About this Event
About the Talk
In a region with a history of commodity shocks and debt crises, why has China maintained financial ties with many economically risky countries in the Americas? Why does China explicitly criticize austerity and policy conditionality, yet implicitly support these same policies through its IMF partnership? This project develops a theoretical framework for global financial statecraft. The traditional approach to sovereign debt sustainability, led by the IMF and Paris Club, emphasizes the short-term viability of sovereign borrowers by promoting financial disclosure and economic reform. China participates in such multilateral initiatives, signaling its willingness to be a global stakeholder, but often prefers bilateral discretion to avoid recognizing bad debts or requiring significant reform.
China’s approach to debt relief reflects a two-tier strategy of bilateral-multilateral interactions in borrowing nations, striking a balance between the twin goals of maximizing its commercial influence and helping ensure regional financial stability. China’s financial statecraft is thus conditional on the geoeconomic importance of its strategic linkages, and its financial power within international financial institutions (i.e., the IMF). Otherwise, when there is a low-level financial statecraft, where China invests in diplomatic prestige projects, overcapacity outlets, or basic infrastructure, debt relief is more firmly concentrated multilaterally. To examine these patterns, this manuscript conducts a multi-method analysis using cross-national statistical tests (spanning 18 countries from 1991-2022) and a comparative case study analysis of five Latin American countries, finding that China’s commercial conditionality reflects important strategic linkages that yield a greater prevalence of bilateral restructurings. Ironically, rather than acting as a competing lender of last resort to the IMF, China’s bilateral debt negotiations are often facilitating multilateral debt relief in the Americas, particularly following the IMF’s 2016 reforms. These findings have important implications for the literature on the political economy of sovereign debt, financial globalization, U.S.-China economic relations, and international development.
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About the Speaker
Stephen B. Kaplan is a Professor of Political Science and International Affairs; and a faculty affiliate of the Institute for International Economic Policy. Professor Kaplan's research and teaching interests focus on the frontiers of international and comparative political economy, where he specializes in the political economy of global finance and development, China's foreign investment in developing countries, and Latin American political economy.
In addition to writing two prize-winning books on financial globalization, Globalizing Patient Capital: The Political Economy of Chinese Finance in the Americas (Cambridge University Press, 2021) and Globalization and Austerity Politics in Latin America (Cambridge University Press, 2013), Professor Kaplan has also published articles in many top research journals, including The Journal of Politics, the Review of International Political Economy, the Latin American Research Review, Regulation and Governance, and World Development. His research and commentary has been featured in The Atlantic, Bloomberg News, Foreign Policy, Georgetown Journal of International Affairs, Goldman Sachs's Top of the Mind, the New Republic, NPR’s Marketplace, and The Washington Post. Professor Kaplan holds a Ph.D. from Yale University, an M.S. from Georgetown University, and a post-doctorate fellowship from Princeton University. Prior to his doctoral studies, Professor Kaplan was a senior economic researcher at the Federal Reserve Bank of New York, writing extensively on developing country economics, global finance, and emerging market crises for more than a half-decade.
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