Friends of the Earth and International Rivers Network have called on private banks not to participate in pending bond issues of the China Development Bank and the China Export Import Bank for a total of more than $2 billion. The groups argue that the bonds will finance environmentally destructive projects that banks would not be prepared to finance directly.

On July 14, 22 international environmental organizations, led by International Rivers Network and Friends of the Earth, called on banks not to sell bonds of the China Development Bank (CDB) and the China Export Import Bank (CEB). The environmental groups charge that the two financial institutions are playing a pivotal role in funding the Three Gorges Dam and other destructive dam projects around the world.

The CDB has mandated Goldman Sachs, Merrill Lynch and Morgan Stanley to manage the sale of bonds to the tune of $500 million in the US. PNB Paribas, HSBC and UBS have been mandated to sell a separate EUR500 million bond in Europe. The CEB plans to hire Citigroup, Goldman Sachs and HSBC to manage the sale of $1 billion in bonds. The CDB and CEB bonds are expected to be issued in the coming months.

Michelle Chan-Fishel of Friends of the Earth/US says: "By using financial intermediaries as a way of raising money for these projects, the Chinese government is trying to dissipate any sense of responsibility that underwriters and investors may feel for bankrolling environmental and social destruction."

A report published by IRN and FoE documents that the CDB and CEB do not follow any internationally acknowledged environmental and social standards. The banks specialize in financing projects that no other financial institutions would fund. The CDB is the largest funder of the Three Gorges Dam. Its portfolio includes other destructive projects such as the Zipingpu Dam and the South North Water Diversion Project in China. The CEB's portfolio includes the Yeywa Dam in Burma, the Merowe Dam in Sudan, and the Nam Mang 3 Dam in Laos.

Peter Bosshard, policy director of International Rivers Network, says: "The projects of the CDB and CEB do not fulfill the most basic standards for safeguarding transparency, environmental sustainability, and human rights. Banks should not finance projects through these institutions that they would not finance directly."

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