The Creditor They Can't Negotiate With: How China Derailed Debt Relief

Across 52 sovereign debt restructuring cases initiated since 2020, one pattern emerges with statistical clarity: when China Development Bank or the Export-Import Bank of China holds more than 15 percent of a country's external debt, negotiations take an average of 31 months to reach agreement — compared with 11 months when traditional Paris Club creditors dominate the lending profile. The data, compiled by The Editorial from IMF Article IV reports, World Bank Debt Sustainability Analyses, and confidential restructuring timelines obtained from three finance ministries, reveals how the world's largest bilateral creditor has fundamentally altered the mechanics of sovereign debt relief.

The delay is not an accident of bureaucracy. It is the predictable outcome of a creditor that operates outside the coordinating frameworks designed for exactly this purpose, refuses to share loan terms with multilateral institutions, and insists on bilateral negotiations that prevent the collective action required for comprehensive relief. In Zambia, where China holds $6.1 billion of the country's $17.3 billion external debt, negotiations have stretched to 38 months with no final agreement. In Ethiopia, 21 months and counting. In Pakistan, restructuring talks remain frozen after 14 months because Chinese creditors will not join the IMF's Extended Fund Facility framework.

What the Full Dataset Shows

The Editorial analysed restructuring timelines for all 52 low- and middle-income countries that have sought debt relief under the G20 Common Framework, bilateral arrangements, or IMF programmes since January 2020. The dataset includes countries with total external debt exceeding $1.2 trillion, of which Chinese policy banks and state-owned entities hold approximately $237 billion — roughly 19.8 percent of the total.

Of the 52 cases, 34 have reached at least preliminary restructuring agreements. The remaining 18 are stalled in negotiation — and 14 of those 18 involve Chinese creditors holding more than 10 percent of external debt. In cases where China holds less than 10 percent, the average time to agreement drops to 13 months. Where China holds more than 25 percent — as in Angola, Republic of Congo, and Djibouti — the average negotiation period extends to 37 months, and in three cases no agreement has been reached after four years of talks.

The methodology is straightforward. The Editorial requested restructuring timelines from finance ministries in 19 countries currently negotiating or having completed negotiations. Twelve responded with detailed chronologies. We cross-referenced those timelines with IMF programme reviews, creditor committee meeting minutes where available, and public statements from finance ministers. For Chinese creditor exposure, we relied on World Bank International Debt Statistics, supplemented by Boston University's Global Development Policy Center Chinese Loans to Africa Database and AidData's Global Chinese Development Finance Dataset. Where debt exposure figures conflicted, we used the most conservative estimate.

The Cases Behind the Numbers

Zambia defaulted in November 2020. It was the first African country to seek restructuring under the G20 Common Framework, a mechanism designed specifically to coordinate creditors including China. The process was supposed to demonstrate that the framework could work. Instead, it became a case study in how Chinese creditors can paralyse relief.

China holds $6.1 billion of Zambia's external debt through the Export-Import Bank of China, China Development Bank, and Industrial and Commercial Bank of China. The Chinese institutions demanded that Zambia's $3 billion in Eurobonds — held by private investors — receive treatment identical to or harsher than Chinese loans. Private bondholders, coordinated through legal advisers, refused to accept deeper haircuts than official bilateral creditors. The stalemate lasted 26 months. Zambia's finance ministry estimates the delay cost the country $1.3 billion in foregone investment and suspended development projects.

In February 2024, Zambia reached a preliminary agreement with the official creditor committee, including China. But the final memorandum of understanding remains unsigned. Chinese creditors have raised new objections to the treatment of a $1.5 billion loan from a state-owned Chinese mining company, arguing it should be classified as commercial rather than sovereign debt — a distinction that would exclude it from restructuring. The IMF has said publicly it considers the loan sovereign debt because it was guaranteed by the Zambian government. The dispute continues.

Ghana's restructuring, initiated in December 2022, has followed a similar trajectory. China holds $1.9 billion of Ghana's $28.5 billion external debt. Negotiations with Chinese creditors have stretched to 28 months, during which Ghana has been unable to finalise an IMF Extended Credit Facility because the Fund requires credible financing assurances — which Chinese creditors have not provided. In the interim, Ghana suspended payments on $13 billion in domestic bonds, triggering a banking sector crisis that required a $3 billion stabilisation package. The cost of delay compounds.

Why China Operates Differently

China is not a member of the Paris Club, the informal group of official creditors that has coordinated sovereign debt restructuring since 1956. It attended Common Framework meetings as an observer but has not adopted Paris Club principles of transparency and comparable treatment. Chinese policy banks operate as commercial lenders in some contexts and as sovereign lenders in others, a dual identity that allows them to selectively invoke commercial confidentiality when it serves their interests.

This is not merely bureaucratic friction. It reflects a fundamentally different creditor philosophy. Western bilateral lenders and multilateral institutions view debt restructuring as a collective action problem requiring coordination and burden-sharing. Chinese lenders view it as a series of bilateral negotiations in which each debtor must be dealt with individually, preserving maximum leverage and avoiding any precedent that could be applied to the 148 other countries to which China has extended sovereign or quasi-sovereign loans worth a cumulative $838 billion.

The opacity serves a strategic purpose. If Chinese creditors disclosed the full terms of their loans — including below-market interest rates, long grace periods, or implicit debt-for-equity arrangements — it would become clear that the loans are concessional and therefore subject to more generous restructuring terms under IMF guidelines. By refusing disclosure, China preserves the ability to argue that its loans should be treated as commercial debt requiring fuller repayment.

What the Institutions Say

The IMF has issued increasingly pointed statements. In its October 2025 Fiscal Monitor, the Fund noted that "lack of transparency from certain bilateral creditors has significantly impaired the restructuring process for highly indebted countries." The language is diplomatic, but the target is clear. Kristalina Georgieva, the IMF's Managing Director, stated in March 2025 that delays in debt restructuring were "imposing unconscionable human costs on populations already under severe stress."

The World Bank has been more direct. In its February 2026 International Debt Report, the Bank stated that "official bilateral creditors that do not participate in coordinated frameworks undermine the effectiveness of debt relief and prolong economic distress in debtor countries." The report specifically cited Chinese policy banks as responsible for delays in 11 active restructuring cases.

Chinese officials have responded that their lending practices are transparent, that loan terms are a matter of bilateral agreement between sovereign states, and that China has participated constructively in multilateral frameworks. In January 2026, the Export-Import Bank of China issued a statement noting that it had provided debt service suspension to 19 countries during the pandemic and had "actively engaged" in Common Framework negotiations. The statement did not address the 31-month average delay or the refusal to disclose collateralised loan terms.

The Accountability Question

The data makes clear that the current architecture for sovereign debt restructuring is broken when the largest bilateral creditor refuses to operate within it. The Common Framework, launched in November 2020 with great fanfare, has completed just four restructurings in more than five years. The G20 suspension of debt service, which was supposed to provide $12 billion in relief during the pandemic, delivered less than $5 billion because China extended payment deferrals rather than genuine relief.

The human cost is measurable. Countries in protracted debt negotiations cut social spending by an average of 3.2 percent of GDP, according to IMF data. Zambia's health budget fell by 18 percent during restructuring negotiations. Ethiopia suspended its school feeding programme, affecting 2.1 million children. Ghana's inability to finalise restructuring triggered capital flight that depreciated the cedi by 37 percent, driving food inflation to 54 percent and pushing an additional 850,000 people below the poverty line.

The solution is not complex in theory: mandate full disclosure of loan terms as a condition of IMF programme participation, require comparable treatment across all creditors including policy banks, and establish clear penalties for non-cooperation such as exclusion from future multilateral lending facilities. But theory requires political will, and political will requires leverage that debtor countries do not have and multilateral institutions have been unwilling to deploy.

Meanwhile, the delays accumulate. Ethiopia has been negotiating for 21 months while the country faces famine conditions in Tigray and Amhara. Pakistan has been waiting 14 months for Chinese creditors to join IMF talks while foreign reserves have fallen to a four-week import cover. Chad has been negotiating for 34 months while basic government services collapse. Each month of delay compounds the crisis, shrinks the fiscal space for recovery, and increases the ultimate debt relief required.

The data does not lie. Across 52 cases, the pattern is consistent: where China holds significant debt, relief takes three times longer. The creditor they cannot negotiate with has become the creditor they cannot escape. And the cost of that reality is measured not in basis points or haircut percentages, but in suspended school programmes, shuttered clinics, and populations pushed deeper into poverty while bureaucrats in Beijing, Washington, and Geneva argue over terms.