Xi’s ESG Boom Funnels Billions Into Coal, Liquor, Defense Stocks
09.07.22
Assets in China’s ESG funds have doubled since 2021, lifted by Beijing’s growing emphasis on poverty alleviation, renewable power and energy security.
Source: Bloomberg
In a 40-minute livestream in June, fund manager Hou Chunyan made her pitch directly to China’s growing population of retail investors: ESG investing is uniquely compatible with Beijing’s growing push for carbon neutrality and “common prosperity.”
To that end, her portfolio — the Da Cheng ESG Responsibility Investment Mixed Fund — doesn’t rule out coal companies or liquor stocks. Chemical manufacturers are fair game, according to China’s main ESG benchmark, the CSI 300 ESG Leaders Index. So are solar energy and technology firms with alleged ties to forced labor in the Xinjiang region.
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Technology is the new frontier of international relations. The interaction is bi-directional: technology is defining diplomatic matters while diplomacy is also influencing the development and deployment of technology. Take semiconductors as an example. This is a technology that forms the foundation of digital economy, national security, and productivity in almost all industries. Global supply chain in the semiconductor industry is shaping U.S. foreign policy. Conversely, America’s diplomatic effort has been redefining the supply chain. Tech diplomacy is different from science diplomacy, which became a key pillar for the U.S. and other countries since World War II. Scientists participated in treaty negotiations, engaged in bilateral summits and served as attachés at embassies. Primary topics included nuclear proliferation, super-collider construction, human space exploration and environmental science.