A New Era of Multilateralism: China’s Evolving Role

[00:00:00] Ian Mitchell: Welcome everybody to the Center for Global Development event on China in the Multilateral System. I'm Ian Mitchell, a Senior Fellow with CGD. And yes, a particular thank you to Reinventing Bretton Woods Program for hosting us here. We're really grateful for the chance to have this conversation in the margins of the Annual Meetings. So I'll come to our brilliant panel in a moment, but first let me say, I think there's been a lot of focus and discussion of China's role in international development. And that tends to focus on its Belt and Road Initiative and its bilateral efforts. And we felt that maybe there wasn't as much attention to China's role in the international system. And that's what our study covers. So it updates work that a former CGD colleague, Scott Morris undertook in 2021. So we've updated that report with five years of new analysis. And we've also added a focus on climate given the importance of that issue and the active nature of China on that agenda. I guess the other thing is, I think China will become a high-income country this year. And even though that's just an arbitrary threshold, it is an interesting moment to look at China as an international actor, particularly in the light of other actors taking a different approach to whether and how China is changing its role in the light of other actors' decisions. Of course, the US included within that. But first, CGD is a research organization. So we're gonna bring you up to speed with the findings of the report. My excellent colleague, Beata Cichocka, is the lead author on the report and she's going to take us through the main findings.

[00:01:55] Beata Cichocka: All right, does this work? I think it does. Right, thank you everyone so much for being here. Like Ian said, I'll just briefly take you through the findings of this report that we've published just last week. So a whirlwind tour through this undertaking. Let me start with a little bit of context and why this matters right now. So like Ian was saying, we already know that China has a big bilateral development finance footprint, perhaps not as large as it was during some of the peaks in 2016, 2017 under the Belt and Road Initiative, but still large. And we also know that China is a permanent member of the Global South. While all this is happening in China, the multilateral system is under strain. G7 aid budgets have been cut. That's led to reduced multilateral inflows. Major replenishments are coming in below targets. And the United States is retreating either by exiting organizations or by using its influence within multilateral development banks to step away or deprioritize issues like climate change. And at the same time, there's stalled governance reform. So our paper tracks China's role in three types of multilateral entities, the MDBs, vertical funds, and UN entities. And it tracks that role as a shareholder and a donor, but also as a borrower and as a source for senior leadership. Like Ian was saying, this is largely an update of our colleague Scott's analysis in 2021, which was mostly for data up to 2020. So we're giving some extra analysis of that for the UN system that's up until 2024. For the MDBs, verticals, it's much more like 2025, 26. So what do we find? Let me start with the big picture. So since 2010, China's contributions have increased more than tenfold from about $260 million to over 3 billion per year in 2024. Most of that goes to the UN in the form of assessed contributions, so that dark teal bar. And that's assessed contributions, which means that they're based on formulas, which rise in line with the size of China's economy. And the smaller gray bars are China's voluntary UN funding. If we just focus on the trends in the most recent five years, so growth since 2019, that's been slower but more focused, especially on the MDB concessional windows, rising by 92%. So that's the gold bars in the chart. UN contributions rose 47%, and contributions to vertical funds have fallen, but kind of off a very small and uneven base. And so apart from the 2022 contributions to COVAX and the pandemic fund, it's barely visible in the chart. Okay, so I mentioned the MDB concessional windows were the quickest growing channel. That's also reflected in China's growing rank at these three windows that we look at over time compared to other providers. The biggest change is at the World Bank's IDA. So China itself graduated from IDA in 1999, became a contributor in 2007. By 2010, it was the 28th largest contributor. And at the last replenishment, it was fifth with a $1.5 billion pledge to IDA 21. And the Asian Development Fund, which is represented with the light blue line here, largely follows the same trajectory, but the amounts given to the ADF are much smaller. But China's rank at the African Development Fund in the gold has largely stayed quite stable from 13th in 2010 to 12th in the last round. So I'm just gonna zoom in on that IDA story because I think it's really worth going into, especially amid the wider context. So while total pledges from all donors for IDA 21 were almost flat in nominal terms and fell in real terms from over the previous round, China's contribution represented a 14% increase and it now makes up over 6% of the total pot for IDA. But IDA contributions are also interesting in another perhaps more strategic way. So if we think about the dynamic formula, which in theory determines shareholding in the IBRD, IDA contributions carry a 20% weight there. So giving more to IDA is one possible lever through which China and other providers have to increase their IBRD shareholding. Practically speaking, that formula's weight is still majorly about economic size and shareholding reform has been stalled. So in the end, the effect is likely to be quite marginal, but a scale-up in IDA is nevertheless a valuable signal about China's political priorities. So that leads me to talking about wider shareholding and voting power at the 13 MDBs we look at. I think the most striking finding here for me is how little has changed in the last six years, especially when you compare it with what's happened in the previous decade from 2010 to 2020, when there was a massive rise in China's voting power at the IBRD and the African Development Bank especially. But since 2020, very little has changed. We saw a small slip in the African Development Bank, a small rise in IDA, not much else. At the newer development banks, there's been an increase in membership. So shareholding has slightly changed, but that hasn't materially diluted China's share of the vote and it hasn't changed its status as the leading shareholder at these organizations. Similarly, little has changed at the IBRD. There's been a widened gap between China's calculated share under that dynamic formula that I just mentioned, which according to board documents was now at over 14% compared to the actual share that China holds, which is 6%. So worth noting that China isn't the only country that's affected by this. There are other countries that also feel they're underrepresented, but the next opportunity to discuss this won't be until the 2030 review within the World Bank. All right, let me get into climate. So one of the side effects of China's shareholding at the MDBs is the level of climate finance that we can attribute to it. Using the same method as the OECD has been using to report on progress towards collective climate finance targets, we find that China's shareholding has meant that MDB attributable climate finance has risen from about 600 million in 2017 to over 5 billion in 2025, representing over 5% of MDB outflows. So that's driven, one, by MDBs themselves doing much more in climate than they were in 2017, tripling their climate finance. Two, China's shareholding rising, especially in the earlier part of that period. Like I said, it's not been raising so much since 2020. And third, and perhaps most significantly, by the AIIB and MDB beginning to report in a joint manner with the other MDBs from 2020 and 2021, respectively. So China has historically resisted joining collective targets towards climate finance. It's framed its contributions as voluntary, but it's also come under increasing pressure to show what it's doing. And to put that in context, our colleagues at CGD have done some analysis on what countries should be contributing based on their historical and current emissions and their current income levels. And based on that kind of estimate, China should be providing about five to 10% of global share of climate finance, rising to 10% by 2030. If we base just on the MDB channel alone, China's approaching the lower end of that range. But it's also worth noting that China's largely missing from the multilateral climate funds and that we don't have as clear a picture what's happening with its bilateral climate finance after 2021. Also worth noting that these amounts are all dependent on what the MDBs themselves choose to do on climate. And given recent US pressure to deprioritize climate targets, it's also worth thinking a little bit more about China's role, not just as a shareholder, but maybe as a client or on the board of these banks. And one example of China exercising that role is in its successful efforts to preserve the climate change action plans of the World Bank earlier this year. Right, so what about what China takes from the system? So lending from the MDBs seem to peak in 2022 with COVID at over 8 billion. That's fallen since to 4.7 billion. Also just to contextualize these amounts, these are all repayable loans near market or market rates as compared to the previous slides, which I discussed, which are all grant-based contributions and not repayable. So I think that's an important distinction. Those are also quite a small share of China's economy, which raises the question of why is China still borrowing from these institutions? What does it get from this finance that's perhaps not just about the financial figures? The composition of borrowing is also changing. Less and less finance is coming from the IBRD, a little bit more from the MDB. As we know, the World Bank's new country partnership framework expects no new lending to China after 2031. So that will continue that trend. Oh. Not that way. All right. Right, I think worth zooming in on the UN story because that's also a big part of the picture. China's the fourth largest donor to the UN entities that we've looked at. It makes up 5.3% of the overall UN budget. It's long been a net contributor to the UN system. It's now contributing over 18 times more than what it's receiving. But also worth noting its rank as a contributor differs significantly between the voluntary and the assessed contributions. So the assessed contributions, it's second on those as the second largest economy in the world right after the US. But on voluntary contributions, it's only 19th. And those voluntary contributions have tended to concentrate at agencies like IFAD or UNDP where China has had some senior leadership positions in the past or currently. Looking towards the future, China made a pledge in 2025 for an additional 500 million to be provided to the WHO over the next five years. So that might be increasing quite substantially after the US withdrawal. But the scope of that pledge is quite unclear whether that's talking about new voluntary contributions or accounting also for assessed contributions that China would have had to make anyway. It's a big debate there. How much is China stepping in to fill in the gap that's left behind? At the same time, the number of senior leadership positions which we are defining as positions at head level or deputy head level has fallen since we last looked at this in 2021 from nine positions to six positions. And China just leads only two agencies of the ones we look at, UNDESA and FAO. And more widely, if we look at staff, Chinese nationals only make up 1%, just over 1% of UN staff which is very disproportional to the share of the world population at 17%. All right, so overall, what do we take from all of these percentages, these details? What kind of multilateralist is China become? First, I would say quite a selective one. China's more deeply embedded in the system than it was 10 years ago, but that growth has been concentrated a lot on IDA, on the multilateral development banks which it helped to fund, and perhaps in the future, WHO. Second, although it is a big funder, China is not currently either willing or able to fill the financial gap that would be left behind by US withdrawal. Contributions remain relatively small as a share of its economy, and it's notably not contributing as much as others on voluntary UN funding and missing from, largely missing from the vertical funds. Third, China has been an institutional entrepreneur. It's helped to found two new institutions, the AIIB and the NDB, and there's potentially progress on a third new China-led development bank in the form of the SCO Development Bank. Although it's unclear what the mandate, what the form of this new institution might be. But finally, that institutional entrepreneurship hasn't really meant that there's been a withdrawal or less support for the traditional development system or the existing development system. So if we think back to what the debates were like 10 years ago in terms of fears that China's, China's involvement would create a parallel multilateral system, that's largely not really materialized. China's continued to contribute, even if at its lower pace, and it's portrayed itself as a reformer from within. All right, I'll leave it there. Thank you. And I'll pass over to the, oh, Ian.

[00:16:17] Ian Mitchell: Great, thanks very much, Bea. And I wonder if I could invite our other panelists up to the stage, let's invite, oh, please. Thank you. Thank you. Thank you. Thank you. Thank you. Please come up. So first, Hannah Ryder, who is the Chief Executive Officer of Development Reimagined, a think tank that works in China, in Africa, in London, and is very well respected. And Ye Yu, Senior Research Fellow at the Shanghai Institute for International Studies, who is gonna give us, who's followed this for some time and is an expert in the multilateral development banks. And Ye Yu, I wonder if I can start with your view here. I'm interested in any reflections you have on the report, but also, what is it that explains this pattern of engagement from China?

[00:17:18] Yu Ye: Thank you, Ian, and thank you for having me here. I'm very glad to join this panel. I think your report actually raises an interesting question, probably a dilemma as a research question. That is, the voice reform actually basically stopped. There's no breakthrough of the World Bank's voice reform. Why would China's contribution actually to the World Bank, to the IDA, focus on IDA, has been increasing quite significantly, I would say, as your number has shown. So I guess your question is why, and how to explain China's role in the multilateral development system. So I don't represent my country. I represent my own self, my personal observation on this issue. I have this, so your report shows that China's, the increasing contribution focuses on the IDA especially, and actually its core contributions. We have some new institutions, the AIB and the NDB, they focus on the infrastructure. But in terms of the concessional funding, the contributions, it really focus on the World Bank's IDA, its core contributions. So my response to the question, I think, I would say there's several reasons that can explain this. The first is that China values the rule of IDA from its own experience in collaborating with the World Bank. It started from the 1980s, and actually the World Bank was the first, was at least one of the very earliest international economic organizations that access Chinese academia and also policy circle to discuss with Chinese officials and also scholars about China's reform and opening up. There's a very famous Bashan Cruise Conference in 1985, which was about discussing how China should do the pricing reform, those market economy reform, whatever. So the World Bank really has a good reputation within China. And Mr. Deng Xiaoping, all of you know that, received the leadership of the World Bank and very famously said that, we actually, we need more your knowledge rather than your money. So we need, we value your advice more than your money. So actually this story about Chinese engagement with the World Bank was a really mutually win-win story. So I think that lays the foundation why China actually puts great value on the IDA. It would like to share its own experience with the other developing countries through the World Bank. So that's my first explanation, the value of the IDA, China attaches on it. And the second point I would like to draw your attention to more the reality, I think about the, I think the IDA is a bridge that links China with the North and the South. So as your data shows that the World Bank, the IDA focus on the African countries, but China still engage with the Africa through the World Bank. So that's what I mean, a bridge to link the North and South. So China would like to make friends, make most of the friends with both the North and the South through the World Bank. And in 2015, that's an old story, but I still think that's a very important story to share. In 2015, then the President Obama of the United States and Chinese leader actually sign a memorandum of understanding, committing each other to support each other. And China will support the legacy institutions, of course, the World Bank. So as a leader of the multilateral development system. And while the U.S. will support Chinese launch of the new institutions. So 2015, that is the year that the AIB and the NDB actually concluded their negotiations. So I guess the AIB and the NDB also provide a confidence for China to contribute more to the legacy institutions. So that's the second very important reason, I think, politically, China would like to support the multilateralism through the IDA. And last but not least, I think why China focus on the IDA's core contributions and didn't support that much those non-core contributions or vertical funds. I think vertical funds has some other story about the status of the developing countries and in the climate, I won't touch that. I just want to say that China as emerging donor still doesn't have a very comprehensive multilateral strategy to, for example, to decide which institution to allocate how much. So we don't have that. It's evolving, learning by doing story. So we still don't know. I just my personal, I think as a scholar, we don't have that very clear strategy about which one to prioritize and which sector to prioritize. So, and China also has limited resources. So we need to focus on the most important one. So IDA becomes the one that China focus. So let me stop here. Thank you.

[00:24:42] Ian Mitchell: Great, thank you, Yu. And I mean, I get on your point about, China is still learning. I mean, when we look across providers and at the size of their economies and actually, it's usually about $30,000 per head purchasing power parity that the country start doing more internationally and China's only actually just reaching that level. So I think one of the really interesting things is, if China continues to grow and its income grows, where does it focus next? And that fits with what you're saying, you about it, learning as it goes. Let me come to you, Hannah. Hannah, you've followed China as a development actor for a long time. Were there surprises in this report for you or does this tell the story that you've been observing for some time?

[00:25:29] Hannah Ryder: Thanks very much, Ian. And thank you for the invitation to be here and also for the excellent work that's gone into this report. And the previous ones that you're building on as well. I think it's really good to be able to chart these things over time and what the changes are. I'm always a big fan of CGD work. So, Ian, you mentioned sort of why I'm here, why I'm talking is because my firm, we do work on Africa-China engagement in particular. And we do work that relates to China's role in the financial and multilateral system as well. But especially as it relates to African countries and also before Development Reimagined, before I opened it in China, our first office, I was at UNDP China, which at that time was a very special office because it was, I was Deputy Country Director there, it was an office where you had, it was the first office to have two specific part, two separate parts of the office, one which was focused on China's domestic poverty reduction and then another part of the office which was focused on China's role with other developing countries or the rest of the world. And at that time as well, the Belt and Road Initiative had just been announced. So it was actually a very interesting time to be working on these issues. And again, we've seen China's role evolve also because of the Belt and Road Initiative and how that has changed. I think when I looked at, when reading the report and also your presentation here, I think I'm gonna agree with Lao Shiyu that it is evolving. I wouldn't characterize it as learning necessarily, but I think evolving and kind of working out strategically what is the next thing to do. I think that's the prerogative of every single country. And again, African countries themselves also have to do the same. When it comes to China's engagement, I think what explains the patterns, and I think that was your first question, I think if we're to kind of bring it into a formula from the work that we've done, I would say the formula is three different things. Number one, and we talked about it just now about China's own capacity and capacity to input into the system and to be part of the system and to do more. The more that you get officials who are familiar with the UN, who have worked in the multilateral system itself, then you can do more. And also, of course, income is a big determinant of that. The second part of the formula is the intentionality of the partner. There is no surprise, for example, that UNDP has been able to make major strides with China in terms of specific programs. UNICEF has made specific, has done major strides with specific programs with China because they have been very intentional about understanding Chinese perspective, making that pitch fundamentally. And that's also what we recommend when it comes to governments. You have to be intentional about what you're trying to achieve and seeing where can China fit in. So that's the second part of the formula. And then the third part of the formula, which I think explains another part of the trend, is the rigidity of the partner. And I think that's where we look at the trends with China's engagement with IMF, World Bank, et cetera. If an organization itself is very rigid, then that's also going to be challenging. And I think there's other countries, other regions, who feel that some of these organizations are too rigid, and therefore, for example, if there's an opportunity to create more, if there's an opportunity to have more homegrown institutions, and then have a global role or to do more, then let's do that. And so I think it's that formula that explains the trends that you're seeing, or the trends that you're observing through here. Capacity, intentionality, and rigidity. And I want to be really clear that two of those are not to do with China at all. Two of those are to do with partners. Countries who can also have that, and organizations who have their own decision-making power. So all of this, China's role in the multilateral system is not just about China. It is also about the multilateral system.

[00:30:46] Ian Mitchell: Great, thank you. And actually, that's a nice segue into the next section. And I'll start with you on this, Yu. In terms of the rigidity at the multilateral development banks and the shareholding model, I mean, maybe there's a paradox there in that the bank isn't, the shareholders at the World Bank are not moving forward with their shareholding review and not following the formula that would imply, as Bea said, 14% shareholding. But China still, as Bea said, in the white paper this year, still retained a commitment to multilateralism and still increased its EIDA contribution last year. So, Yu, what does meaningful reform and shareholding in the multilateral development banks look like from Beijing's perspective? Do you have any, yeah, speculations on what might be a way forward? Massive question.

[00:31:47] Yu Ye: Thank you, and let me, in the first part, I think your report has really provided a very comprehensive data and the whole picture of China's participation in the multilateral development institutions, including the shareholding and its also financial contributions and including its leadership role on those aspects, which is very informative also for us. So, I really appreciate the report. I forgot to thank the author's team, so I must add this. And for the question about the shareholding and the voice reform topic, I think it's not only a China issue. That's the first point I want to emphasize. After the global financial crisis, there are two shareholding reform. It's about the advanced economies and the emerging economies. But China is indeed the most focused issue. So the ranking of the shareholders, of the top five shareholders, are really the important issue. But I would say this is much more beyond a China issue. It should be taken as how to make the MDBs more effective, the operational effectiveness, and how to mobilize the largest resources from all the shareholders. So I still want to emphasize this point. And I don't know from Beijing's perspective still. Again, from my observation, I hope to see the shareholding and the voting power to be more technical, to be more depoliticalized. Like the World Bank has already had a dynamic formula. And that formula, actually, if it can be implemented automatically, for example, I think that would be a good thing. But it is very difficult. I realized that. And the second point I want to say, I think even from my perspective and from many of my friends, the scholars, actually, in the official document of the Global Government Initiative, as the report mentioned, and many other leaders' speech, you will see China's mention of the shareholding reform. But actually, we think that this is probably not the most important issue, not the most important indicator to measure how representative is China or any other developing countries are. Suppose that there's breakthrough of the shareholding tonight, I don't think there will be much fundamental change of Chinese representation. So there's other informal voice, the governance reform. I think that's actually more important. Like the people, the leadership, especially, and also how to shape the policy, the development of policy. I think that is more substantially important than the single shareholding, the number itself. And that we have, I think, if I have time, I think China has also invested a lot in how to, and one of the impressive thing is that you elaborated how the Chinese senior leadership in the United Nations has actually declined, right? So that tells that the Chinese people are not very competitiveness in getting the leadership role in the United Nations, because the senior leadership is the person you mentioned is, many of them are compete for the senior leadership, not politically appointed. So this is a more, another issue, I think China needs to invest more. And we have already many programs on this, how to help the young people to be more, to can go to the, can work for the international organizations, for example. The China Scholarship Council, the Ministry of Education, of course have many, I mean, that's something probably, I guess, more important if you can see more Chinese role in the impact on the institutions.

[00:37:27] Ian Mitchell: Thank you. Yeah, interesting, great, thank you. Yeah, so I mean, we didn't have a chance to delve into the UN story very much, but that's, we suspected, I guess, part of it is how ready Chinese citizens are to take up these roles. And it's interesting to hear there's that pipeline, if you like. Hannah, can I come into you on both these issues? So one, I mean, you were saying that maybe the shareholding share isn't the only thing that matters and that China has got a voice, but you've worked hard on shareholding in the MDBs. And so I'd be really interested in your reflections on that. But maybe also on the UN, as I say, we didn't have a chance to understand what's driving the seniority of posts. I mean, maybe it's, you're arguing it's maybe just these posts are open and competition. I mean, it could be that other countries have got more competitive about those posts, perhaps. But the other thing I think is interesting about the UN story is, I mean, really, the China's role at the UN is the opposite of the Bank. I mean, it's automatically being given a bigger role and assess contributions, but actually it isn't seeing its role in governance. So yeah, MDB shareholding and role at the UN, please.

[00:38:43] Hannah Ryder: So I think when it comes to MDBs, as you know the, so for example, the African position when it comes to IMF shares is a push for doubling of shares. And obviously that's a challenge to everybody. China has not said whether China agrees with that position or doesn't. It would have implications for China's own position. But nevertheless, I think, just to illustrate that there are many other views on shareholding review, and that is quite a significant and important perspective that while, yes, there are other ways to deal with the IMF or the World Bank, certainly I think for China, being a country that can contribute more is a different meaning when it comes to countries that rely a lot more on the IMF, or rely a lot more on the World Bank. So I think that also explains why this may not be such an important issue for China, but would be much more of an important issue for African countries, because being able to be part of the rules design and being able to, be able to have an opportunity to say no in a much more significant way, and to be taken more seriously because you have a bigger share by the others. I mean, of course, no one votes, really. We know that. But at the same time, it is about how seriously others take you in terms of, and how seriously the organization itself even takes you in terms of consultation and planning and design and all that sort of thing, and even in employment and all those sorts. So it's very complex. And so, but I think because China's in, although describing as part of the Global South, I think this evolution is, means that China's role will be different, for example, to the role of, let's say, the African continent in these places. I would say, by the way, just, because it was mentioned in the discussion about China being a developing country or being part of the Global South, I think the alignment there is really not necessarily one that's related to income. The way that I would explain it is more in terms of a perspective of not being involved in the original design of a system in which you then need to contribute to and then needs to be, yeah? So I think that's a political aspect of it, not necessarily an income-based one. Anyway, that was an aside. So in terms of the shareholding, I think that explains the difference for the MDBs. With the UN, I think China's capacity has definitely increased. The UN has got a much trusted, very, very trusted role in China, and again, you've had agencies being significantly more intentional, saying, you know, this works, but these are some proposals. They also have much stronger links, let's say, on the African continent, where, again, there's an opportunity for, they've explained the opportunity for Chinese finance to be supporting what the UN would like to do and feels that it was really adding value. And so again, I think that intentionality counts for a great deal. And although China is not, there's been a decline in senior leadership, but at the same time, the fact that there are only seven African heads of UN agencies also explains that, I think there's lots of countries that have a hard time getting proper representation at the UN. So that's, again, about the organization's intentionality at a much more senior level. So while you do get, the opportunities are there for stronger engagement and support for the UN system from China, there are places in which it is quite restricted. Let me just say one final thing with regards to, and give you just one more example to illustrate in terms of the intentionality versus intransigence question, or rigidity question. The African Development Bank. So you showed how Chinese contributions to the African Development Bank haven't really changed over time. But that's the formal contributions. In 2014, or 2013, in fact, the negotiation took place when Donald Kabaruka was president of the African Development Bank. He worked with, he discussed with China the opportunity for something called the Africa Growing Together Fund. And that was partly designed, it's co-financing between AFDB and the People's Bank of China. And it was run separately, but at the same time was able to utilize AFDB's network and AFDB's expertise and knowledge to then deliver infrastructure projects, which really made a huge difference. And you can look at its track record, was very, very strong. And I'm just giving you that example because China's contributions to AFDB have not shifted as the kind of the core contributions, but also China's governance role in AFDB has also not shifted. But at the same time, there have been ways in which the AFDB have worked with China to see, okay, well, even if our governance is restricted, can we find a way through? Can we work together in some way that actually meets the needs of African countries, AFDB's clients, and provides more finance because China has that capacity, but despite the institution itself having some rigidities, which may not actually be that helpful for the client country. So I think there's a, that's why I'm saying it's a complex formula and saying, well, China would have the opportunity to do X, Y, and Z. In many cases, China doesn't. And sometimes the Chinese position on where it wants to go with different multilateral institutions is not the same as, let's say, African positions too. So just to illustrate those suggestions.

[00:45:53] Ian Mitchell: It's a good example of the practicalities. Super. So one of the other things our report did was to look at China's climate finance in the form of the attributable share, if you like, from the amounts going through the multilateral system. So I wanna spend a bit of time on that before we open up to questions. So, Bea, let me turn to you on this. So how should China's climate finance contributions be recognized in the context of COP and the climate finance goal that was agreed there?

[00:46:29] Beata Cichocka: Thanks, Ian. So this actually ties a lot to what Hannah was saying around whether China is a member of the Global South. It's described itself as a permanent member of the Global South. Whether it's a lower-middle-income country or a high-income country and what the kind of responsibilities or contributions it should be making to international agreements are based on that kind of classification. So within the UN system, which was based on a 1992 agreement, if I'm not wrong, China doesn't count as a country that should be providing climate finance, unlike countries which, at that point, had reached a certain income level. And it's alongside South Korea and many other countries that now have transitioned to OECD DAC provider status and high-income country status, but still aren't part of the contributor base for the new collective quantified goal on climate finance. So China's presented any contributions that it makes as being entirely voluntary. It did, for the first time, publicly acknowledge what it is doing bilaterally. And in 2024, it hasn't done so since, but bilaterally, we have an estimate. And also, as part of the new collective quantified goal, it's agreed that all shareholding from MDBs, all that MDBs do, whether that's attributed to developed country shares or developing country shares, will be counted towards the final target, but that is entirely voluntary. So I suppose there is a question here about this convention that was made in 1992, what legitimacy it still carries going forward, and what the legal status is and what expectations are put on China from developing countries and from the world.

[00:48:51] Ian Mitchell: Great, thanks, Bea. And there's work on this from CGD colleagues, looking both at different countries' contributions to emissions under different measures, and then also, Bea referred to this in her presentation, how you might adjust that for income level if you were trying to be fairer about countries' contributions. So we and our colleagues have views on that. But I do think it's an interesting illustration where, as Bea says, two years ago, China did acknowledge its own climate finance contributions bilaterally for the first time. And then what we're seeing now is, because of the way that OECD countries count climate finance through the MDBs, China's automatically qualifying, in the sense, as a shareholder, and we think is contributing a meaningful amount through that channel. So I think it'll be interesting to see whether that progress continues in acknowledging its role as, if not in the global north, at least a high-income country that has responsibilities for climate change and finance. So we've got 20 minutes left. Let me open the floor to questions. And if people could say, introduce yourself briefly, and then make a brief comment or question, that would be great. I think I can see a colleague with a microphone. But, yeah, there's Cathy there, and then a lady in the front.

[00:50:27] Audience Member: Afternoon, Cathy, I had a question for Anna. You started with asset intentionality. On intentionality, thinking about sub-Saharan Africa, is there a more important or more general point of collaboration or approach to China, like in the context of the forecast, or what countries are all asking for, rather than just, you know, one country to come, either come and get this deal, or another one get another deal is there a way for that, and how would that happen?

[00:51:30] Ian Mitchell: So let's just take another question as well. So, regional approaches to China, and then the lady down here, please, just this lady down here as well.

[00:51:31] Audience Member: Hello, you hear me well, as I think it was not so loud down there. So my name is Alexandra. I am from the Eurasian Fund for Stabilization and Development. Thank you very much for an excellent session. It was extremely interesting to hear. It's always interesting to hear about the new donors, the emerging ones. And my question slash comment would be to Beata, because it's about the report itself. When we are talking about the role of the donors in the multilateral institutions, to my mind, one of the important questions is always the question of the control over the finances that are donated to the multilateral institution. And in that case, the donor usually goes, well, that's what we've seen previously. The donor usually goes from the contributions to the multilateral system, which is owned by the other donors, then to the bilateral contributions, and then often to creation of their own institutions that are led by these donors. So we have to distinguish between the country-led, these donor-led institutions, which is also part of the multilateral system, and the basic multilateral system, and also between the basic contributions, the core contributions, and the trust funds, for example, which they have their full control over. So the question slash comment is that whether you had, whether you estimated the dynamics, these dynamics for China, in terms of the control.

[00:53:23] Ian Mitchell: Great, thank you. Let's take those two. And Hannah, do you mind just, I think the microphone was off for Cathy's question. If you caught it, do you mind just-

[00:53:30] Hannah Ryder: So it was what's the scope for more regional coordination, especially with African countries' engagement with China, rather than one by one? I think, so you referred also in your question to the Forum on China-Africa Cooperation, FOCAC, which I would say, and I don't know what the Chinese perspective is on this, but to me, out of all of the regional engagements that China has, I would say that the FOCAC has been the most successful. Established in 2000 at the request of African governments, has been going every, has a big, either a ministerial or a summit every three years. And you can track how the commitments from China, especially bringing two parts of that formula together in terms of China's capacity to support African countries, and also then the intentionality of African countries has increased. And I think what you can also track is African governments also being more intentional with regards to how do we use that forum to also get China to understand our position, for example, in multilateral spaces. So is this using it as an opportunity where there are regional positions to say, China, are you going to, will you agree to this? What do you think about this? So you do see increasing references to that in the declarations and action plans, as well as a sort of general support. So there is absolutely scope for that. It is really the main way for African governments to explain what their positions and African institutions, to explain what their positions are, and see if you, to support, get that support from China if it's relevant. And I think it's, there's gonna be another one next year. It's co-chaired, the co-chair is Republic of Congo. So there is already preparatory work towards that beginning.

[00:55:43] Ian Mitchell: Super, thanks Hannah. And Bea.

[00:55:46] Beata Cichocka: Thank you. Yeah, thanks for outlining that donor trajectory from kind of contributions to existing system, bilateral to establishing own institutions. In some ways, I feel like China is doing all three at the same time. And I mean, I'm going to tie this a little bit to CGG's other work on kind of cross-comparative donor work and our work on South-South cooperation. And I feel like there is merit to that trajectory that you mentioned, but there is also donor choice. And a lot depends on the size of the provider. I think smaller providers, as they kind of rise up the income scale, tend to focus a little bit more on the multilateral system because they are smaller. The comparative advantage of doing something alone is less than it is for a large country. China is quite unique due to the size, just due to the sheer size. So it can do all three of these things at the same time, contribute to the existing system, do things bilaterally under the Belt and Road Initiative and do its own thing. What I will say in terms of setting up its own institutions, there is value to doing so, but there is also a risk to fragmentation for setting up separate trust funds and vehicles. So one example that I can point out here is, the Global Biodiversity Financing Framework, which was actually initiated during the COP15, Biodiversity COP in Kunming in China. So China does not contribute to that new vehicle, which is a collective multilateral vehicle, has instead set up its own Kunming Biodiversity Fund. And there's a question there about the efficiency and effectiveness of going it alone versus joining up collective efforts. It's not always clear cut, but there's a risk.

[00:57:57] Ian Mitchell: Super, thanks. So let's get another round of questions. I think there was a colleague here, a colleague here afterwards as well. So let's start there and then.

[00:58:10] Audience Member: Thank you. We cast S&P Global Ratings based in Hong Kong. I have a question regarding the future. I think both Beata and Dr. Yu mentioned how, I think they both observed that China does seem to be interested in furthering, like strengthening the multilateral development system. I think many of us are glad that that's the case. Are there things that either the multilaterals or other important actors in this field that you think that these actors could undertake to increase the incentive of countries like China to support and join and act more in the multilateral system? Because as you mentioned, there was a risk 10, 15 years ago that we may have seen another scenario whereby there would be two multilaterals.

[00:59:10] Ian Mitchell: Great question, thank you. Let's get the other, there's this gentleman here, please. Oh, there's a microphone on your left, sir. Actually, look the other way. And then one more question over here.

[00:59:21] Audience Member: Thank you. Yes, exactly one. Thank you, this is super interesting. I remember when I was director for the World Bank, there were quite a few other ways which China works with multilateral system. I don't know if you haven't seen the report, to catch or not, you have vertical funds. I'm surprised that the voluntary contributions are so small. And maybe they're just vertical funds, but they're also, I hear, parallel projects that use World Bank projects as model and then parallel propose other funding, which may be a way of exerting more pointed influence and cheaper in a way, because it's more targeted. And then, I remember that most of the construction contract went to Chinese companies that then stayed in the continent to other projects, maybe finance, directed by China. So I wonder if you try to catch this broader influence that goes beyond just the voting right. And if I may, a second question. You describe involvement through the new development bank, AI, others, see this as competition or compliment? How is this portfolio, man?

[01:00:51] Ian Mitchell: Great, thank you. And then this lady here in the middle, please.

[01:00:58] Audience Member: Thank you. Hello, my name is Chen Zheng from CIFF, the Children's Investment Fund Foundation. Thank you again for the brilliant report and the insightful discussion. So my question is also about the future and a bit a broad question beyond donation through the UN or MD system, similar to what Hannah mentioned earlier about the practical type of contribution China. In your most ideal location in the next five years, say, where do you see China could contribute further in terms of global climate, its role in global climate governance, either bilateral, regional, practical, innovative way, where, in most ideal case, where do you see it?

[01:01:47] Ian Mitchell: Super, great set of questions. So in the course of answering these, I wonder if also I'll ask the panel to make any final remarks. They're quite forward-looking questions anyway. So there's, Yu, if you could help us with the complementarity or competition of China and these institutions from our colleague here. Bea, I'll come to you on climate finance, but I've got some views as well. And then Hannah, maybe your thoughts on what China could do in the next five years from an outsider perspective. And any final remarks as well?

[01:02:25] Yu Ye: Should I start?

[01:02:26] Ian Mitchell: Please do.

[01:02:27] Yu Ye: Okay. Thank you for the great questions about the future of the system and the rule of China, including how to deal with the relationship between the new and the legacy institutions. Probably just quickly, even you didn't, quickly about the future. I think there's clearly a strong demand for more global public goods and how the multilateral system can really respond. I think there's clear larger demand there. I think this, the crisis, I hope the crisis could reduce the fragmentation, the division of the different actors and come together. And as a report mentioned that the traditional donors contribution are declining and China has the willingness to support, to contribute more and of course, according to its capacity. So there's a debate. I guess the, for example, the MDB could recognize more future contributions to incentivize the emerging donors like China to contribute more because the current formula still protect the past contributions. And I guess it's difficult to expect China to contribute like Japan in the 1980s. I checked the number in like 1989 or something, Japan contributed about 18% of the IDAS replenishment. China is far below that. I think it's not realistic to expect China to contribute like that. But we are seeing a multipolar world. In China's view, China's vision, it's a multipolar world rather than one hegemon replacing the other and can fill in the gap that's left by the traditional donors. It's very difficult. But I guess together, China and the other emerging donors, if can be more recognized about its future contributions, this can incentivize more. And also a broader issue I think is the, there's more fundamental issue that is beyond the MDB system as well. So we are seeing a fragmented trade and investment system that really does not, I think, what is the, how to assess China's role in the world economy, in the global economy, in the global south, in the world development. I think that's something that is, China feels it's not very well recognized. I think that's more fundamental issue. Probably need more dialogue, need more trust. That's a second point I want to mention. And third, related to the relationship between the new institutions and the legacy institutions, I guess there's different opinions. And there's a complimentary or competitive. And I think both, both are there. But it depends on who defines it. I think the recipient countries has a definition. And I guess from their perspective, probably more complementarity. Just one very simple issue. More resources, more alternative choices. And there's a, the G20 has a MDB triple agenda. But actually the new institutions are expanding the most, I think. The, even Chinese bilateral policy banks, those major policy banks, are adjusting, are, I mean, more about the, more strict financial regulation at home. So they cannot invest more. And they are reducing the investment, especially in those large-scale infrastructure projects. But if you look at the AIB and the MDV, they are really expanding. The AIB's newest strategy just announced they will double its commitment in the next five years. And the MDB as well. So in total, the two institutions now are committing, like, it's already more than $100 billion. And so they will play a big role, I think, important role in achieving the MDB's triple agenda. So I see more complementarity, rather than competition. But by saying this, I think from Chinese perspective, if you know Chinese model, I think one very important element of Chinese industrial policy is to encourage competition. To encourage good competition, if it's possible. And so different provinces, they compete for FDI. And the different sectors, they compete. So you have seen the best electronic vehicle and everything is by competition. So I guess by design, the new institutions can also be a healthy competitor for the lax ones to have a better system as a total. Thank you.

[01:08:21] Ian Mitchell: Great, thank you. So yeah, the new Chinese-led institutions as a stimulant for the existing ones. Hannah, so it'd be great if you could, the ratings agency question as well, if you could touch on that. So it wasn't about rating agencies from our S&P colleague. And any final remarks?

[01:08:38] Hannah Ryder: Yeah, thank you. So I guess I'm gonna talk mostly about the role of China in the future. And including on climate, where I think, I think we should also take into account a couple of other things around China's role in multilateralism generally. So I think one of the most interesting announcements from China came fairly recently at the WTO, where China said, we'll no longer be using or be trying to access preferential agreement, we're going to be coming out of that. So even though it's not saying we're not a developing country, it's saying, well, we're in a different category. And I think that is also interesting when it comes to how we've seen the role of China evolving as a receiver of funds, for example, in the multilateral system. And it's not like Asian Development Bank still have a team that pitches, for blended projects in China. It's not that it's not in the organization's interest to keep doing work in China, it's a great place to be doing development work, right? But it's really about then saying, well, we're creating space for other countries to have access to the system and more access to the system as it exists. But I think it's very difficult to see, it's very difficult to project what's going to happen because so much is still evolving. I think there's so much change in the multilateral system right now. And there's pressures from all sides. So I think China itself, from what we see, is, can live with some of the most difficult elements of the system, whether it's shareholding or just being able to work and create other institutions. There's other countries that can't really continue to bear that, in a sense, or can, but they will continue to fare badly from it. So I think it's, well, when it comes to climate finance, for example, I think there is a great opportunity here. There is, you know, there are still some funds that China does not contribute to, so they can be more intentional to go and explain and work with China, say, we can do this. But I think also it means working with the institutions that are based in China or having stronger representation in China as well, engagement with AIB, NDB, et cetera, and seeing how they can do more. More and more African countries are joining AIB and NDB, for example. So I think from their perspective, from African countries' perspective, it's the plurality of the system is what they're just trying to take advantage of as much as possible. It's not a case of, and they have to be flexible. And I think that flexibility from an African perspective is where there is more flexibility with Chinese institutions at this point than with some of the other institutions. So that's gonna be interesting to continue to watch. I just, I think the next five years, the next 10 years are gonna be a very testing time for the multilateral system.

[01:12:17] Ian Mitchell: Yeah, thank you. I'm feeling a bit more positive about multi-polarity and in the light of the comments we've had. Your trade example is a really interesting one. I think that is the parallel to climate where China's also offered zero tariff access to least developed countries. And I guess my wish would be, and it would be this from a think tank, why not showcase those efforts on climate finance and on trade with some more transparency because those are positive things for the world and it would be good to take credit. Bea, any final remarks from you?

[01:12:51] Beata Cichocka: Thanks, I'll try and be brief but address a point made by several people about China's kind of involvement beyond the things that we've looked at, the broad financial shareholding and the concessional windows it funds, separate vehicles that it might have. So, the study was really kind of a very broad based overview of the system and I would love to look in more detail qualitatively what China's doing to build coalitions with other countries on climate to resist pressures from other major shareholders on the pushback, what China's doing kind of behind the scenes. There's a lot to be said for involvement beyond the financial headline figures and I guess I'll leave it there.

[01:13:52] Ian Mitchell: Super, thanks. And maybe, yes, China's role in the climate change action plan and preserving the climate change action plan at the Bank I guess is a good example of that where I think it was proactive. So, I wonder if you'll join me in just saying thank you very much to our panel. I think it's been a great discussion and for those in the room, look forward to continue it. Thank you. Thank you.