As China Touts Green Financing and Climate Goals, Its Banks Are Pouring Billions Into Commodities From the World’s Rainforests

China plays a growing role in the future of the planet’s tropical forests, but a new report says its financial flows are going in the wrong direction.

Chinese banks have become the biggest international funders of companies that trade in goods linked to deforestation, a trend that could further imperil the world’s most climate-critical forests, environmental advocates say.

A new report from the advocacy group Global Witness, published Thursday, tracks financing from China’s top banks to companies that rely on the world’s tropical rainforests for commodities, including timber, pulp, paper, beef, soy and palm oil. It finds that major Chinese banks bankrolled a total of $23 billion to these businesses between 2018 and the middle of 2024. 

From 2013 to 2018 China provided only $12 billion in credit to companies that source products that have higher risks of causing deforestation. Over the next five years, from 2019 to 2024, that figure jumped to $20.1 billion. The increase indicates “that the financial sector has failed to adjust lending practices to mitigate the damage some of these companies are wreaking upon global forests,” the report says.

China is the world’s largest importer of “soft commodities,” which include soy, beef and forest products, and is also home to the world’s biggest banks, giving it a growing and critical role in the fate of the world’s forests. But, the report points out, the country has no policy that restricts imports of illegally deforested goods and no regulations that prevent its financing from flowing to companies with possible ties to illegal deforestation. These are critical blind spots, critics say, especially with China’s geopolitical and economic power on the rise.

Merel van der Mark, a researcher with the Forests & Finance coalition, said it’s difficult to prove a definitive link between a particular financier and an instance of illegal deforestation. But, she said, “the lack of critical questions and proper due diligence make the deforestation possible. There’s definitely a strong role these banks play.”

Forests & Finance, along with the research company Profundo, provided the data upon which the new report was based. The two are members of a group of advocacy and nonprofit organizations that track global financing for commodities that are at higher risk of driving deforestation—or “forest-risk” commodities. In their most recent report, from 2024, the groups found that global banks have provided nearly $400 billion to companies that rely on these commodities since 2016, the year the Paris climate agreement took effect, while institutional investors held about $53 billion in shares and bonds.

The new report, similarly, looks at financial flows to the world’s biggest forest-risk companies with operations in the planet’s largest and most important rainforests, including the Amazon in South America and tropical forests across southeast Asia and Africa. These forests are those most exploited for their natural resources—and are especially critical for maintaining a stable atmosphere—but continue to be degraded and destroyed, despite some positive trends. (Last year, rates of deforestation in Brazil, home to about two-thirds of the Amazon rainforest, were lower than they have been in a decade, according to government data.)

The new analysis excludes national banks in Brazil, which are the biggest bankrollers of forest commodities in South America, and in southeast Asia, where Indonesian and Malaysian banks provide most of the forest-risk funding. Chinese banks are the top financiers of forest-risk companies in central and west Africa, home to the vast tropical forests of the Congo basin.

Excluding these banks, Chinese banks surpass European and American banks in providing financing to companies that have track records of illegal deforestation, the report says. The top Chinese banks providing funding, according to the report, are the Bank of China, CITIC and the Industrial and Commercial Bank of China, the world’s largest bank.  

None of the banks responded to Global Witness for comment.

The top recipients of Chinese bank funding were Sinochem, a Chinese state-owned conglomerate with business in oil, fertilizer, rubber and chemicals, and Indonesia-based Royal Golden Eagle Group (RGE), which trades in pulp and palm oil, among other commodities, and has faced repeated deforestation allegations. The third-largest recipient is COFCO, China’s biggest food trader, which was recently accused of illegally sourcing soybeans from Indigenous lands in the Brazilian Amazon. 

In 2022, the China Banking and Insurance Regulatory Commission, the nation’s financial regulator, issued new guidelines that outline how banks should gauge their environmental, social and governance (ESG) risks. But the guidelines are voluntary and focus on other carbon-intensive industries, including coal power and smelting. 

China is also one of the more than 140 signatories to the Glasgow Leaders’ Declaration on Forests, launched at the annual United Nations climate conference in 2021, which commits countries to stopping and reversing forest loss and land degradation, including realigning financial flows. 

The rise in funding for forest-risk companies is at odds with China’s global commitments and its “green finance” guidelines, the report notes. And, despite being the world’s biggest importer of soy, beef and palm oil, China has no policy restricting imports linked to illegal deforestation.

“China has become such an important player,” van der Mark said. “It’s really important they implement strong measures to make sure they don’t support deforestation and human rights violations.” 

Van der Mark noted that President Donald Trump’s tariffs on agricultural products, if implemented, will likely have the effect of driving more soy production in Brazil as countries, including China, seek cheaper options to American soybeans. (A U.S. trade court ruled that most of Trump’s tariffs were illegal on May 28; the Justice Department said it will appeal the decision and a federal appeals court ordered that the trade court’s decision be temporarily paused on May 29.) 

“There’s a fear it will drive deforestation in Brazil for soy,” van der Mark said. “If that scenario develops, it becomes even more important that Chinese finance doesn’t contribute to deforestation.”

Cover photo:  A group of cows graze on deforested land in Madre de Dios, Peru. Credit: Angela Ponce/The Washington Post via Getty Images