Building a green Silk Road

TOPICS dealing with development and the environment have concerned many for years. Pollution is the inevitable consequence of economic development. The impact of pollution is more severe in developing countries than in developed countries because developing countries often lack the technology and resources to mitigate pollution.

Indeed, studies have shown that when a country starts its economic growth process, environmental quality will decline. However, once an income threshold is reached, the demand for a cleaner environment will increase and only then environmental quality will improve.

In addition, it is believed that developing countries with weaker environmental regulations damage their environment at a faster pace than developed countries with stricter environmental regulations.

The Belt and Road Initiative’s growing contribution to green development

The Belt and Road Initiative (BRI) is a China-led initiative that is mainly related to infrastructure development and investment strategy. As BRI puts a major focus on developing countries' involvement, its mega projects would subsequently create environmental degradation and energy-related challenges to participating countries.

This violates the objectives of BRI in promoting economic, social, fiscal, financial and environmental sustainability of projects, while striking a balance between economic growth, social progress and environmental protection.

Hence, in 2016, China’s President Xi Jinping called for green development and efforts to build a “green Silk Road”. BRI aims to ensure its partner countries develop, while safeguarding the environment.

As a result, China has launched several efforts to develop green finance (including the issuance of green bonds), green technology and green infrastructure to address the challenges of environmental protection and climate change. This new development paradigm is in line with the 2030 Agenda for Sustainable Development.

To support the green transformation of the BRI, China initiated the Green Investment Principles in 2018 and supported the establishment of BRI International Green Development Coalition in 2019.

Besides that, China has consistently invested more than US$2bil (RM8.4bil) annually in recent years in renewable energy projects in BRI partner countries. In 2020, China Everbright Bank launched the “Everbright Belt and Road Green Investment Fund” to support a green finance system under BRI.

At the end of the same year, China announced its aim to have carbon dioxide emissions peak before 2030 and achieve carbon neutrality before 2060 at the United Nations General Assembly, indicating China’s strong impetus to build a green Silk Road.

Deepening cooperation in green development

Going green poses a high burden of regulation as development projects must adhere to high environmental standards. This could form unwarranted obstacles that constrain the development of a country. This explains the reason environmental quality in developing countries initially declines, but gradually improves as the country becomes more developed.

At the initial stages of economic development, individuals are better off when their basic consumption needs are fulfilled, with their limited income. However, as the economy experiences rapid development which translates to higher income, individuals are more concerned about the trade-off between environmental quality and consumption.

The Belt and Road Forum (BRF) Advisory Council was founded in 2018 to offer intellectual support to BRI members. To overcome barriers for partner countries to adopt green practices, the Council, which met on Dec 17, 2021, agreed that China will implement environmental initiatives together with all partner countries on several fronts.

Firstly, BRI projects will be structured considering national circumstances of partner countries and will provide flexibility in developing appropriate standards to implement environmental initiatives.

Secondly, BRI members will be provided with more options to embrace green development, which strikes a balance between environmental development and fiscal pressures.

Thirdly, a reasonable time frame for capacity building will be given to ensure effective implementation of environmental standards.

Fourthly, members proposed to increase the BRI’s proportion of green investment to help partner countries expand their investment in green projects. Members also suggested for BRI to be more focused on renewable energy and gradually phase out coal-fired power plants. Furthermore, members recommended improving environmental data transparency by continuing the development of Belt and Road big data.

Malaysia’s green initiatives

In recent years, Malaysia has been more focused on going green. In line with this, the Malaysian government introduced several policies and schemes such as the Green Technology Financing Scheme, Green Investment Tax Allowance, Green Income Tax Exemption and so on. Additionally, Malaysia supports BRI’s green transformation. This is evident through Malaysia’s participation in jointly launching the Belt and Road Partnership on Green Development on 23 June 2021, at the Asia and Pacific High-level Conference on Belt and Road Cooperation, together with 28 other countries.

The Belt and Road cooperation is a catalyst to further strengthen economic and political ties between Malaysia and China. While BRI is aimed toward high-quality development, Malaysia’s involvement in BRI can achieve more than this intended outcome. We can further strengthen our cooperation with China while paving the way to achieve our goal of going green.

Dr Ong Sheue Li is a Senior Lecturer at University of Malaya. The views expressed here are entirely the writer’s own.

The SEARCH Scholar Series is a social responsibility programme jointly organised by the Southeast Asia Research Centre for Humanities (SEARCH) and the Centre of Business and Policy Research, Tunku Abdul Rahman University College (TAR UC), and co-organised by the Association of Belt and Road Malaysia.