China's Role in Developing Country Debt Restructuring
According to estimates by the International Monetary Fund, 60% of low-income countries are now in or at high risk of debt distress, double the number in 2015. Zambia defaulted on its public debt two years ago. Sri Lanka, Ghana, Ethiopia and Pakistan have already defaulted or are on the cusp of doing so. In all these cases, China is a significant creditor. China’s lending of projects in other countries between 2000 and 2017 totaled more than $800 billion. In the past five years, Beijing’s lending has tapered off, but it has left a trail of unsustainable debt.
China’s role in sovereign debt restructuring is under scrutiny and criticism. Beijing has been reluctant to participate in multilateral debt restructuring unless the World Bank and other regional development banks also agree to write down their own loans. The World Bank dismisses that demand, arguing that development bank financing already comes with low interest rates and does not add significantly to a country’s debt burden.
What is China’s approach to debt relief and should it be doing more? To discuss these topics and more, host Bonnie Glaser is joined by Jeremy Mark, a nonresident senior fellow at the Atlantic Council’s GeoEconomics Center, who writes on developing country debt and US-China issues. He worked in Asia for The Wall Street Journal early in his career and as a communications specialist for the International Monetary Fund for over two decades, where he was responsible for its communications in Africa and Asia.