update to the China’s Global Energy Finance Database, managed by the Boston University Global Development Policy Center, recorded no new energy development finance commitments in 2021 from China to foreign governments through its two most active policy banks, the China Development Bank (CDB) and the Export-Import Bank of China (CHEXIM). This is the first year with no new reported energy commitments since the beginning of the 21st century. [...]

Main findings:

• China has provided more energy sector loans to public entities than any other lender in the world. Even with $0 in energy finance in 2021, CDB and CHEXIM have issued a total of 331 loans to 68 foreign governments and associated entities in the energy sector since 2000, totaling $234.6 billion. From 2016-2021 alone, CDB and CHEXIM disbursed 92 loans worth $75.1 billion to 37 foreign governments and associated entities in the energy sector. This far exceeds total energy sector lending by the World Bank over the same period.
• China is not alone in decreasing development finance in 2021. Although development finance in general substantially increased in 2020 (especially in the health sector since the COVID-19 pandemic began), most development finance institutions around the world decreased new commitments in 2021.
• FDI may become China’s dominant means of capital participation in the energy sector overseas. While China’s annual energy sector FDI has decreased in general in the past few years, its energy sector FDI has on average remained much more stable than development finance. And if the looming debt crisis for the Global South worsens in the short run, the much-anticipated green transition of China’s overseas energy sector participation may be driven by other forms of engagement, such as FDI, contracting or technical assistance.
• Chinese development finance sector could rebound in the coming years. Given China’s continued emphasis on energy cooperation, especially green energy, it is not likely China will cease its leadership in global energy finance. With key roles in guiding and supporting China’s foreign investment and international economic cooperation, CDB and CHEXIM will remain leaders of China’s overseas development engagement. Additionally, as the world economy begins to recover from the impacts of COVID-19, fast-growing energy demand has been exerting pressure on the energy sector supply chain, causing disruptions in both resource commodity and electricity markets around the world, presenting opportunities for China to help fill these gaps.