Interview with Ren Peng on China's Overseas Investment Guidelines

Katy Yan
Wednesday, April 24, 2013
The Chinese Ministry of Commerce and the Ministry of Environmental Protection's “Guidelines for Environmental Protection in Foreign Investment and Cooperation” were based on recommendations by the Chinese NGO, Global Environmental Institute (GEI). These Guidelines provide civil society groups with a new source of leverage when it comes to holding Chinese companies responsible for their environmental and social impacts overseas. International Rivers spoke with Mr. Ren Peng, program coordinator for GEI's environmental governance program, on what led to the development of the Guidelines and how NGOs in host countries can use them.
What were the main drivers behind the development of China's overseas guidelines?

Ren Peng: The main driver was the increase in awareness of government officials to realize the environmental, political and economic risks faced by China’s enterprises operating abroad. So the number one driver is increased awareness of risk. The number two driver has to do with reputation. Regarding the “going global” strategy in the 11th FYP, the Chinese government decided that China should be a responsible global player, which shows they care about their reputation.

GEI staff
GEI staff in Beijing
Photo: GEI

Reflecting on GEI’s role in the early stages of the guidelines, what would you recommend is an effective role for NGOs in seeking to address China’s overseas footprint?

Ren Peng: NGOs should find some channels to talk with government officials. For example, GEI talked to the government and promoted sustainability in overseas investment, to make sure China’s investments are sustainable in the long-term. At the end of the project, we believe we have achieved our goal of regulating overseas investment.

What do you think are the main achievements and limitations of the guidelines?

Ren Peng: At the very beginning, government officials and especially those in the Ministry of Environmental Protection (MEP) were very reluctant to get involved and to take on these issues. Over time, we engaged government officials through conference and showed them negative case studies involving Chinese enterprises. We also brought officials to foreign countries and exposed them to the negative environmental cases and showed them that these are controversial projects in other countries. It was a gradual process to build their awareness and to change the track record of overseas investments. Major limitations of the guidelines are of course that it cannot address all the challenges, it’s voluntary rather than mandatory, and there are gaps in implementation and monitoring.  

How can local host country communities and NGOs use these guidelines to encourage better practices by Chinese companies?

Ren Peng: First, they should get a draft of the guidelines and understand them, they can use them to negotiate with a Chinese company, because it’s Chinese government policy and the companies have to follow government policy. Second, they should bring these guidelines to their governments and show them what the Chinese government’s guidelines are. This will build the capacity of host country governments on environmental governance to regulate foreign investment, not only with regards to Chinese investors but also other international investors in their own country. Finally, they can encourage their countries to incorporate these guidelines and principles into their countries’ bilateral investment or regional investment agreements.

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