China Risks Repeating Debt Restructuring Mistakes of the Past Say Research Trio “HRT”

This figure combines data on distressed debt restructurings on private external creditors (bondholders and banks) with those on Chinese creditors from the various sources listed in the report's appendix. The Chinese cases include 33 debt reschedulings with countries in high risk of or at debt distress in the wake of the DSSI over 2020-21. To avoid bias, 149 “symbolic” restructurings of minor, Zero-Interest Loans are excluded.

Chinese creditors’ obsession with secrecy and their outright refusal to cancel debts held by low-income countries will undermine the chances of success of any major sovereign debt restructuring initiative, argue World Bank economists Sebastian Horn and Carmen Reinhart along with University of Kiel economist Christoph Trebesch.

The three economists have published extensively on the issue of Chinese lending practices to the world’s poorest countries and are informally known by the acronym “HRT.”

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by Eric Olander

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