The Strategist

Chinese banks become the world's second-largest sponsor of deforestation

05/05/2021 - 03:52

Despite statements by China's leaders and personally by President Xi Jinping about the country's ambition to become a global leader in combating climate change, China is still one of the leaders in sponsoring deforestation.

According to a coalition of non-profit organisations Forests & Finance, between January 2016 and April 2020, Chinese institutions provided $15bn in loans and underwriting services to companies that traded commodities related to deforestation in Southeast Asia, Brazil and Africa. 

That ranks second globally, following Brazilian financial institutions, which lent $53 billion in the same period. Meanwhile, Brazilian banks finance deforestation mainly in Brazil itself, while Chinese financial institutions mainly sponsor companies operating abroad.

The largest provider of loans and underwriting services in the Forests & Finance database is the State Industrial and Commercial Bank of China, which issued a total of $2.2 billion. And chemical group Sinochem was the largest recipient of funds, raising $4.6 billion, most of which went to rubber products.