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China and India take different roads to green Asia’s infrastructure

by Adela Suliman | @adela_suliman | Thomson Reuters Foundation
Friday, 15 September 2017 17:32 GMT

Chinese President Xi Jinping and Indian Prime Minister Narendra Modi shake hands at the 2017 BRICS Summit in Xiamen, Fujian province in China, September 5th 2017. REUTERS/Kenzaburo Fukuhara

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“It’s not just about getting a project done - it’s about getting it right for the future”

India and China, Asia’s two economic heavyweights, have taken starkly different approaches to how the region could green its infrastructure, a conference at London’s Asia House heard this week.

China - with its ambitious, multi-national New Silk Road plan - is looking outward, while India appears to prefer home-grown solutions for its citizens, like its UJALA LED bulb scheme.

Unveiled in 2013 as one of President Xi Jinping's signature policies, China’s “One Belt, One Road” (OBOR) initiative seeks to build a new Silk Road linking Asia, Africa and Europe. It is a landmark programme to invest billions of dollars in infrastructure projects, including railways, ports and power grids. 

The programme may seem China-led “but really it’s a global initiative”, said Rongrong Huo, global head of China and renminbi business at HSBC.

So far, the web of international infrastructure has 68 countries officially participating - from Sri Lanka to Djibouti. 

Beijing has dedicated $40 billion to its Silk Road plan via the $50-billion Asian Infrastructure Investment Bank (AIIB), a new international development bank created by China in 2016. 

“One Belt, One Road is to date the most important public good China has given to the world - first proposed by China, but for all countries to enjoy,” Foreign Minister Wang Yi told its international launch in April, underscoring the external nature of China’s infrastructure ambitions. 

But for HSBC’s Huo, the key issue is how to make that infrastructure sustainable.

“It’s not just about getting a project done - it’s about getting it right for the future,” she said. “Whether it’s a bond or a loan or some funding structure, for us, they are enablers to get to a positive outcome.”

Sherry Madera, special adviser for Asia at the City of London Corporation, said one aim of the OBOR initiative was to ensure that no new “brown infrastructure” was developed, and that projects were green right from the start.

The City of London Corporation is planning an OBOR green investor alliance, in which sustainable finance such as green bonds will play a central role, she added. 

The European Bank for Reconstruction and Development (EBRD), meanwhile, aims to increase green finance to around 40 percent of its total annual investments by 2020, said the bank’s Aida Sitdikova. 

Working in Central Asia and the Caucasus, a significant part of the OBOR route, the EBRD has helped develop the first large-scale solar project in Kazakhstan as part of a national drive to provide cheap, clean energy. 


For India - notably absent from the OBOR initiative, which does include its neighbour Pakistan - greening infrastructure starts on its own soil.

"Momentum has to be home-grown - it cannot be imposed from the outside,” said Vasuki Shastry, global head of sustainability at Standard Chartered Bank. 

“You really need countries to go through their own, difficult political process in building support for climate change policies," he said.

Shastry is not convinced the green finance agenda itself is sustainable. 

“It runs the risk of being a fad,” he said, citing the example of petroleum companies issuing green bonds, which he said undermines the wider purpose.

Unlike China, India is not yet seeking to export its infrastructure, experts said. Its landmark UJALA Programme aims to replace traditional halogen light bulbs across the country with LED bulbs, which are more environmentally friendly. 

So far, more than 260 million LED bulbs have been distributed, from Jammu and Kashmir to Kerala, making a carbon reduction of 28 million tonnes per year, according to the government. 

Public buildings, schools, hospitals and even the high commission in London have had LED bulbs fitted, as India seeks to expand the initiative in a government drive to spread the energy-efficiency message. 

According to Shastry, Asia has huge untapped resources, but there is a divide between countries such as Singapore, India, the Philippines and Malaysia - which are capable of developing their own green infrastructure plans - and others like Myanmar, Nepal and Sri Lanka, which have more limited capacity and need international support and private-sector participation to roll out green infrastructure projects. 

India also benefits from huge political will in the form of Prime Minister Narendra Modi, said Pratik Dattani, UK director of the Federation of Indian Chambers of Commerce and Industry.

While India’s economic growth has slowed in the last few years, Dattani said the government has not swerved away from its green infrastructure commitment to focus on more popular issues such as health or education, and has continued to back renewable energy projects.

"There's a recognition that clean infrastructure is needed to build the resilience of future GDP growth,” he said.

Whether looking outward or inward, China and India are both taking important steps to green their economic development, experts emphasised.

"What we're trying to achieve here really is dramatic and important - we're trying to save the planet," said Shastry.    

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