Confusion and Challenges in Debt Contracts

China’s Impact on Sovereign Debt Restructurings There has been much chatter (a lot of it out of Washington) about how China is mucking up the financial architecture for sovereign debt restructurings. Given the political and strategic biases of much of the chatter, it is often hard to separate out real claims from bullshit. Political scientists, Lauren Ferry and Alexandra Zeitz, in their paper, “China, the IMF, and Sovereign Debt Crises”, have dug into the question. Using both qualitative and quantitative data, they document and describe how the debt negotiation processes for distressed countries with the IMF has materially changed in the wake of China’s emergence as a major lender. In the podcast, we discuss, among other things, the general question of China’s impact on the debt restructuring processes today, the measures they use in their analyses, and what is likely to happen in the foreseeable future. Producer: Leanna Doty