January 26, 2018 / 12:24 PM / 24 days ago

China's development push in poor countries worries non-profits

DAVOS, Switzerland (Reuters) - China’s development push into poor countries is marginalizing the role of human rights bodies, green groups and other non-profits, making it harder for them to play their traditional role as a check on rampant development, advocates said.

China has embarked on one of the biggest overseas development plans since America’s post-war Marshall Plan, with more than $100 billion of investments through its Belt and Road scheme to build highways, rail lines, ports and other infrastructure linking up Asia, Europe and Africa.

But unlike Western-backed lenders, where development financing often comes with social and environmental strings and strengthens the voice of non-profits, China-backed lenders are taking a more hands-off approach, according to interviews with NGO executives and a lender at the World Economic Forum.

“The situation with China right now is obviously the one to watch,” said Jennifer Morgan, executive director of Greenpeace International. “What are the standards they are setting in the loans or the financing that they are doing around the world?”

Kenneth Roth, executive director of Human Rights Watch, described China’s approach as amoral and said it had eased the economic pressure that nations felt when aid or investment was “more conditioned on respect for human rights”.

China-backed institutions take a different approach to the World Bank and other Western-backed development lenders.

For example, the World Bank has a strong bias against new coal-fired power stations on environmental grounds, but China’s new Asia Infrastructure Investment Bank (AIIB), which is helping finance the Belt and Road plan, is less strident.

The AIIB’s vice president for policy and strategy, Joachim von Amsberg, told Reuters at Davos that the Chinese-backed lender wanted to encourage transition to renewable energy but it did not want to “put on the front door the sign -- ‘No Coal’.”

“We are not seeing every project as a lever into broader policy changes in our member countries,” von Amsberg said.

“That is a welcome addition to the world of development finance because I think it avoids the risk of overreaching, of trying to do too much with individual investment projects.”

Financing through institutions such as the World Bank has long been used by rich countries as a way to push borrowers to improve their track record on social causes.

As part of that push, non-profits have played the role of watchdogs, helping to change the course on issues such as dam development and speaking up for human rights.

Advocates said the headwind had become stronger amid rising populism and as the United States under President Donald Trump took a more muted approach on issues like human rights or reversed policy, as it did on climate change.

FILE PHOTO: A Chinese flag is seen in front of the financial district of Pudong in Shanghai, China, January 19, 2016. REUTERS/Aly Song/File Photo - RC18D15B05C0

“Am I concerned about shrinking civic space and not having as much voice in governments in various countries around the world? Absolutely,” Morgan said.

NO STRINGS ATTACHED    

Von Amsberg, who spent some 25 years at the World Bank before joining the AIIB in 2016, said the lender with 84 member nations held itself to high standards on environmental, social and governance norms, and denied it weakened civil society.

In response to a question from Reuters, Chinese foreign ministry spokeswoman Hua Chunying told a briefing in Beijing: “The Chinese government has always asked companies that are going out to carry out operations in their host countries under a legal framework in accordance with the law and rules, and to positively fulfill their responsibility to society.”

Some sovereign governments welcome assistance without a broader agenda. Bangladesh, for example, struck deals with China for billions of dollars worth of loans for various projects when President Xi Jinping visited in late 2016.

“Anybody would prefer Chinese investment if the alternative is the World Bank,” Moshiur Rahman, economic adviser to Bangladesh’s prime minister, told Reuters in an interview in Dhaka this month.

“Unlike Western investors, they are not worried about how many people you put in jail.”

COMMON GROUND

Some non-profits are looking for common ground to find areas that they can work on.

The Bill & Melinda Gates Foundation has been working with Beijing on projects for more than a decade, and taking Chinese expertise in areas such as agriculture to other parts of Asia and Africa, said Mark Suzman, chief strategy officer for the foundation.

Suzman said the foundation was in discussions to see if Belt and Road projects in Southeast Asia could be used to work on malaria prevention in the Mekong delta, a disease where the Chinese have expertise.

“We actually feel pretty optimistic that there is a win-win potential to it,” Suzman said.

Last month the Chinese government circulated an article to the United Nations about its approach to human rights, laying out how Beijing was turning its “domestic governance philosophies into international consensus”.

“Peace and security are the most important human rights,” wrote Li Baodong, vice minister for foreign affairs. “Development is of paramount importance.”

“We have made fresh headway in increasing our say on human rights issues,” he wrote.

Additional reporting by Krishna Das in Dhaka and Ben Blanchard in Beijing; Editing by Mark Bendeich

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