Explaining china's approach to the global governance of sovereign debt distress: a state transformation analysis

The global governance of sovereign debt distress is widely understood to be under threat from China, which has risen to become the world's largest official bilateral creditor. In response to the Global South's post-2020 debt crisis, China has undermined established approaches led by the International Monetary Fund and the Paris Club, with many seeing this as further evidence of Beijing's challenge to the US-led liberal international order. Yet, China has proposed no meaningful alternative to the existing regime, and its behaviour has arguably undermined Beijing's global standing, rather than advancing its strategic interests. Moreover, China has actively participated in Group of 20 frameworks drawing heavily on Paris Club rules, and insists more resolutely on 'comparable treatment' with other creditors than Paris Club member-states. Its behaviour therefore seems contradictory and incoherent, rather than reflecting a strategic choice. This article explains this using the State Transformation Approach, which sees the Chinese party-state not as a strategic, unitary actor but as a loosely coordinated, highly contested array of agents pursuing potentially contradictory interests. This explains why China's commercial lenders have successfully safeguarded their interests during the debt crisis, at the expense of other creditors and Beijing's wider geopolitical interests.