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China is shaping the future of economic development through its , an ambitious multi-billion-dollar international push to better connect itself to the rest of the world through trade and infrastructure. Through this venture, China is providing over 100 countries with funding they have long sought for roads, railways, power plants, ports and other infrastructure projects.

This mammoth effort could generate for the countries involved and the global economy. The World Bank that recipient countries' gross domestic product could rise by up to 3.4% thanks to Belt and Road financing.

But development often expands human movement and economic activity into new areas, which can promote , illegal and the spread of . Past initiatives have also sparked conflict by . These projects were often approved without the of local Indigenous communities.

In a , our team of and mapped the risks Chinese overseas development finance projects pose for Indigenous lands, threatened species, protected areas and potential critical habitats for global biodiversity conservation. We found that more than 60% of China's development projects present some risk to wildlife or Indigenous communities.

Diverse projects and risks

Our study examines 594 development projects financed by the China Development Bank and the Export-Import Bank of China. We created a to track the characteristics and locations of projects that these two "policy banks" supported between 2008 and 2019. During this period, the banks committed more than US$462 billion in development finance to 93 countries—roughly as much as the , the traditional global leader in development finance, committed in that time.

Nearly half of all projects financed by these two banks are located within potential . These are areas that might be essential for conservation and require special protection considerations, , a unit of the World Bank that promotes private investment in developing countries.

One in three of the projects fall within existing protected areas, and nearly one in four overlaps with lands owned or managed by Indigenous peoples. In total, we calculate that China's development finance portfolio could impact up to 24% of the world's .

The greatest risks lie in South America, Central Africa and Southeast Asia. All of the projects that China's policy banks are financing in Benin, Bolivia and Mongolia overlap with existing protected areas or potential critical habitats. More than 65% of Chinese development projects in Ethiopia, Laos and Argentina are located within Indigenous lands.

On average, risks to Indigenous lands are greatest from extraction and transportation projects, such as mines, pipelines and roads. The greatest threats to nature are energy projects, including dams and coal-fired power plants. For example, a cascade of seven hydropower dams along the the Nam Ou River in Laos has that depended on local ecosystems for their livelihoods.

How the World Bank addresses these risks

China may be the world's , but it's not the only funding source for emerging economies. The World Bank, an , has been a of development finance over the last 40 years—but its approach is markedly different from China's.

In the 20th century, critics for funding projects that caused environmental damage and social conflict. But in the past 30 years it has enacted a series of that are designed to steer lending toward more inclusive and sustainable development projects. Just this year, the bank to aligning its lending with the by 2023.

The World Bank's ISFL's new Guide to offers a holistic approach to by challenging practitioners to look beyond traditional, sectoral development projects and instead engage w/ the complexity of entire landscapes.

— World Bank Climate (@WBG_Climate)

China's rapid economic growth since the 1980s has made it one of the world's top polluters. Now its leaders are working to improve their country's environmental performance.

China has and has pledged to by 2060. But it has made no such reforms in its foreign lending.

Comparing projects financed by the World Bank from 2008–2019 with our list of Chinese loans, we found that on average China's projects pose significantly greater risk to nature and Indigenous lands, primarily in the energy sector.

The World Bank also has a concerning proportion of loans in high-risk areas. Notably, the roads, railways and other transportation projects that it financed during this period pose risks to biodiversity that are nearly equivalent to those posed by similar projects financed by China.

For example, in 2016 the World Bank financed a major road project across the Democratic Republic of the Congo, including Indigenous peoples' territory, opening them up to the loss of property and livelihoods, as well as violence. A formal internal found that "serious harm" had occurred and directed the World Bank to manage future projects more carefully.

Making development finance sustainable

China has an opportunity with the Belt and Road Initiative to improve infrastructure networks around the world in a way that is both sustainable and inclusive. Recently it published the inter-ministerial "," a set of voluntary guidelines produced by Chinese experts from universities, governmental and non-government organizations and international experts, including two of us (Kevin Gallagher and Rebecca Ray). This report urges Chinese investors to respect host country environmental standards. When those standards are lower than China's, the guidelines recommend using international environmental standards.

Nonetheless, China has not enacted binding environmental performance requirements for the projects it finances overseas. Nor has it ended support for high-risk projects like coal-fired power plants.

Currently China is preparing to host the 15th meeting of the Conference of the Parties to the —the main global agreement that commits nations to protect species and ecosystems around the world. Sessions will take place online in October 2021 and in person in Kunming in the first half of 2022. This event is a unique opportunity for China to address social and environmental risks from its global development activities.

We believe that China would be wise to adopt set forth by its Ministry of Ecology and Environment, in collaboration with international experts, including two of us (Kevin Gallagher and Rebecca Ray), that would require compulsory environmental management systems for projects supported by public Chinese banks to prevent and mitigate risks. This would raise the bar for Western lenders, who also need to improve their standards but .

By minimizing harmful impacts from the projects it funds, we believe China could make the Belt and Road Initiative a win-win for itself, host countries and the global economy.

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