Chinese banks have been accused of financing deforestation around the world

Chinese banks are the second largest financiers of raw materials mixed in tropical forest deforestation, according to a study that questions Beijing’s intentions to become a world leader in the fight against climate change.

A global coalition of non-governmental organizations, according to data analyzed by Forests & Finance, reported that between January 2016 and April 2020, Chinese organizations provided $ 15 billion to companies trading in deforestation-related goods in Southeast Asia and subscription services. Brazil and Africa.

Chinese companies engaged in the trade of dough and paper, palm oil, soybeans, rubber and timber work abroad and are often financed by Chinese banks, highlighting the international footprint of the country’s financial sector. Brazil had the largest amount of financing related to deforestation, but most of the loans were granted within the country.

The findings, which a company calculated were amounts to forest-endangered activities, were consistent with an increase in attention paid to limiting greenhouse gas emissions in Beijing. President Xi Jinping he committed last year China would achieve “carbon neutrality” by 2060.

Climate advocates have stated, however, that investment outside of China and lending to high-risk environmental infrastructure and trade run counter to Xi’s bold goal.

The State Bank of Industry and Commerce of China was the largest provider of database lending and subscription services, with a total value of $ 2.2 billion. Sinochem, a Chinese state-owned chemical group, was the largest recipient, raising $ 4.6 billion, mostly for the rubber business.

Trade in goods from the Forest and Finance database accounted for about two-fifths of deforestation worldwide. Studies show that annually it gave about 5 percent of greenhouse gas emissions caused by deforestation alone.

“The world’s major economies talk a lot about climate action, yet banks that finance tropical deforestation continue to blind their eyes,” said Tom Picken, head of the Forest and Finance campaign.

Picken explained that the purpose of the database was to show the large flow of funding from Chinese banks fell below standards “green financing” and pressure on Chinese banks to take stricter guarantees to prevent financing deforestation.

“There are currently few implications for banks that subsidize illegal deforestation abroad,” he said.

In 2017, the Chinese banking system passed the eurozone by assets to become the largest in the world. There are also signs of increasing influence in other developing economies.

A document from the Bank’s International Settlements Survey last year found that Chinese banks have become cross-border creditors around half of the emerging and developing economies worldwide. The paper added that their lending activity is “closely linked to trade”.

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