We’ve covered Chinese lending to the Global South through the boom days of the BRI and the current debt busts cratering Zambia, Sri Lanka and other economies. One of the things we’ve learned is that China plays a weird dual role in the global development finance landscape. First, Chinese lending has in some ways been transformative, offering poor countries a whole new set of options, some leading to development benefits and some straight over the cliff.
But this transformative role also fits into a wider context still largely dominated by Western power. Western officials love to complain about China’s disruptions to debt reform processes and in many cases, they have a point. But the huge stake Western-led multilateral lenders and private creditors have in these crises remains unsaid and (by Western officials at least) weirdly unsayable.
All of these dynamics are coming to a head this week. China keeps poking at the conventions that ensure the unique position of the Bretton Woods institutions in development financing, and this week’s G20 debt roundtable will be extremely revealing about whether that is having an effect.
At the same time, the news that David Malpass is leaving the World Bank presidency early will likely cast a spotlight on U.S. control over this particular appointment.
Speculation is already mounting: will it be the head of USAID? The CEO of Pepsico? The question of which particular American the Global South should prepare to deal with will no doubt be mixed with questions about why only Americans are eligible for the job in the first place.
More importantly, even if the World Bank presidency is made more inclusive (probably a long shot), will that change anything? It’s not like the appointment of Ngozi Okonjo-Iweala to head the WTO magically made trade fairer.
But the death grip the U.S. and Europe maintain on the WB and IMF leadership is shorthand for a broader set of 20th century development conventions biased towards the West that the Global South would love to kick out.
Beijing is playing cannily to this mood. But it’s a high-stakes game. China has already made clear that it’s willing to delay and possibly derail debt renegotiation processes involving “all-weather friends” like Zambia in order to have this fight.
As climate change barrels down on us, reforming global development finance in order to make it easier for the Global South to access funds and deal with debt distress is crucial. Drastic reform is needed. But whether that is the kind of reform China is after or whether this whole fight is just about getting Chinese banks paid is a different question.
More immediately, the specter of debt-ridden societies like Zambia or Sri Lanka fully collapsing because Chinese officials were busy debating a bunch of U of Chicago grads who can’t be bothered to find Africa on a map is real.
Explaining that choice at the next Friends of the Global Development Initiative meeting will be extremely awkward.
