Institute for Governance & Sustainable Development

New York Times: As U.S. and Europe Pass the Hat at Climate Talks, China Clings to Developing-Nation Status

December 9, 2015
New York Times, Keith Bradsher and Coral Davenport

PARIS — Last week, China was trumpeting its arrival as one of the world’s great economic powers, as the International Monetary Fund elevated the renminbi to the ranks of leading currencies, alongside the dollar, euro, yen and British pound.

This week, China is crying poverty.

A crucial issue at the climate negotiations now taking place in Le Bourget, a northeast suburb of Paris, lies in who will foot the bill for $100 billion a year in long-promised assistance for developing countries, starting in 2020.

Europe and the United States, still feeling the effects of the global financial crisis of 2008 and 2009, have been trying to pass the hat for contributions from increasingly affluent middle-income countries, particularly China.

China has considered itself a developing country for purposes of climate negotiations for more than 20 years. And it is sticking to that position, even as locking in sources for the $100 billion annually for poorer countries is one of the biggest remaining hurdles for the talks, which are scheduled to end Friday.

Li Junfeng, the director general of climate change strategy at the National Development and Reform Commission, China’s top government planning agency, ruled out any change in China’s classification as a developing country.

“That is the most important regulation, based on the kind of convention that China still recognizes themselves as developing,” he said on Tuesday, speaking at The International New York Times Energy for Tomorrow conference in Paris.

Western officials have responded to China’s stance by volubly praising Beijing for its willingness to limit future emissions of greenhouse gases while also pursuing quiet diplomacy on the financial issue. They are trying to find legal language acceptable to China that would mandate a sizable financial contribution.

“Hopefully we can work quietly and effectively with China to bring them even further on board, but I think China has made a huge difference and has already stepped up significantly,” Secretary of State John Kerry said on Wednesday at the conference.

He also noted that hundreds of millions of people in China are still very poor.

Later in the day, Mr. Kerry announced a planned doubling of American assistance for climate change adaptation by developing countries, to $860 million in 2020 instead of $430 million, subject to Congressional approval.

Less than two days before their deadline to conclude a sweeping new climate accord, negotiators from nearly 200 countries have yet to resolve major issues, including how and when pledged cuts to carbon emissions would be verified.

Lead negotiators said they were confident that a deal could still be reached, although Rachel Kyte, the World Bank’s special envoy for climate change, mentioned at the energy conference that the talks could run into Saturday or Sunday. But some outside observers who have been monitoring the talks said that the compromises necessary to bring it across the finish line could weaken the deal so much it would become nearly toothless.

At the heart of the proposed deal is a set of pledges from 186 countries, representing more than 90 percent of the global economy, to cut their emissions. But a draft text published on Wednesday did not include any details on how those emissions cuts would be monitored and verified.

China has been splashing out huge sums for other projects, but refuses to let them count toward the $100 billion in annual contributions called for in the climate negotiations.

The country is setting up a $100 billion, 57-nation Asian Infrastructure Investment Bank, and it created a separate $40 billion fund at the end of last year to help pay for investments in countries along the ancient Silk Road. Three months ago it created a $3.1 billion “China South-South Climate Cooperation Fund” to provide direct assistance to developing countries.

China is also the world’s largest exporter and holds $3.5 trillion in foreign reserves. The reserves have been financed with money borrowed from China’s commercial banks, however, and the potential need to repay that money someday means that it can be invested in overseas projects but not donated outright.

Chinese officials have worried that if they agree to contribute toward the $100 billion annual assistance for developing countries, China might someday be classified as an industrialized country and asked to follow more stringent limits on greenhouse gases. The Kyoto Protocol in 1997 set binding limits for emissions from industrialized countries but was less stringent on developing countries.

Western officials have been seeking a compromise. Energy Secretary Ernest J. Moniz told reporters on the sidelines of the energy conference that he welcomed Chinese assistance to developing countries, even if it did not count toward the $100 billion a year that developing countries want from the West.

“To me, it’s money in the game, but that’s not the U.S. government response,” he said, adding that the Treasury would have the final say on financial issues.

Negotiators have been looking for a way to finesse China’s concerns about being labeled an industrialized country while still including China’s ambitious international investment programs in the needed $100 billion. With the deadline for the climate talks looming, any absence of Chinese money makes it harder to come up with pledges of $100 billion a year.

The Organization for Economic Cooperation and Development, a Paris-based club of industrialized democracies, recently estimated that $62 billion of the $100 billion was raised last year. But countries like China and India question how much of that money represents firm pledges.

“Developing countries are saying, ‘We’re not seeing the money’ — that’s why transparency is so important,” said Xie Zhenhua, China’s top climate negotiator, at a news conference on Tuesday in Le Bourget, on the sidelines of the climate talks. “The O.E.C.D.’s number has not been acknowledged by developing countries. This is something that we need to address.”

Mr. Xie joined officials from Brazil, India and South Africa in calling on Tuesday for the world’s rich countries to bolster and expand their commitment of $100 billion a year by 2020, which was announced in 2009 during climate talks in Copenhagen. The fund would be used to help developing countries mitigate, and adapt to, the effects of climate change. The Copenhagen talks ultimately failed.

Mr. Xie defended China’s ability to represent the interests of the Group of 77, a bloc of largely very poor nations that coordinate their stances in many international negotiations. China remains a member of the group despite three decades of rapid growth that have given it the world’s second-largest economy.

“We are actually part of the G-77,” Mr. Xie said. “So why can’t we mention the G-77?”

Mr. Li, of the National Development and Reform Commission, said that Western governments had refused to keep pace even with Western businesses in addressing climate change. “That’s the barrier, I think, not China,” he said. “We hope in the next three or four days we can solve the problem.”

No matter the shape of the deal that emerges, it is also certain to require governments that have already committed to substantial emissions cuts to begin looking at how they can do still more.

“We’re going to get a deal,” said Durwood Zaelke, president of the Institute for Governance and Sustainable Development, a research organization. “It’ll be good enough to drink the Champagne. And the next day, we’ll wake up with hangovers and realize we have a lot more work to do.”

This article was originally published in the International New York Times on December 9, 2015.