China’s overseas Sovereign debt relief actions: What insights do recent cases provide?

In the context of the COVID-19 pandemic, the G20 and the Paris Club agreed to provide bilateral official debt relief to low-income countries. This paper presents eight case studies of China’s recent debt relief actions overseas to shed light on their common features and particularities. These cases – Cuba (2010), Seychelles (2011), Chad (2017), Zambia (2018), Mozambique (2018), Cameroon (2019), Congo (2019) and Venezuela (in progress) – highlight China’s growing role in providing debt relief. This relief is provided either in conjunction with other official creditors, such as the Paris Club, or private creditors, or out of its own political initiative. The magnitude of debt relief and restructuring terms vary across different cases and depending on the terms offered by other creditors. We observe a predominant share of cancellation of accumulated arrears instead of nominal haircut of the outstanding principal in these eight cases. We conclude with preliminary reflections on political economy factors motivating China’s debt relief actions.