Divided Burdens: Strategic Dynamics of OECD and Chinese Climate Finance in Adaptation and Mitigation

• In Event: Adaptation to Environmental Effects? Win-Win, Win-Lose, or Lose-Lose?

Abstract

The Trump Administration’s retrenchment from global development assistance triggered a fundamental realignment in the global climate-finance architecture, undermining OECD-DAC (Development Assistance Committee) contributions and leaving the world’s most vulnerable communities with diminished support. In this vacuum, emerging providers, most prominently China, have attained a central role in the provisioning of climate finance.

Despite these shifts, empirical research remains limited on how China’s allocation patterns differ from OECD-DAC donors—particularly regarding how their funding preferences vary across recipient income groups and other key characteristics as well as competitive dynamics among donors.

Drawing on international burden-sharing theory and public-goods provision models (Pang 2023; Roberts and Weikmans 2017), this study argues that donor identity and policy paradigms shape allocation preferences. China’s climate assistance, rooted in its South-South cooperation ethos, likely prioritize projects aligned with its infrastructure-driven approach. In contrast, OECD-DAC contributions follow governance-conditionality norms, focusing on resilience-building in vulnerable communities. We hypothesize that China preferentially funds greenhouse gas mitigation projects, while OECD donors tend to support climate adaptation efforts. Meanwhile, these funding streams exhibit competitive dynamics, wherein expansion by one donor bloc precipitates contraction by the other.

      Using a balanced panel of climate finance spanning 2000-2020 from the OECD-DAC Creditor Reporting System and AidData, this study utilizes mixed methods, including paired-sample t-tests, chord-diagram visualizations, and vector-auto regression (VAR) model. Our preliminary results suggest that China has allocated roughly 70 percent of its annual climate finance to mitigation since 2013 while OECD-DAC donors exhibit the inverse distribution. Heterogeneity analysis further reveals that China’s mitigation bias is most pronounced in renewable-energy sectors and in lower-middle-income recipients, while OECD adaptation flows are disproportionately directed toward small-island developing states and least-developed countries, particularly for water-management and coastal-protection initiatives. Our VAR estimates also reveal significant negative feedback: a 10 percent rise in Chinese mitigation funding corresponds to a 3-4 % decline in OECD adaptation flows in the subsequent year.

These findings expose a competitive burden-sharing dynamic rather than harmonious complementarity, reshaping our understanding of multi-donor public-goods provision. By delivering the first systematic comparison of traditional and emerging donor modalities, enriching burden-sharing theory with insights on how donor identity shapes strategic interactions and offering guidance for coordination mechanisms to mitigate harmful substitution effects and furnishing empirical evidence to inform future international climate negotiations. This study advances both scholarly debates and practical strategies for more equitable and effective global climate governance.

Author

• Yu He, Fudan University
  Presenting Author