peng ren global environmental institute pengren@geichina.org
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Environmental Policy &China OFDI
Peng RenGlobal Environmental Institute
pengren@geichina.org
Profile of China outward FDI
Overview of Integrated Policy Package (IPPs) program
Looking ahead – Future Trends
Outline
Profile of China outward FDI
Overview of Integrated Policy Package (IPPs) program
Looking ahead – Future Trends
Outline
Profile - Global context
Source: UNCTAD
Figure: Global FDI Outflow top 20 ( Billons of dollar )
Profile - Facts and Trends19
9019
9119
9219
9319
9419
9519
9619
9719
9819
9920
0020
0120
0220
0320
0420
0520
0620
0720
08
0
100
200
300
400
500
600
9 1040 43
20 20 21 26 27 19 10
692728.5
55
122.7
211.6265.1
559.1
Source: MOFCOM
China’s FDI Outflow 1990-2008 (100 millions of dollars)
China’s OFDI outflow amounted to 56.53 billions of dollars, expanded 1.1% in 2009 compared to that of 2008; despite the economic downturn
China’s OFDI is expected to break through USD 100 billions and capital stock USD500b by 2013 in the calculation of the average annual growth rate of China’s OFDI in the past 10 years (Source:
China Industrial Overseas Development and Planning Association )
Profile - 2009 and beyond
Profile - Mining
Wholesale & Retail Trades
Business Services
Mining
Finance
Agriculture, Forestry, Husbandry & Fishery
Figure: Distribution of China OFDI in 2008 (100 million USD)Source: MOFCOM
Transport
Manufacturing
Profile – Investment Entities
SOEs
Source ; MOFCOM ( 2008 )
Limited co.
shareholding
collectivePrivat
e
SOEs play a dominant role in China’s OFDI, account for more than 80%
Profile of China outward FDI
Overview of Integrated Policy Package (IPPs) program
Looking ahead – Future Trends
Outline
“Go Abroad” Policy in 2000◦ to encourage Chinese enterprises to invest overseas, ◦ But, lack of monitoring social & environmental risks,
fall out of scope of Chinese policy
“Being a country with a strong sense of responsibility” bears two aspects:
China should must actively fulfill commitments it has made and agreements it has signed, such as the UN Biodiversity Pledge
China should also take an active role in protecting ecosystems of local and global importance
IPPs - Overview
◦ How can China move forward with “Go Abroad” while make overseas investment more environmentally sound?
◦ How can China avoid, or at least minimize, the risks in terms of financial, political, and the personal safety of overseas staff?
◦ What can be done to ensure that overseas Chinese enterprises in the host countries in ways that will have favorable impact on S & E and provide multiple benefits to all the stakeholders?
IPPs – Fundamental Qs
Enterprises-SOEs
Pilot to put the guidelines in practice
Host Government
Information and education
Government
Guidelines to improve the E & S impact
IPPs – GEI’s Response
Integrated Policy Package:Guidelines on Environmental Conduct by Chinese Overseas Enterprises
Chinese Government
GEILocal
Government
Chinese Enterprises
Environmental Policies
NGO
All overseas enterprises
Overseas
MEPMOCMFACBRCBanks
EIA , PESCSR , CCA,REDD
( e.g. Laos, Cambodia and other SE Asian and African countries )
Initiated in 2005, under the auspice of Blue Moon Fund, partners including government agencies, State-owned Enterprises, host country government, academia and NGOs etc.
◦ Phase I Forestry Guideline (2005-2007)◦ Phase II Environmental Guideline (2007-2010)◦ Phase III Piloting 2010-…
IPPs – Implementation
IPPs - Implementation Phase I Forestry Guideline
2005-2007◦ Guidelines on Sustainable
Overseas Silviculture for Chinese Enterprises
◦ Joint released by SFA and MOC
◦ The second Guideline on Sustainable Management for Chinese forestry enterprises was jointly released by SFA & MOC
Phase II Environmental Guideline 2007-2010◦ A report of Environmental Policy for
China’s Overseas Investment was published in 2010
◦ A draft Environmental Guideline on Chinese Overseas Investment
◦ Partners: the Environmental Planning Institute at MEP & the University of International Business and Economics (UIBE)
IPPs - Implementation
Phase III Piloting 2010-…
◦ To select pilot companies to undergo trainings on the guidelines and put them into practice
Case I: A timber company in Cambodia Case II: A hydro power company in Laos Case III: …a mining company?
Environmental issues ranging from waste rock, tailing disposal, land disturbance, dust and noise, to water use and pollution.
IPPs – Implementation
Voluntary rather than binding guidelines
Release of Guidelines◦ International financial downturn ◦ Coordination between concerned government agencies
Enterprises leaders’ awareness in balancing development and conservation, education of guidelines within the enterprises is key to creating a corporate culture of sustainability among leaders.
IPPs - Challenges
Profile of China outward FDI
Overview of Integrated Policy Package (IPPs) program
Looking ahead
Outine
This is the beginning of China’s Outward investment expansion and the trends will continue in years to come
China’s resource need is real and will continue to grow over the long run
It is expected that a greater number of Chinese mining company will go abroad, a more cautious and sound environmental approaches to overseas investment should be in place
The State-owned Assets Supervision Administration Commission (SASAC) should take the lead for supervising & regulating environmental behavior of SOEs operating overseas(one-ballot veto overseas)
Final Words
China Exim Bank - “Guidelines for Environmental and Social Impact Assessment of the China Exim Bank Loan Project”, Financial institutions can have a significant impact on improving environmental behavior of overseas investment
MOFCOM – “Guidelines for Overseas Investment by countries and regions”
More are expected to come
Final Words
Thank you! REN Peng Global Environmental InstituteCell: 136 0107 8953Tel: 86-10-67083192 ext. 212Fax: 86-10-67083193http://www.geichina.org
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