CHINA'S BELT & ROAD INITIATIVE

AN INTRODUCTION

D ECEMBER 2016
 Acknowledgement s
Friends of the Earth US w ould like to thank M ark
Grimsditch of Inclusive Development International
for his support in review ing this report. We also
thank Li Zeng, Sustainable Finance Intern at Friends
of the Earth US, for assisting developing this report.

PUBLICATION INFORMATION

© December 2016
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 TABLE OF CONTENTS

EXECUTIVE SUMMARY Pg ii

INTRODUCTION Pg 1 7. H OW DOES BRI FIT INTO Pg 11

CHINA?S GOING OUT POLICY?

1. W HAT IS THE BELT AND ROAD Pg 3 8. W HAT IS THE ROLE OF CIVIL

Pg 12
INITIATIVE (BRI)? SOCIETY IN BRI?

2. W HAT SECTORS OR REGIONS Pg 5 9. W HAT ARE EXPECTED Pg 13

WILL BRI PRIORITIZE? CHALLENGES OF BRI?

3. W HAT ARE SOURCES OF Pg 6 10. H OW CAN NGOS FIND Pg 15

FINANCING FOR BRI? INFORMATION ON BRI RELATED
PROJECTS?

4. W HAT IS THE PROCESS FOR Pg 8 11. H OW CAN NGOS SUPPORT Pg 16

DEVELOPING BRI PROJECTS?
D EVELOPING A ?GREEN?BRI?

5. W HAT ARE THE CURRENT Pg 9 APPENDIX 1 - GUIDELINES FOR

PROJECTS BEING DEVELOPED ? ENVIRONMENTAL PROTECTION IN Pg 19
FOREIGN INVESTMENT AND
COOPERATION
6. W HAT REGIONAL OR APPENDIX 2 - THE GREEN
INTERNATIONAL PLATFORMS WILL Pg 10 Pg 21
CREDIT GUIDELINES
BE USED TO SUPPORT OR
IMPLEMENT BRI PROJECTS?
 3. Wh at ar e pot en t ial sou r ces of f in an cin g

EXECUTIVE SUMMARY f or BRI pr oject s?

Financing sources will include those typical of
Chinese overseas investments, such as Chinese
banks (commercial and policy), bonds, state owned
1. Wh at is t h e Belt an d Road In it iat ive (BRI)? enterprises (SOEs), private Chinese equity,
The Belt and Road Initiative (BRI) is a major Chinese private/public partnerships, the Asian Infrastructure
strategy which marks a national push for China to Investment Bank, or others. However, it is expected
increase economic links to Southeast Asia, Central that Chinese banks will continue to be a main
Asia, Russia, and the Baltic region (Central and source of financing for Chinese overseas projects,
Eastern Europe) through various infrastructure and including those along BRI routes.
development projects. 4.Wh at is t h e pr ocess f or developin g BRI
BRI sends a clear signal for Chinese industries to pr oject s?
invest along proposed BRI land and maritime BRI projects will be developed in the same manner
routes, and embodies the political, economic, and as other Chinese overseas investments. Based on
foreign diplomacy interests of China abroad. Given the size of the investment, investors must register
the immense scope and scale of the policy, and/or receive approval from the National
managing the environmental and social impacts of Development and Reform Commission (NDRC),
BRI projects will be a key challenge for China. Ministry of Commerce (MOFCOM), and the State
Since Chinese President Xi Jinping announced the Administration of Foreign Exchange (SAFE). For
policy in 2013, BRI has been officially renamed state-owned enterprises (SOEs) or publicly listed
several times, previously being called One Belt, One companies, approval must also be given by the
Road or the Silk Road Economic Belt and State-owned Assets Supervision and Administration
21st-Century Maritime Silk Road. After the initial Commission of the State Council (SASAC) and the
announcement in 2013, the policy was more fully China Securities Regulatory Commission (CSRC).
articulated in 2015 as a Vision Statement. Since Large investments over 2 billion USD must be
then, numerous supporting policy documents have approved by the State Council.
been produced to support the implementation of
5. Wh at ar e cu r r en t pr oject s bein g
the Vision Statement.
developed?
2. Wh at sect or s or r egion s w ill BRI pr ior it ize?
Numerous projects have been proposed or are
BRI will prioritize energy, infrastructure, transport, already in development. According to China's
aviation, logistics, agriculture, and communications Ministry of Commerce, from January - August 2016,
sectors. Chinese policy makers have currently Chinese companies signed 3,912 project contracts
proposed a general land-based route with six throughout 61 countries. The value of those
economic corridors spanning from Western China projects amounted to US$69.82 billion* . However, a
to the Middle East, in addition to a maritime-based number of what have been termed as new BRI
route stretching from China, Africa, to Europe. projects are in fact older or previously stalled
However, Chinese policy makers have emphasized projects which are being given new life under BRI.
that BRI is open to all countries, not just those along
6. Wh at r egion al or in t er n at ion al plat f or m s
Eurasian routes.
w ill be u sed t o su ppor t BRI pr oject s?

* Data regarding BRI investments is known to vary, particularly since it is unclear if existing projects are retroactively
categorized by the Chinese government as BRI investments. These figures are obtained from China's Ministry of Commerce
Statistics Announcement, published on September 23, 2016:
http://english.mofcom.gov.cn/article/statistic/foreigntradecooperation/201610/20161001410655.shtml
ii
China has identified some international and potentially sensitive or controversial projects.
regional platforms to support BRI projects such as
10. How can NGOs f in d ou t m or e
the Shanghai Cooperation Organization and ASEAN.
in f or m at ion on BRI pr oject s?
In addition to these platforms, all Chinese actors in
BRI overlap with existing Chinese overseas NGOs will need to draw upon similar methods of
investors. These include the Ministry of Commerce, researching BRI projects as when researching
National Development and Reform Commission, Chinese overseas investments. These include
State Owned Assets Supervision and Administration reviewing bilateral agreements, Memorandums of
Commission, China Banking Regulatory Understanding, media announcements, and others.
Commission, and other Chinese government Civil society groups can contact their local Chinese
bodies. Other major players will of course include Embassy or Chinese Chamber of Commerce (if
host country government and local stakeholders. established in the host country) for requests for
information. These agencies are often involved in
7. How does BRI f it in t o Ch in a's Goin g Ou t
facilitating Chinese investments in host countries.
Policy?
11. How can NGOs h elp in developin g a
BRI is a second wave of Chinese overseas
"gr een" BRI?
investments and should be seen as a renewed
version of China?s 2000 Going Out policy, also A "green" BRI can only be achieved with the full
known as China's "Go Global" strategy. This policy participation and consent of local communities
was the first to call on Chinese enterprises and impacted by potential projects. NGOs can help by
industries to "go out" and invest abroad. BRI has working to foster stronger accountability,
been called an "upgrade" of China's Going Out transparency, and clear channels of communication
policy and fits into an ongoing push for China's among Chinese investors and local governments.
businesses and industries to internationalize.
Given the lack of international experience of
8. Wh at is t h e r ole of civil societ y in BRI? Chinese investors, in addition to the lack of a
common definition of what constitutes a "green"
The BRI Vision Statement does not offer explicit
project, it is important that local communities and
guidelines on how Chinese investors ought to
NGOs call on both Chinese and host country
regard environmental protection or civil society.
government stakeholders to comply with relevant
However, it does call for strengthening "people to
host country laws and international norms and
people bonds" and creating "win win" cooperation
standards, in addition to leveraging existing Chinese
between Chinese and host country stakeholders.
policies which promote environmental and social
However, if BRI is to be successful, local
due diligence overseas. Currently, there is no
communities impacted by BRI projects will have to
singular Chinese institution or international
play a key role.
governance body responsible for ensuring
9. Wh at ar e expect ed ch allen ges of BRI? environmental and social accountability among BRI
projects.
As an extremely ambitious strategy in both scope
and scale, BRI will face significant challenges,
ranging from corruption issues in BRI countries, the
lack of international experience on the part of
Chinese investors, to potentially inadequate or
insufficiently implemented environmental
protection standards. Chinese policy makers have
yet to develop robust solutions to these challenges.
Compounding this challenge is the lack of space and
communication channels given to civil society to
proactively participate and provide feedback on
iii
 Introduction
This document is structured as a series of frequently asked questions regarding BRI. It is
meant to provide civil society groups a brief introduction to China' s Belt and Road Initiative
(BRI), w hich w as announced by Chinese President Xi Jinping in 2013. Beginning in Western
China and ending in Central and Eastern Europe, the Belt and Road Initiative is immense in
scale and ambitious in its political and economic goals.
BRI is a renew ed extension of China' s 2001 Going Out Policy, w hich marked the first w ave
of Chinese overseas investments. Like the Going Out policy, BRI calls on Chinese businesses
and industries to "go out" and heighten internationalization efforts. Given the immensity of
BRI, how ever, its success w ill largely depend on how Chinese policy makers, developers,
banks, and other stakeholders engage w ith civil society in managing BRI' s political,
environmental, social, and climate impacts.

1
2
 1. W HAT IS THE BELT AND ROAD INITIATIVE?

Image courtesy of Creative Commons

Know n by several names, the Belt and Road According to the vision statement, the basic
Initiative (BRI) - also know n as One Belt, One principles are: ?The Belt and Road Initiative is in
Road , or the Silk Road Economic Belt and line w ith the purposes and principles of the UN
21st-Century M aritime Silk Road - is a major Charter. It upholds the Five Principles of
initiative w hich marks a national push for China Peaceful Coexistence: mutual respect for each
to increase economic links to Southeast Asia, other' s sovereignty and territorial integrity,
Central Asia, Russia and Central and Eastern mutual non-aggression, mutual
Europe through various infrastructure and non-interference in each other' s internal affairs,
development projects. The Chinese government equality and mutual benefit, and peaceful
has proposed several land and maritime ?routes? coexistence?3 .
from China to Central and Eastern Europe.
The basic framew ork is characterized as "a w ay
Given its immense scope and scale, BRI is
for w in-w in cooperation that promotes
expected to impact more than 60 countries,
common development and prosperity and a
w hich is home to about 4.4 billion people; this
road tow ards peace and friendship by
represents about 63% of the w orld' s
enhancing mutual understanding and trust, and
population 1 .
strengthening all-round exchanges. The Chinese
What does the policy say? government advocates peace and cooperation,
openness and inclusiveness, mutual learning
China' s National Development and Reform and mutual benefit. It promotes practical
Commission (NDRC), M inistry of Foreign Affairs cooperation in all fields, and w orks to build a
(M OFA) and M inistry of Commerce (M OFCOM ) community of shared interests, destiny and
jointly published a ?vision statement and action responsibility featuring mutual political trust,
plan on the principles, framew ork, and economic integration and cultural
cooperation priorities and mechanisms in the inclusiveness".
Belt and Road?2 . This vision statement lays out
the basic scope and purpose of China?s Belt and Cooperation priorities are: ?Countries along the
Road Initiative. Belt and Road have their ow n resource
advantages and their economies are mutually

3
complementary. Therefore, there is a great on maritime routes suggests that ?Chinese
potential and space for cooperation. They military observers see a clear need for China to
should promote policy coordination, facilities strengthen its sea lane security as part of the
connectivity, unimpeded trade, financial One Belt, One Road Initiative? this could require
integration and people-to-people bonds as their an enhanced level of PLA [People?s Liberation
five major goals, and strengthen cooperation in Army] access to necessary military support
the follow ing key areas?. facilities along the maritime route, but not bases
per se?5 .
China has identified cooperation mechanisms
for implementing BRI: ?China w ill take full How are Chinese government
advantage of the existing bilateral and
multilateral cooperation mechanisms to push
agencies promoting BRI?
forw ard the building of the Belt and Road and The Chinese government has designated
to promote the development of regional w orking groups to oversee, encourage, or guide
cooperation. We should strengthen bilateral the implementation of BRI across ministries and
cooperation, and promote comprehensive departments. For instance, the National
development of bilateral relations through Development and Reform Commission (NDRC),
multi-level and multi-channel communication responsible for economic planning, houses a
and consultation. We should encourage the special BRI research group; the China Banking
signing of cooperation M OUs [M emorandum of Regulatory Commission (CBRC) has designated
Understanding] or plans, and develop a number staff to monitor BRI bank financing; and the
of bilateral cooperation pilot projects. We M inistry of Environmental Protection (M EP) has
should establish and improve bilateral joint also devoted staff and resources tow ards
w orking mechanisms, and draw up understanding environmental impacts6 .
implementation plans and roadmaps for
In anticipation of environmental challenges
advancing the Belt and Road Initiative. In
associated w ith BRI, the M EP has launched a
addition, w e should give full play to the existing
w ebsite for collecting ?information related to
bilateral mechanisms such as joint committee,
environment quality, environmental protection
mixed committee, coordinating committee,
policies, law s, regulations, standards,
steering committee and management
technologies and industrial development of
committee to coordinate and promote the
China and those countries along the One Belt
implementation of cooperation projects".
and Road, [and w ill] share concepts and practice
What is the significance of BRI in in ecological civilization and green development,
establish a channel to promote policy dialogue
Chinese policy? and communication, decision-making, scientific
As a cornerstone initiative, BRI represents key research and capacity building, provide
economic, diplomatic, and geopolitical interests information support to countries along the One
of China. Some have interpreted BRI as a major Belt and Road and serves the development of a
underpinning of China?s economic reform w hich green One Belt and Road. Jointly developed by
w ill simultaneously further efforts to strengthen China-ASEAN Cooperation Center and China
diplomatic relationships w ith neighboring Center for SCO Environment Cooperation, the
countries. It has also been observed that BRI w ill Platform Website of One Belt and Road
help relieve excess domestic capacity by Environmental Protection Big Data is the first
exporting industries abroad. such w ebsite nationw ide?7 . How ever, it remains
unclear how to access this w ebsite, as efforts to
Others have gone further and surmised that BRI
locate it have proved unsuccessful at the time of
w ill internationalize China?s homegrow n model
publication.
of development through the construction of
large infrastructure projects. According to an
academic analysis of BRI discourse in China, ?For
some authoritative Chinese analysts, the
emphasis of the One Belt, One Road initiative
infrastructure development signifies the ?export
[of] China?s development blueprint to the
w orld??4 . In addition, it has been suggested that
the impacts of BRI might extend beyond
economic, geopolitical, or diplomatic
dimensions. Some have noted that the emphasis

4
 2. W HAT SECTORS OR REGIONS WILL BRI PRIORITIZE?

completed or underw ay. For instance, an international

rail line connecting Nanning, China to Hanoi,
Vietnam, has already been completed.
The China?Pakistan Economic Corridor connects
China' s northw est city of Kashgar to the port of
Gw adar in Pakistan. Plans for building highw ays,
railw ays, oil and natural gas pipelines, and optic fiber
netw orks have been proposed. According to media
reports, the corridor w ill involve more than $46 billion
in investment from China; $11billion is being allocated
to infrastructure projects, w hile the rest is reportedly
earmarked for electricity generation 9 .
The China-M ongolia-Russia Economic Corridor w as
Image courtesy of Creative Commons
agreed upon by Chinese, M ongolian, and Russian
BRI w ill prioritize investments in the energy, heads of state in September 2014, w hich called for
infrastructure, agriculture, transport, logistics, the improvement of rail and highw ay connectivity,
aviation, information, and communications sectors. develop customs clearance and transport facilitation,
and promote international cooperation. In July 2015,
Geographically, China has prioritized a general land
the three leaders further adopted the M idterm
route beginning in China and ending in Central
Roadmap for Development for Trilateral Co-operation
Europe, in addition to six regional economic corridors.
betw een China, Russia, and M ongolia.
These economic corridors build off of pre-existing or
previously stalled projects8 . How ever, Chinese policy The Bangladesh-China-India-M yanmar Economic
makers have repeatedly emphasized that BRI is open Corridor w as proposed as a key part of BRI during
to all countries, not just those along Eurasian routes. Premiere Li Keqiang' s visit to India in M ay 2013. Later
in December that year, representatives from the four
Currently proposed economic corridors include:
countries met in Kunming, China, to convene the first
The New Eurasia Land Bridge Economic Corridor is an Joint Working Group to discuss priorities for
existing rail line from China' s Jiangsu province running cooperation for the Bangladesh-China-India-M yanmar
to Rotterdam in the Netherlands. It passes through Economic Corridor10 .
Kazakhstan, Russia, Belarus, and Poland. China has
China has also proposed a maritime route originating
expanded the rail routes w ith freight trains running
in Fuzhou, China, w hich then moves on to Vietnam,
from Wuhan to Pardubice, Czech Republic, Chengdu
M alaysia, Indonesia, Sri Lanka, India, Pakistan, Kenya,
to Lodz, Poland, and Zhengzhou to Hamburg,
Djibouti, Greece, and Italy. In the past decade, China
Germany.
has already invested over $5 billion in port
The China-Central-Asia-West Asia Economic Corridor development, including:
runs from Xinjiang, China, to Kazakhstan, Kyrgyzstan,
- Antw erp Port, Belgium: $3.94 million
Tajikistan, Uzbekistan, and Turkmenistan, in addition
to Iran and Turkey. In July 2015, China and the five - Pireas Port, Greece: $624 million
Central Asian countries committed to jointly building a - Port of Djibouti, Djibouti: $185 million
Silk Road Economic Belt. The economic corridor aims
to deepen cooperation betw een the five Central Asian - Lamu Port, Kenya: $484 million
countries and China on the basis of trade, investment, - M ombassa Port, Kenya: $66.7 million
finance, transport, and communication.
- Gw adar Port, Pakistan: $198 million
The China Indochina Peninsula Economic Corridor w as
proposed by Chinese Premier Li Keqiang in December - Hambantota Port, Sir Lanka: $1.9 billion
2014, calling on leaders in the Greater M ekong region - Colombo Port City, Sir Lanka: $1.43 billion
to strengthen relations w ith China. Since then, a
number of transportation projects are already - Colombo Port, Sri Lanka: $500 million 11
5
 3. W HAT ARE SOURCES OF FINANCING FOR BRI?

Investment sources for BRI type projects w ill include Road' . By June 30, 2016, China Export & Credit
those typical of other Chinese overseas investments, Insurance Corporation had supported export,
such as Chinese banks (commercial and policy), domestic trade and investment w ith a total value of
bonds, state ow ned enterprises (SOE) equity, peer to $2.3trillion USD" 17 .
peer lending, private Chinese equity, private/public
Follow ing the lead of Chinese policy banks like
partnerships, or others.
China Development Bank and China Exim Bank are
In an effort to facilitate cross border investment, Chinese commercial banks, "serving as the
China has signed tax treaties w ith 53 countries along follow -up driver for commercial cooperation".
BRI, as of June 2016 12 .
Chinese banks are increasingly establishing
Key financing sources for BRI branches in BRI countries. So far, nine Chinese
banks have established branches in 24 BRI
Chinese Policy and Commercial Banks: Chinese banks countries18 . As of June 2016, China Development
w ill play a major role in BRI. Bank' s loan balance for BRI projects amounted to
Chinese policy banks include China Development more than $110 billion 19 . How ever, it should be
Bank and China Export Import Bank. noted that Chinese banks have already been
investing in BRI countries for over a decade prior to
China' s five largest commercial banks are Industrial the formalization of BRI as a national Chinese
and Commercial Bank of China (ICBC), China initiative, so it is likely that w hat constitutes a BRI
Construction Bank (CCB), Bank of China (BOC), project today likely also includes older projects
Agricultural Bank of China (ABC), and Bank of w hich predate the announcement of BRI.
Communications (BOCOM ).
State Ow ned Enterprises: State ow ned enterprises
According to the"Belt and Road Progress Report" (SOEs) have played an important role in China' s
published by Renmin University of China, financial Going Out Policy, dominating key sectors such as
integration w ill be an "important underpinning for energy, oil and gas, telecommunications, and
the successful implementation of the BRI". Chinese shipping. There are 112 SOEs managed by China' s
banks have already played a significant role in central government, w ith thousands of provincially
financing China' s Going Out policy, and the authors managed SOEs as w ell. All SOEs are regulated by
of the report emphasize that although numerous the State-ow ned Assets Supervision and
new financing institutions have emerged recently, Administration Commission (SASAC). This agency
such as the Asian Infrastructure Investment Bank and is responsible for appointing top executives at
the New Development Bank, Chinese policy and central SOEs, though these selections must be
commercial banks w ill continue to play a major role approved and review ed by the Central Committee
in financing BRI: "Domestic policy-based financial of the Communist Party of China. SOEs may
institutions serve as the backbone for financial function as an investor, developer, or contractor to
cooperation. By June 30th, 2016, the China a project, and are closely connected to China' s
Development Bank has established a ' Belt and Road' foreign aid program. In addition, they often benefit
project pool involving over 900 projects from over from preferential access to credit from China' s
60 countries in transportation, energy, resources, policy and commercial banks. At the same time,
and other sectors. The Export-Import Bank of China many SOEs are facing overcapacity issues
holds an outstanding loan balance of over 1000 domestically, especially in the steel, cement, coal,
projects involving roads, railw ays, ports, pow er and chemical industries, thus prompting SOEs to
resources, pipelines, communication, and industrial expand their markets to overseas* . Although SOEs
parks in the 49 countries along the ' Belt and Road' . also seek funds from Chinese banks, they can also
The Export-Import Bank of China also recently signed function as financiers of a project by investing via
over 500 projects w ith countries along the ' Belt and equity.

* For more information on Chinese SOEs, please see our report, "Understanding the Role and Characteristics of Chinese
State-owned Enterprises and Private Enterprises in Overseas Investment", published by Friends of the Earth US in April 2015.

6
 M anagement Limited, and a major partner is
Other financing sources for BRI Dubai-based Elyseum Capital Partners.
The Silk Road Fund: This is a $40 billion private According to the Global Times, ?In order to balance
equity fund, operated by the Silk Road Fund Co. its roles as a profit-seeking financial institution and a
Ltd. promoter of the BRI initiative, COSSIIF Chairman Jin
Its first installment of $10 billion w as jointly Kun said the fund w ill divide its business strategies
backed by China' s foreign exchange reserves into tw o parts. The first part w ill focus on
(65% ), China Investment Corp.(15% ), assembling private equity funds by investing in
Export-Import Bank of China(15% ), and China businesses w ith potential, w hile the second part w ill
Development Bank (5% )13 . focus on helping countries located along the routes
of the BRI initiative w ith infrastructure projects?20 .
The Silk Road Fund invests in infrastructure,
resources and energy development, industrial China-Central Eastern Europe Fund: M anaged by
capacity cooperation, and financial Sino-CEE Financial Holdings Ltd. (established by
cooperation 14 . ICBC earlier in 2016), this investment fund aims to
raise 50 billion euros for project finance in
Green Silk Road Fund (Green Ecological Silk infrastructure, high tech manufacturing, and
Road Investment Fund): Separate from the Silk consumer goods sectors.
Road Fund, this fund has been reported to have
30 billion yuan ($4.3 billion USD) 15 . It w as launched by Chinese Premiere Li Keqiang in
November 2016, and w ill be backed by the
It w as launched by Elion Resources, China government. The fund w ill initially focus on Central
Oceanw ide, Chint Group, Huiyuan Juice, and Eastern Europe, but may extend to Western
M acrolink, JuneYao, Ping?an Bank, and Europe if deemed relevant to China-Central and
Sino-Singapore Tianjin Eco-city. It is the ?the first Eastern Europe cooperation 21 .
equity investment fund dedicated to
eco-environment improvement and the Shanghai Cooperation Organization (SCO)
development of eco-friendly photovoltaic clean Development Bank (proposed): The Shanghai
energy" 16 . Cooperation Organization Development Bank has
been proposed by Chinese and Russian members of
Asian Infrastructure Investment Bank (AIIB): AIIB the Shanghai Cooperation Organization.
is a multilateral development bank (M DB)
founded on Dec 25, 2015. It focuses on Should the bank be established, it is expected to
developing infrastructure, energy and pow er, fund regional projects w ith other multilateral and
transportation, telecommunications, rural development banks.
infrastructure, agriculture development, w ater
supply and sanitation, environmental protection,
urban development, and logistics.
Current projects are located in M yanmar,
Pakistan, Indonesia, Bangladesh, Tajikistan, and
India, all of w hich are located along the BRI
route.
New Development Bank (NDB): The concept for
the New Development Bank w as born in M arch
2012 as a w ay to meet the development funding
requirements of its founders - Brazil, Russia,
India, China, and South Africa (BRICS). How ever,
it w as only in July 2014 that the New
Development Bank w as formally established. The
bank has an authorized capital of $100 billion
USD and w ill prioritize infrastructure and
sustainable development as key focus areas. It
issued its first loans in the spring of 2016.
China Ocean Strategic Industry Investment Fund
(COSIIF): This investment fund w as launched by
Hong Kong-based Golden Grain Capital

7
 4. W HAT IS THE PROCESS FOR DEVELOPING BRI
PROJECTS?
BRI projects w ill be
developed in the same
manner as Chinese
overseas investments.
Based on the size of the
investment, investors
must register and/or
receive approval from
the National
Development and
Reform Commission
(NDRC), M inistry of
Commerce (M OFCOM ),
and the State
Administration of
Foreign Exchange
(SAFE). For SOEs or
publicly listed
companies, approval
must also be given by
SASAC and the China
Securities Regulatory
Commission (CSRC).
Large investments over
2 billion USD must be
approved by the State
Council* . Image courtesy of Creative Commons

According to the Vision Statement, the process for mechanisms for mutual certification of standards
encouraging BRI projects is described as: ?We should adopted in countries" along BRI. Published by the
encourage the signing of cooperation M OUs National Development and Reform Commission
(M emorandum of Understanding) or plans, and develop (NDRC), the plan provides further guidelines for
a number of bilateral cooperation pilot projects. We Chinese investors and companies. The plan describes
should establish and improve bilateral joint w orking BRI w ithin the context of advancing China' s Going Out
mechanisms, and draw up implementation plans and Policy, calling for the "development of key national
road maps for advancing the Belt and Road Initiative. In standards for mutually beneficial cooperation".
addition, w e should give full play to the existing bilateral
mechanisms such as joint committee, mixed committee, Although the document aims to "promote
coordinating committee, steering committee and international standards", it also calls for the broader
management committee to coordinate and promote the adoption of Chinese technical standards in the iron and
implementation of cooperation projects". steel, nonferrous metals, railw ays, highw ays, w ater
projects, oil and gas fields, and overseas engineering
In an effort to streamline standards across BRI, the services sectors. The plan also calls for the translation
Chinese government produced the Action Plan for the of 500 national standards of BRI countries into
Belt and Road Standard Coordination 2015-2017, w hich Chinese22 .
establishes guidelines for "developing procedures and

* For more information on the approval and registration process for Chinese foreign investment, please see this article
published by Mondaq: Cynthia Lau, "China: Approval And Regulatory Requirements For Chinese Foreign Direct Investment ",
Mondaq, May 30, 2014.http://bit.ly/2h1PJkk

8
 5. W HAT ARE CURRENT PROJECTS BEING DEVELOPED?
How Our Number One Selling Product is Doing

2013-2016, China Railw ay Group Limited and China

Numerous projects have already been proposed or Communications Construction Company Limited, both
are already in development. According to China' s of w hich are SOEs, signed 38 contracts for
M inistry of Commerce, from January - August 2016, demonstration projects for transportation
Chinese companies signed 3,912 project contracts infrastructure in 26 countries, w hich includes port
throughout 61 countries along the Belt and Road. cooperation and updating existing infrastructure. There
The value of those projects amounted to $69.82 have also been fifteen airport projects and 28 airport
billion USD* . expansion projects25 .
How ever, it should be noted that a number of w hat In the energy sector, it has been reported that Chinese
have been termed as new BRI projects are in fact SOEs contributed to the construction of 40 energy
older or previously stalled projects w hich are being projects, including pow er plants, transmission facilities,
given new life under BRI. For instance, the and oil and gas pipelines in 19 countries; in this year
Jakarta-Bandung High Speed Rail in Indonesia has alone, China has already signed at least 16 energy
been largely seen as a BRI investment, yet plans for projects26 , one of w hich w as the Yamal LNG project in
the project have been discussed since at least 2008. Russia. The project received $12 billion USD in loans
from China Development Bank and China Export
The promotion of trade and investment Import Bank; the Silk Road Fund and China National
in BRI countries Petroleum Company (CNPC), a large SOE, also hold
As of June 2016, China has signed bilateral stakes in the project 27 .
investment treaties w ith 104 countries and Although China is the w orld' s leading investor in
established a "Joint Economic and Trade Commission renew ables28 , it has also continued to heavily finance
and other mechanisms to promote investment the coal sector in BRI countries. Betw een 2007-2015,
cooperation, providing legal and institutional basis for instance, China w as the largest investor of coal
for bilateral investment cooperation" 23 . globally, financing roughly$25 billion USD, and during
In facilitating project investment, the Chinese this same time period, the top destinations for coal
government has also signed numerous financing included mostly BRI countries, such as
implementation plans and cooperation agreements Indonesia, Vietnam, India, and Russia29 .
w ith various BRI countries* * . Given the immense geographic and sectoral scope of
Investments along the proposed economic corridors BRI, how ever, the challenge of managing the
have also already begun. As referenced earlier, China environmental and social impacts of such projects are
has already invested roughly $5 billion in port becoming increasingly apparent. For example, in
development, and the China-Pakistan Economic Pakistan, the construction of the Orange M etro Line in
Corridor has reportedly raised $35 billion USD of a Lahore has caused mass protests and triggered
total target of $46 billion USD; approximately $11 law suits, as millions of people have been displaced
billion USD of investments w ill be allocated to since demolition for the metro line began four months
infrastructure projects and the rest to primarily coal before the loan from China Export Import Bank w as
and hydroelectric projects24 . approved 30 .

Investments by sector
In the transportation sector, Chinese investments in
BRI countries have steadily expanded. Betw een

* Data regarding BRI investments is known to vary, particularly since it is unclear if existing projects are retroactively categorized by
the Chinese government as BRI investments. These figures are obtained from a China's Ministry of Commerce Statistics
Announcement, published on September 23, 2016:
http://english.mofcom.gov.cn/article/statistic/foreigntradecooperation/201610/20161001410655.shtml
* * A useful list of specific country agreements compiled by HKTDC Research can be found here: http://bit.ly/2gRE3A1
9
6. W HAT REGIONAL/ INTERNATIONAL PLATFORMS WILL BE
USED TO SUPPORT OR IMPLEMENT BRI PROJECTS?
China has identified some
international and regional platforms
to support BRI projects.
According to the Vision Statement,
China has identified the follow ing
regional and international platforms
for implementing BRI:
- Shanghai Cooperation
Organization (SCO)
- ASEAN Plus China (10+1)
- Asia-Pacific Economic
Cooperation (APEC)
- Asia-Europe M eeting (ASEM )
- Asia Cooperation Dialogue (ACD)
- Conference on Interaction and
Confidence-Building M easures in
Asia (CICA) Image courtesy of Creative Commons
- China-Arab States Cooperation
Forum (CASCF) - China-Arab States Expo Commerce, National Development
and Reform Commission, State
- China-Gulf Cooperation Council - Western China International Fair
Ow ned Assets Supervision and
Strategic Dialogue, Greater M ekong - China-Russia Expo Administration Commission,
Sub-region (GM S) China Banking Regulatory
- Qianhai Cooperation Forum
- Economic Cooperation, and Central Commission, and other Chinese
Asia Regional Economic Cooperation - Silk Road (Dunhuang) International government bodies. Other major
(CAREC) Culture Expo players w ill of course include host
country government and local
Forums and exhibitions are another - Silk Road International Film Festival stakeholders.
proposed means for implementing - Silk Road International Book Fair
BRI :
Additionally, there is a UNESCO
- Boao Forum for Asia, China-ASEAN partnership w ith the China Council
Expo, for the Promotion of International
- China-Eurasia Expo Trade (CCPIT), w hich is China' s
largest trade organization.
- Euro-Asia Economic Forum
In addition to these platforms, all
- China International Fair for Chinese actors in BRI overlap w ith
Investment and Trade existing Chinese overseas investors.
- China-South Asia Expo These include the M inistry of

10
 7. H OW DOES BRI FIT INTO CHINA?S
GOING OUT POLICY?
China are adopting new business models, seeking
business and structural upgrades to participate in
international competitions at a higher level,
promoting the influence of Chinese firms and
brands in the process" 31 . How ever, Chinese
companies and banks are comparatively still less
sophisticated than their international counterparts
in terms of conducting due diligence, committing
to international norms (such as the Equator
Principles or Global Compact), assessing
environmental and social risks,or meeting other
international standards on a project level* .
Like the Going Out Policy, BRI represents an
increasing political and economic shift tow ards the
internationalization of Chinese companies and
industry. It is expected to help boost China' s
domestic economy by relieving excess capacity in
key sectors (such as coal, cement, and others) to
overseas markets.
What counts as a BRI project?
There is no common definition of w hat constitutes
a BRI project, and even the geographic boundaries
are unclear as Chinese policymakers have
emphasized that BRI is open to all countries, not
just those along the Eurasian land or sea routes. As
such, there is no special Chinese agency tasked
w ith "approving" projects as BRI investments.
Image courtesy of Creative Commons

BRI is a second w ave of Chinese overseas investments

and should be seen as a renew ed version of China?s
2000 Going Out policy, also know n as China' s Go
Global strategy. This policy w as the first to call on
Chinese enterprises and industries to "go out" and
invest abroad. BRI fits into this ongoing push for
China' s businesses and industries to internationalize.
As reported in Xinhua, the vice president of China
Communications Construction Company Ltd. (CCCC),
stated that the BRI is an ?upgrade? of China?s Go
Global strategy. He noted that the Going Out policy
has generally helped increase the sophistication of
Chinese enterprises: ?Through the construction of
major infrastructure projects along the ' Belt and
Road,' Chinese enterprises that have ventured out of

* For information on how Chinese banks have performed in complying with international norms and host country law in
overseas projects, please see our report: "Going out, but going green? Assessing the implementation of the Green Credit
Guidelines Abroad", published by Friends of the Earth US in November 2014.
http://www.foe.org/news/archives/2014-11-going-out-but-going-green
11
 8. W HAT IS THE ROLE OF CIVIL SOCIETY IN BRI?

The Chinese government has provided limited (epidemic/disease information sharing, medical
information regarding the role of civil society in BRI. assistance), student scholarships, protecting w orld
cultural sites, tourism, sister cities, cultural exchanges,
The Vision Statement offers mostly generic language
and others.
on NGOs and the role of public participation: ?We
should increase exchanges and cooperation betw een The "Belt and Road Progress Report" published by
non-governmental organizations of countries along Renmin University describes China' s support for civil
the Belt and Road, organize public interest activities society along similar themes, and notes that China
concerning education, health care, poverty reduction, "held 63 events of exchange and cooperation w ith
biodiversity and ecological protection for the benefit non-governmental organizations" from BRI countries.
of the general public, and improve the production How ever, these exchanges seem to generally involve
and living conditions of poverty-stricken areas along government sponsored events and organizations, as
the Belt and Road. We should enhance international the examples referenced in the report include the
exchanges and cooperation on culture and media, Cairo International Book Fair and China-ASEAN
and leverage the positive role of the Internet and new Forum on Social Development and Poverty Reduction.
media tools to foster harmonious and friendly cultural
In sum, the BRI Vision Statement or supporting policy
environment and public opinion".
documents do not offer explicit guidelines on how
How ever, one of the priorities for cooperation of BRI Chinese investors ought to regard environmental
is ?people to people bonds?, w hich can be loosely protection or civil society. How ever, environmental
interpreted as to include civil society. Under the protection, local community consultations, and NGOs
category of "people to people bonds", the Vision must play a key role if BRI is to be successful in its goal
Statement covers broad cooperation in public health of developing meaningful "people to people bonds".

12
 9. W HAT ARE EXPECTED CHALLENGES OF BRI?

Image courtesy of Creative Commons

As an extremely ambitious strategy in both scope and un-addressed, despite the fact that some projects are
scale, BRI w ill face significant challenges, ranging already in the process of being developed: ?Regarding
from local corruption issues, the lack of international the challenges and problems confronting the One
experience on the part of Chinese investors, to Belt, One Road initiative... relatively few Chinese
potentially inadequate or insufficiently implemented sources address this issue. While some
environmental protection standards. Chinese policy non-authoritative sources stress the apparent
makers have yet to develop robust solutions to these complementarity betw een the needs of the other
challenges. Compounding this is the lack of space and developing states that comprise the One Belt, One
communication channels given to civil society to Road region and China?s huge financial resources and
proactively participate and provide feedback on extensive experience in undertaking infrastructure
potentially sensitive or controversial projects. projects, none seriously examine w hat w ould be
required to complete such an endeavor in a profitable
What is the current discourse in China on and genuinely beneficial manner. M any of the nations
potential BRI challenges? in the One Belt, One Road region are exceedingly
poor, w ith limited experience in undertaking huge
According to an academic analysis of official BRI
infrastructure projects, and considerable levels of
documents, these challenges remain largely

13
corruption. M oreover, as some non-authoritative noted that different countries may have different
Chinese observers suggest, a major increase in the approaches to environmental protection, social
activities of Chinese enterprises across the One Belt, responsibility, and human rights, and has thus called
One Road area could generate damaging political and for the Chinese government to ?set up a systemic and
cultural ?blow back? that could harm China?s image or sustainable research platform to monitor the state of
increase instability and heighten geopolitical Chinese investments (including problems, needs,
tensions?32 . scale, and types), step up investigation and study of
overseas conditions, and establish a joint mechanism.
Increasingly, these concerns are being discussed in
At the same time, [the government should] organize
China. In an opinion piece in China Daily, a researcher
and mobilize researchers to go to investment target
at Tsinghua Univeristy observed that in the short term,
countries to launch overseas investigation and study
financial interests of Chinese investors may not alw ays
w ork for at least one year on the One Belt and One
align w ith those of local communities:
Road, and set up a contingent of young researchers
?M any local governments and enterprises in China w ho understand the situation in the major
have high expectations from the Belt and Road countries?34 .
Initiative, but most of their interests are related to
infrastructure projects, trade and capital. They don' t Ensuring environmental and social due
seem to care much about Chinese people' s diligence
understanding of the ground situations in foreign
Given the proposed scale and intensity of projects
countries. Studying the ground realities in target
located in w hat are generally high risk and extremely
countries before venturing into them is very important
poor regions, it remains unclear how Chinese policy
for Chinese enterprises, because if the people of a
makers and investors w ill w ork w ith host country
country do not w elcome them, they simply cannot do
governments and local stakeholders in order to
business there. So getting the green light from such
adequately assess the environmental, social, and
countries' governments does not necessarily
climate change impacts of such projects, all w hile
guarantee success in business?33 .
simultaneously ensuring a common, systematic
Liu Weiping, a researcher at the China Development approach tow ards applying robust environmental and
Bank Research Institute, has echoed this concern. social standards. In ensuring environmental and social
Regarding Chinese overseas investments, Liu has said, diligence, civil society groups, NGOs, and local
?At present Chinese enterprises going global find it communities can play a major role in helping BRI
?easy to stand up but difficult to stand steady." He investors meet this challenge.

14
 10. H OW CAN NGOS FIND OUT INFORMATION
ON BRI RELATED PROJECTS?

NGOs w ill need to draw upon on similar methods of via participating in regional or international forums (as
researching BRI projects as used for researching referenced in Question 6), engaging host country
Chinese overseas investments. These include Chinese Embassies and Chinese Chambers of
review ing bilateral agreements, M OUs, media Commerce, or creating local pressure to encourage
announcements, company w ebsites, utilizing financial local government or Chinese investors to disclose
databases, or others* . additional information.
Engaging Chinese Embassies and Chinese Online resources
Chambers of Commerce In anticipation of some of these challenges, the
Civil society groups can contact their local Chinese Chinese government has created online platforms for
Embassy or Chinese Chamber of Commerce (if Chinese enterprises going abroad. Those related to BRI
established in the host country) for requests for projects include:
information. They are often involved in facilitating - OBOR Universal Service Platform: This w ebsite
Chinese investments in host countries. Especially for appears to be tailored to help Chinese enterprises
projects for w hich funding is not yet confirmed, it can invest abroad. How ever, it does not appear to contain
be useful to engage these agencies. How ever, it information on how to appropriately interact w ith
should be noted that utilizing communication local communities (such as obtaining free, prior, and
channels at Chinese Embassies and Chinese Chambers informed consent), nor does it contain specific
of Commerce, w hether via via telephone, fax, email, guidance on environmental protection standards.
or in person visits, may be challenging depending on w w w .bigdataobor.com/
each agency' s staff. NGOs attempting to contact
Chinese Embassies, for instance, have had mixed - China National Remote Sensing Center of Science
results, w ith some embassy staff in certain locations and Technology Beijing: This w ebsite discusses
providing responses, w hereas others have not. In one potential environmental impacts located along BRI
example, an Ecuadorean group attempted to deliver a routes. w w w .chinageoss.org/
letter to the Chinese Embassy in Quito regarding the - Credit China: This w ebsite can be used to find
controversial M irador copper mine in 2012. How ever, information on companies blacklisted from receiving
their attempt to hand deliver the letter to the Chinese credit in China. w w w .creditchina.gov.cn
ambassador w as denied by staff, and as a result, the
situation escalated w ith the arrest of protesters.
In contrast, in Zimbabw e, the Chinese Embassy
acknow ledged receipt of a letter from the local group
Center for Research and Development, and in
Indonesia, the environmental NGO WALHI w as
contacted by a Chinese mining company at the
request of the Chinese Chamber of Commerce of
Indonesia.
Developing new strategies
Similar to other advocacy efforts on Chinese overseas
investments, a key challenge w ill be transparency and
channels of communications w ith Chinese project
developers and financiers. This challenge is
compounded by the fact that BRI land and maritime
routes cross through regions w ith high levels of
corruption and w eak governance. With this in mind,
civil society groups should consider new strategies for
contacting BRI developers and financiers, w hether it is
* For more detailed information on this, please refer to our ?Tip Sheet on researching Chinese financed projects", which can be
accessed by contacting [email protected].
15
 11. H OW CAN NGOS SUPPORT D EVELOPING A ?GREEN?BRI?

Chinese policy makers have stressed the importance of diligence, and the Green Credit Guidelines, w hich
a "green" BRI, perhaps most obviously demonstrated obligates Chinese lenders to comply w ith host country
by the establishment of the Green Silk Road Fund. law and international best practices and norms w hen
How ever, a "green" BRI can only be achieved w ith the investing abroad. Text of these policies are included as
full participation and consent of local communities appendices* .
impacted by potential projects.
Creating local pressure
NGOs can help by w orking to foster stronger
accountability, transparency, and clear channels of It is important for civil society groups to w ork w ith
communication among Chinese investors and local their ow n governments in calling for the kinds of
governments. The follow ing is not an exhaustive list of projects and industries w hich they w ish to be
advocacy strategies, but is meant to help inspire and developed in their ow n communities. Chinese BRI
guide further discussion on how civil society groups investors are obligated to respect a host country
can promote the development of a "green" BRI. government' s decisions, so civil society can play an
important role in educating and advocating to both
Early engagement local government and Chinese investors the types of
projects that are indeed "w in w in" for all stakeholders.
It is important to engage Chinese BRI investors as early
as possible in cases of potentially controversial Applying lessons learned
projects. Engaging BRI investors early and informing
them of potential environmental, social, or operational NGOs can also help support the development of a
risks can play a key significant role in preventing or green BRI by draw ing lessons from China?s Going Out
mitigating major impacts. Policy over the past decade, as the lessons are equally
applicable to BRI investors.
Leveraging international standards
Helping investors understand host country
Given the lack of international experience of Chinese law s and regulations
investors, it is important that NGOs call on both
Chinese and local government stakeholders to comply NGOs can help Chinese BRI policy makers and
w ith relevant host country law s and international investors identify and reflect on recurring challenges of
norms and standards, such as Free, Prior Informed Chinese overseas investments, such as a lack of
Consent, UN Declaration on the Rights of Indigenous general communication channels, know ledge of local
Peoples, and others, in addition to existing Chinese cultural or legal issues, and understanding of relevant
policies w hich encourage environmental and social international norms and standards.
due diligence overseas. Although these challenges are not necessarily unique
Leveraging Chinese policies to Chinese investors, given their relative lack of
expertise and experience as international players,
With the increasing sw ell of Chinese overseas Chinese BRI investors w ould especially benefit from
investments, Chinese policy makers are gradually increased communication and information sharing
developing an emerging policy framew ork for from civil society and local communities in order to
managing the behavior and environmental footprint better localize their operations and mitigate
of Chinese banks and companies abroad. Currently, environmental and social risks.
China has developed overseas investments policies
related to mining, palm oil, silviculture, and bank
financing.
Examples of key policies include the Guidelines for
Environmental Protection in Foreign Investments,
w hich encourages Chinese enterprises to implement
corporate social responsibility and environmental due

* For more information on all Chinese policies up to 2012, please see: ?Chinese Outward Investment: An emerging policy
framework?published by the International Institute for Sustainable Development (IISD).
16
 ENDNOTES
1. Wu Xia, Wang Lei, & Liu Yang, ?Special Report: M utual interests key to China' s ?Belt and Road?
initiative,? Xinhua, June 17, 2016. http://new s.xinhuanet.com/english/2016-06/17/c_135445017.htm
2. ?Full text: Action plan on the Belt and Road Initiative?, published by The National Development and
Reform Commission, M inistry of Foreign Affairs and M inistry of Commerce (authorized by the State Council),
M arch 30,2015. http://english.gov.cn/archive/publications/2015/03/30/content_281475080249035.htm
3. Ibid.
4. M ichael D. Sw aine, ?Chinese View s and Commentary on the ?One Belt, One Road? Initiative?, China
Leadership M onitor, No. 47: M ay 24, 2015.
http://w w w .hoover.org/sites/default/files/research/docs/clm47ms.pdf
5. Ibid.
6. ?The Platform Website of One Belt and Road Environmental Protection Big Data w as Launched?, China
Environment M edia, September 30, 2016.
http://w w w .chinaenvironment.info/Policy/201609/t20160930_90797.html
7. Ibid.
8. "What is Belt and Road Initiative?", HKTDC Research.
http://beltandroad.hktdc.com/en/about-the-belt-and-road-initiative/about-the-belt-and-road-initiative.aspx
9. Selcuk Gokoluk, Lyubov Pronina, and Faseeh M angi, "China About to Start $35 Billion of Silk Road Plan
in Pakistan", Bloomberg, Novermber 24, 2016. http://bloom.bg/2gDHH4l
10. "What is Belt and Road Initiative?", HKTDC Research.
http://beltandroad.hktdc.com/en/about-the-belt-and-road-initiative/about-the-belt-and-road-initiative.aspx
11. "Hungary and China signed an accord on new Silk Road trade netw ork", Associated Press, June 8,
2015. http://read.bi/1HjQs9P
12. Belt and Road Progress Research Team, "Adhering to the Planning, Orderly and Pragmatically Build the
' Belt and Road": The Belt and Road Progress Report", Renming University, September 26, 2016.
http://upload.db.silkroad.new s.cn/2016/0929/1475118415154.pdf
13. ?Overview ?, Silk Road Fund. http://w w w .silkroadfund.com.cn/enw eb/23775/23767/index.html
14. ?Scope of Investment?, Silk Road Fund.
http://w w w .silkroadfund.com.cn/enw eb/23798/23805/index.html
15. Yu Wenjing, ?First ?Green Silk Road Fund?Launched in Beijing?, Xinhua, M arch 8, 2015.
http://w w w .chinagoabroad.com/en/article/first-green-silk-road-fund-launched-in-beijing;
http://new s.xinhuanet.com/2015-03/08/c_1114563063.htm
16. Ibid.
17. Belt and Road Progress Research Team, "Adhering to the Planning, Orderly and Pragmatically Build the
' Belt and Road": The Belt and Road Progress Report", Renming University, September 26, 2016.
http://upload.db.silkroad.new s.cn/2016/0929/1475118415154.pdf
18. Ibid.
19. ?CDB holds seminar for finance issue of the Belt and Road?, China Development Bank, Aug 23, 2016,
http://w w w .cdb.com.cn/xw zx/khdt/201608/t20160823_3600.html
20. Liu Zhun, ?China Ocean Strategic Industry Investment Fund to promote ?Belt and Road?initiative?,
Global Times, October 23, 2016. http://w w w .globaltimes.cn/content/1013140.shtml
21. ?China launches 10 billion euro fund for Central, Eastern Europe?, Reuters, November 6, 2016.

17
http://uk.reuters.com/article/uk-china-eastern-europe-fund-idUKKBN13105J
22. "Action Plan for the Belt and Road Standard Coordination 2015-2017", National Development and
Reform Commission, October 22, 2015. http://w w w .sdpc.gov.cn/gzdt/201510/t20151022_755473.html
23. Belt and Road Progress Research Team, "Adhering to the Planning, Orderly and Pragmatically Build
the ' Belt and Road": The Belt and Road Progress Report", Renming University, September 26, 2016.
http://upload.db.silkroad.new s.cn/2016/0929/1475118415154.pdf
24. D. Suba Chandran, "Pakistan' s Corridor of Uncertainty", Business Line, November 29, 2016.
http://w w w .thehindubusinessline.com/opinion/pakistan-cpec-china-and-india/article9398836.ece
25. Belt and Road Progress Research Team, "Adhering to the Planning, Orderly and Pragmatically Build
the ' Belt and Road": The Belt and Road Progress Report", Renming University, September 26, 2016.
http://upload.db.silkroad.new s.cn/2016/0929/1475118415154.pdf
26. Ibid.
27. Stephen Bierman and Elena M azneva, "Russia LNG Plant Gets $12 Billion From China Amid
Sanctions", Bloomberg, April 29, 2016. http://bloom.bg/2gw EBhJ
28. Vera Eckert, "China leads as green energy investment plans hit record high", Reuters, M arch 24,
2016. http://w w w .reuters.com/article/us-renew ables-investment-idUSKCN0WQ1IU
29. "Carbon Trap: How International Coal Finance Undermines the Paris Agreement", National Resources
Defense Council and Oil Change International, Novemer 2016.
https://w w w .nrdc.org/sites/default/files/carbon-trap-international-coal-finance-report.pdf
30. Shashank Bengali, "China' s dream of a new Silk Road runs into hurdles at its first stop: Pakistan", Los
Angeles Times, M ay 25, 2016. http://w w w .latimes.com/w orld/asia/la-fg-pakistan-china-snap-story.html
31. Wu Xia, Wang Lei, & Liu Yang, ?Special Report: M utual interests key to China' s ?Belt and Road?
initiative,? Xinhua, June 17, 2016. http://new s.xinhuanet.com/english/2016-06/17/c_135445017.htm
32. M ichael D. Sw aine, ?Chinese View s and Commentary on the ?One Belt, One Road? Initiative?, China
Leadership M onitor, No. 47: M ay 24, 2015.
http://w w w .hoover.org/sites/default/files/research/docs/clm47ms.pdf
33. Zhao Kejin, ?People factor key to ' Belt and Road?, China Daily, M ay 23, 2015.
http://usa.chinadaily.com.cn/opinion/2015-05/23/content_20798229.htm
34. Ibid.

Sources for "Belt and Road Initiative Routes" M ap

1. "What is Belt and Road Initiative?", HKTDC Research.
http://beltandroad.hktdc.com/en/about-the-belt-and-road-initiative/about-the-belt-and-road-initiative.aspx
2. "Hungary and China signed an accord on new Silk Road trade netw ork", Associated Press, June 8,
2015. http://read.bi/1HjQs9P
3. "Belt and Road, a promising initiative aimed at common prosperity", China Daily, October 8, 2016.
http://w w w .chinadaily.com.cn/business/2016-10/08/content_26989566.htm

18
 APPENDIX 1

Guidelines for Environment al Prot ect ion

in Foreign Invest ment and Cooperat ion
Issued by: M inistry of Commerce of the People?s Republic of China and M inistry of Environmental Protection of
the People?s Republic of China
Shang He Han [2013] No. 74
Date of Issuance: February 18, 2013
Article 1 These Guidelines are hereby formulated in order to direct enterprises in China to further regularize
their environmental protection behaviors in foreign investment and cooperation activities, timely identify and
prevent environmental risks, guide enterprises to actively perform their social responsibilities of environmental
protection, set up good international images for Chinese enterprises, and support the sustainable
development of the host country.
Article 2 These Guidelines are applicable to the environmental protection of Chinese enterprises in foreign
investment and cooperation activities, w hich shall be abided by enterprises consciously.
Article 3 It is advocated that in the course of active performance of their responsibilities of environmental
protection, enterprises should respect the religious belief, cultural traditions and national customs of
community residents of the host country, safeguard legitimate rights and interests of labors, offer training,
employment and re-employment opportunities to residents in the surrounding areas, promote harmonious
development of local economy, environment and community, and carry out cooperation on the basis of
mutual benefits.
Article 4 Enterprises shall, adhering to the concept of environmental friendly and resource conservation,
develop low -carbon and green economy, and implement sustainable development strategies, so as to realize a
?w in-w in? situation of corporate self-interests and environmental protection.
Article 5 Enterprises shall understand and observe provisions of law s and regulations of the host country
concerning environmental protection.
For projects invested in the construction and operation by enterprises, application shall be filed to local
government for permits w ith respect to environmental protection in accordance w ith law s and regulations of
the host country.
Article 6 Enterprises shall include environmental protection into their enterprise development strategies as w ell
as production and operation plans, establish corresponding rules and regulations for environmental
protection, and reinforce management of enterprise?s environment, health and production safety. In addition,
enterprises shall be encouraged to utilize integrated environmental services.
Article 7 Enterprises shall establish a sound environmental protection training system to provide employees
w ith proper education and training w ith respect to the environment, health and production safety, and enable
them to understand and know w ell about relevant law s and regulations of the host country regarding
environmental protection and master disposal of harmful substances, prevention of environmental accidents
and other environment know ledge, so as to improve employees?law -abiding aw areness and environmental
protection quality.
Article 8 Enterprises shall, in accordance w ith requirements of law s and regulations of the host country,
conduct environmental impact assessment on their development and construction as w ell as production and
operation activities, and take reasonable measures to reduce possible adverse impacts based on the findings
of such environmental impact assessment.
Article 9 Enterprises are encouraged to take full into account of the impacts of their development and
construction as w ell as production and operation activities on the social environment such as historical and
cultural heritages, scenic spots and folk customs, and to take reasonable measures to reduce possible adverse

19
impacts.
Article 10 Enterprises shall, attending to the requirements of law s, regulations and standards of the host
country concerning environmental protection, construct and operate pollution prevention installations, carry
out pollution prevention w ork, and ensure that the emission of exhaust gas, w aste w ater, solid w astes or other
pollutants meet the standards of the host country for pollutant emission.
Article 11 Enterprises are encouraged to, prior to construction of the project, conduct environmental
monitoring and evaluation for the proposed construction site, obtain understanding of the environmental
background situation of the place w here the project is located and its surrounding areas, and put the
environmental monitoring and evaluation results on record.
Enterprises are inspired to conduct monitoring on main pollutants discharged, be aw are of the pollution
situation of enterprises at all times, and put the monitoring results on record.
Article 12 Enterprises are advocated to carry out environmental due diligence on the target enterprise before
acquiring overseas enterprises, focusing the evaluation on the hazardous w astes formed in its historical
operation activities and the soil and underground w ater pollution, as w ell as environmental debts of the target
enterprise related thereto. Encourage enterprises to take favorable environmental practices for the purpose of
reduction of potential risks of environmental liabilities.
Article 13 Enterprises shall make management plans for hazardous w astes that may be generated during
production, the contents of w hich shall include measures to reduce the amount and hazard of hazardous
w astes, as w ell as measures to store, transport, utilize and dispose these hazardous w astes.
Article 14 For potential risks of environmental accidents, enterprises shall formulate contingency plans for
environmental accidents and other emergencies based on the nature, features and possible environmental
hazards of the same, and set up a system of reporting to and communication w ith local government, regulatory
authority of environmental protection, the general public that may be affected and the headquarters of
Chinese enterprises.
Contingency plans shall include the organizational system and responsibilities of emergency management
w ork, prevention and early w arning mechanism, handling procedures, emergency guarantees, and recovery
and reconstruction after the emergency. Encourage enterprises to organize emergency drills and make timely
adjustments to the plans, as w ell as to take such measures as covering environmental pollution liability
insurance to reasonably disperse risks of environmental accidents.
Article 15 Enterprises shall carefully consider the ecological function orientation of the area w here the project is
located, and they may, w ith the coordination of the government of the host country and the community, have
priority to take such measures as in-place and nearby conservation of animal and plant resources that w orth
conservation and may be affected, to reduce adverse impacts on local biodiversity.
For ecological impacts caused by investment activities, enterprises are encouraged to carry out ecological
restoration in accordance w ith requirements of law s and regulations of the host country or common practices
in the industry.
Article 16 Encourage enterprises to conduct clean production, promote recycling, reduce pollution from the
source, improve the resource use efficiency, and reduce generation and emission of pollutants in the course of
production, service and product use.
Article 17 Encourage enterprises to implement green procurement and give preference to environmentally
friendly products.
Enterprises are encouraged to apply for relevant environment management system certification and
environmental label certification for relevant products in light of provisions of law s and regulations of the host
country.
Article 18 Encourage enterprises to post their environmental information on a regular basis, and publish their
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plans on implementation of law s and regulations on environmental protection, measures taken, and environmental
performance achieved, etc.
Article 19 Enterprises are inspired to strengthen their contacts and communications w ith the government and
regulatory authority of environmental protection of the host country, and actively seek for their opinions and
suggestions on environmental protection issues.
Article 20 Advocate enterprises to establish a w ay of communication and dialogue mechanism for enterprises?
environmental social responsibilities, take the initiative to strengthen their contacts and communications w ith their
communities and relevant social groups, and take opinions and suggestions w ith respect to environmental impacts of
their construction projects and operation activities through forums and hearings according to requirements of law s
and regulations of the host country.
Article 21 Enterprises are encouraged to actively participate in and support local public benefit activities for
environmental protection, publicize the concept of environmental protection, and build a good enterprise image in
respect of environmental protection.
Article 22 Encourage enterprises to research and learn from the principles, standards and practices w ith respect to
environmental protection that are adopted by international organizations and multilateral financial institutions.
 Green Credit Guidelines
CBRC local offices, policy banks, state-ow ned commercial banks, joint-stock commercial banks,
financial assets management companies, the PSBC, provincial rural credit unions, as w ell as all
trust firms, enterprise group finance companies and financial leasing firms directly regulated by
the CBRC:
To implement the macro adjustment policies provided for in the Integrated Working Plan of the
State Council for Energy Conservation and Emission Reduction during the 12th Five-year Period
and the Comments of the State Council on Strengthening Environmental Protection Priorities, and
to follow the requirements of matching supervisory policies w ith industrial policies, the CBRC has
formulated the Green Credit Guidelines for the purpose of encouraging banking institutions to, by
focusing on green credit, actively adjust credit structure, effectively fend off environmental and
social risks, better serve the real economy, and boost the transformation of economic grow th
mode and adjustment of economic structure. The Guidelines are hereby printed and issued for
implementation.
Banking supervisory authorities should forw ard the Notice to local banking institutions and urge
them into implementation.
Feb. 24, 2012

Chapter 1 General Provisions

Article 1 For the purpose of encouraging banking institutions to develop green credit, these
Guidelines are formulated pursuant to the Law of the People' s Republic of China on Banking
Regulation and Supervision and the Law of the People' s Republic of China on Commercial Banks.
Article 2 Banking Institutions mentioned herein include policy banks, commercial banks, rural
cooperative banks and rural credit cooperatives law fully incorporated w ithin the territory of the
People?s Republic of China.
Article 3 Banking institutions shall promote green credit from a strategic height, increase the
support to green, low -carbon and recycling economy, fend off environmental and social risks, and
improve their ow n environmental and social performance, thus optimizing their credit structure,
improving the quality of services, and facilitating the transformation of development mode.
Article 4 Banking institutions shall effectively identify, measure, monitor and control
environmental and social risks associated w ith their credit activities, establish environmental and
social risk management system, and improve relevant credit policies and process management.
The environmental and social risks mentioned herein refer to the hazards and risks on the
environment and society that may be brought about by the construction, production and
operating activities of banking institutions?clients and key affiliated parties thereof, including
environmental and social issues related to energy consumption, pollution, land, health, safety,
resettlement of people, ecological protection, climate change, etc.
Article 5 The CBRC is responsible for, in accordance w ith applicable law s, regulating and
supervising banking institutions?green credit business and their environmental and social risk
management.

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Chapter 2 Organization and M anagement
Article 6 The board of directors or supervisory board of a banking institution shall build and
promote green credit concepts concerning energy saving, environmental protection and sustainable
development, be committed to giving play to the functions of facilitating holistic, coordinated and
sustainable economic and social development, and establish a sustainable development model that
w ill benefit the society at the same time.
Article 7 The board of directors or supervisory board of a banking institution is responsible for
developing green credit development strategy, approving the green credit objectives developed by
and the green credit report submitted by senior management, and monitoring and assessing the
implementation of green credit development strategy.
Article 8 The senior management of a banking institution shall, pursuant to the resolutions of the
board of directors or supervisory board, develop the green credit objectives, have in place relevant
mechanisms and processes, define clearly the roles and responsibilities, conduct internal checks and
appraisal, annually provide report to the board of directors or supervisory board on the
development of green credit, and timely submit relevant reports to competent supervisory
authorities.
Article 9 The senior management of a banking institution shall assign a senior officer and a
department and configure them w ith necessary resources to organize and manage green credit
activities. Where necessary, a cross-departmental green credit committee can be set up to
coordinate relevant activities.

Chapter 3 Policy, System and Capacity Building

Article 10 Banking institutions shall, as per national environmental protection law s and regulations,
industrial policies, sector entry policies, and other applicable regulations, establish and constantly
improve the policies, systems and processes for environmental and social risk management and
identify the directions and priority areas for green credit support. As for industries falling w ithin the
national "restricted" category and industries associated w ith major environmental and social risks,
they shall customize credit granting guidelines, adopt differentiated and dynamic credit granting
policies, and implement the risk exposure management system.
Article 11 Banking institutions shall develop client environmental and social risk assessment criteria,
dynamically assess and classify client environmental and social risks, and consider the results as
important basis for credit rating, access, management and exit. They shall adopt differentiated risks
management measures concerning loan investigation, review and inspection, loan pricing, and
economic capital allocation.
Banking institutions shall prepare a list of clients currently faced w ith major environmental and
social risks, and require these clients to take risk mitigation actions, including developing and having
in place major risk response plans, establishing sufficient, effective stakeholder communication
mechanisms, and finding a third party to share such risks.
Article 12 Banking institutions shall establish w orking mechanisms conducive to green credit
innovation to boost innovation of green credit processes, products and services w hile effectively
curbing risks and ensuring business continuation.
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 Article 13 Banking institutions shall give priority to their ow n environmental and social performance,
set up appropriate systems, step up the publicity and education on green credit concepts, standardize
their operational behaviors, promote green office, and improve the level of intensive management.
Article 14 Banking institutions shall strengthen green credit capacity building, establish and improve
green credit labeling and statistics system, improve relevant credit management systems, enhance
green credit training, develop and employ related professionals. Where necessary, they can hire an
eligible, independent third party to assess environmental and social risks or acquire related professional
services by means of outsourcing.

Chapter 4 Process M anagement

Article 15 Banking institutions shall strengthen due diligence in credit granting. The scope of due
diligence on environmental and social risks shall be defined according to the characteristics of the
sector and region in w hich the client and its project is located, so as to ensure the due diligence is
complete, thorough and detailed. Where necessary, the banking institutions can seek for support from
an eligible, independent third party and competent authorities.
Article 16 Banking institutions shall examine the compliance of clients to w hom credit w ill be granted.
As for environmental and social performance, compliance checklist and compliance risk checklist shall
be developed according to the characteristics of different sectors, so as to ensure compliance,
effectiveness and completeness of the documents submitted by the clients, and make sure they have
paid enough attention to related risk points, performed effective dynamic control, and satisfied the
requirements on substantial compliance.
Article 17 Banking institutions shall strengthen credit approval management, and define reasonable
level of credit granting authority and approval process according to the nature and severity of
environmental and social risks faced by the clients. Credits may not be granted to clients w hose
environmental and social performance fails to meet compliance requirements.
Article 18 Banking institutions shall, by improving contract clauses, urge their clients to strengthen
environmental and social risk management. As for clients involving major environmental and social
risks, the contract shall provide for clauses that require them to submit environmental and social risk
report, state and avow that they w ill strengthen environmental and social risk management, and
promise that they are w illing to be supervised by the lender; the contract shall also provide for clauses
concerning the remedies banking institutions can resort to in the event of default on environmental
and social risks made by the clients.
Article 19 Banking institutions shall enhance credit funds disbursement management, and consider
appropriation management, and regard how w ell clients have managed environmental and social risks
as important basis for credit funds appropriation. As for projects to w hich credit is granted, all stages,
including design, preparation, construction, completion, operation and shutdow n shall be subjected to
environmental and social risk assessment. Where major risks or hazards are identified, credit funds
appropriation can be suspended or even terminated.
Article 20 Banking institutions shall strengthen post-loan management. As for clients involving
potential major environmental and social risks, relevant and pertinent post-loan management actions
shall be developed and implemented. They shall w atch closely the impact of national policies on the
clients?operation, step up dynamic analysis, and make timely adjustment to asset risk classification,
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reserve provisioning and loss w rite-off. They shall establish and improve internal reporting system and
accountability system concerning major environmental and social risks faced by the clients. Where major
environmental or social risk event occurs to the client, the banking institution concerned shall timely
take relevant risk responses and report to competent supervisory authorities on potential impact of said
event on itself.
Article 21 Banking institutions shall strengthen the environmental and social risk management for
overseas projects to w hich credit w ill be granted and make sure project sponsors abide by applicable
law s and regulations on environmental protection, land, health, safety, etc. of the country or jurisdiction
w here the project is located. The banking institutions shall make promise in public that appropriate
international practices or international norms w ill be follow ed as far as such overseas projects are
concerned, so as to ensure alignment w ith good international practices.

Chapter 5 Internal Controls and Information Disclosure

Article 22 Banking institutions shall incorporate green credit implementation into the scope of internal
compliance examination, and regularly organize and carry out internal auditing on green credit. Where
major deficiencies are identified, investigation shall be conducted to determine w hom to be held
accountable as per applicable regulations.
Article 23 Banking institutions shall establish effective green credit appraisal and evaluation system and
rew ard and penalty system, and have in place incentive and disciplinary measures, so as to ensure
sustained and effective offering of green credit.
Article 24 Banking institutions shall make public their green credit strategies and policies, and fully
disclose developments of their green credit business. As for credit involving major environmental and
social risks, the banking institutions shall disclose relevant information according to law s and
regulations, and be subjected to the oversight by the market and stakeholders. Where necessary, an
eligible, independent third party can be hired to assess or audit the activities of banking institutions in
performing their environmental and social responsibilities.

Chapter 6 M onitoring and Examination

Article 25 Banking supervisory authorities at all levels shall strengthen the coordination w ith competent
authorities, establish and improve information sharing mechanism, improve information services, and
remind banking institutions of related environmental and social risks.
Article 26 Banking supervisory authorities at all levels shall strengthen off-site surveillance, improve
off-site supervisory indicator system, enhance the monitoring and analysis of environmental and social
risks faced by banking institutions, timely guide them to strengthen risk management and adjust credit
orientation.
Banking institutions shall, pursuant to the provisions hereof, perform overall green credit evaluation at
least once every tw o year, and submit the self-evaluation report to competent banking supervisory
authorities.
Article 27 When organizing and conducting on-site examination, banking supervisory authorities shall

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 take into full account the environmental and social risks faced by banking institutions, and make
clear the scope and requirements of examination. As for regions or banking institutions involving
prominent environmental and social risks, ad hoc examination shall be conducted and urge said
institutions to improve in light of examination results.
Article 28 Banking supervisory authorities shall provide more guidance to banking institutions on
green credit self-evaluation, and, in conjunction w ith the results of off-site surveillance and on-site
examination, holistically assess the green credit performance of banking institutions, and treat the
assessment results, as per applicable law s and regulations, as important basis for supervisory rating,
institution licensing, business licensing, and senior officer performance evaluation.

Chapter 7 Supplementary Provisions

Article 29 These Guidelines become effective as of the date of promulgation. Village banks, lending
firms, rural mutual cooperatives and non-banking financial institutions shall enforce actions in
reference to these Guidelines.
Article 30 These Guidelines are subject to interpretations by the CBRC.

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