This, in turn, reflects China's own international financial subordination, as noted previously by authors like
@iliasalami.bsky.social. In Sri Lanka's case, once access to bond markets was lost, the govt defaulted on its external debt, including to Chinese lenders. 7/7

Borrowing from China thus plays a role in driving up debtors' borrowings on international bond markets, which increases their vulnerability to shifts in monetary policy in the US, rather than lessen it. 6/

Second, rather than Chinese lending rescuing borrowers from the vagaries of financial markets, in reality Chinese loans create demand for US$, needed to repay these loans. 5/

First, from the point of view of borrowing governments, Chinese loans and international sovereign bonds are complementary, not competing, sources of financing, that are being deployed for different political purposes. 4/

In this article, we examine the pivotal case of Sri Lanka, the 'poster-child' for the debt-trap diplomacy thesis, whose default in 2022 kicked off a blame game between creditors. We make two interrelated arguments. 3/

China is often seen to offer borrowers in the global south an alternative model for development, contrasted with the West's neoliberal model, notably sovereign borrowing on bond markets. 2/

That what happens when you're trying to implement sweeping tariffs in a highly financialised and still integrated economy.

But they push back when serious cuts to net present value or face value are at stake, often in ways that undermine China's overall diplomatic and geopolitical imperatives. 12/12

These creditors are concerned to protect their balance sheets above all else. Hence they cooperate where they can, typically agreeing to reschedule debt and offer grace periods. 11/

We explain how its domestic governance of development financing and debt restructuring negotiations operates and show that the main interests shaping Chinese negotiations over sov debt have been of its mammoth policy banks - the China Exim Bank and the China Development Bank. 10/

In the article we explain this incoherent behaviour by using the analytic framework we developed in our book Fractured China. We argue that China is not necessarily a strategising top-down monolith. www.cambridge.org/core/books/f... 9/

They have insisted on comparability of treatment, especially with private creditors, even more than the Paris Club members. As a result debt restructuring processes have become longer and more contested than they had been for some time. academic.oup.com/ia/article/1... 8/

It has not sprung the supposed 'debt trap' on distressed debtors and hasn't used debt restructuring to win friends by showing generosity. In fact, Chinese creditors have often been most reluctant to provide generous debt restructuring deals. 7/

Alongside these challenges, however, there is evidence of some Chinese cooperation with the IMF and Paris Club, notably via G20 initiatives. China's behaviour in debt restructuring also doesn't make sense from any established geostrategic point of view: 6/

These challenges are often claimed to be part of China's wider challenge to the US-led order of which the IMF is a core pillar. 5/

and (c) its refusal to join the Paris Club of creditor countries and its rejection of the Club's norms of transparency among creditors, collective bargaining with debtor countries and comparability of treatment among creditors. 4/

The article examines the challenge that China poses for international efforts to address sovereign debt distress: (a) its 'rescue' lending that competes with the IMF (b) its challenge to the established debt analysis and restructuring framework of the IMF and World Bank; 3/