Inadequate demand and reluctant supply: The limits of Chinese official development finance for foreign renewable power

Abstract

This paper examines the puzzle of why China has thus far channeled a tiny fraction of its massive official development finance (ODF) for energy worldwide to solar and wind power. With a supply/demand analytical framework, our empirical analysis and field research show that both the foreign demand for Chinese ODF and the supply by the country’s two global policy banks face limits. The external demand is limited because foreign countries often approach non-Chinese sources for solar and wind power development finance; even when they turn to China for renewable power finance, they request more Chinese ODF for their hydropower and coal-fired power expansion. Meanwhile, shaped by their experience in renewable power finance in China and worried about the bankability of the solar and wind power projects abroad, the two Chinese policy banks exhibit sharpened risk sensitizations and biases against renewable power projects abroad.