Debt Sustainability with Chinese Characteristics: Norm Convergence and Its Limits in Sovereign Lending

In 2019, China introduced the Belt and Road Initiative Debt Sustainability Framework (BRI–DSF) for low-income countries (LICs), offering a critical window into sovereign lending risk assessment practices.

The rise of China as a bilateral lender raises the question of how Chinese development finance institutions (DFIs) generate and apply risk signals when lending to LICs, and how their approaches compare with those of traditional and emerging donors.

A new working paper by Tianyi Wu and Marina Zucker-Marques analyzes the design and use of the BRI–DSF and situates it within China’s broader sovereign risk governance architecture.

Main findings:

• The BRI–DSF is heavily modeled on the International Monetary Fund (IMF) and World Bank (WB) framework, borrowing its structure, concepts and much of its language.
• Chinese DFIs have strengthened their reliance on in-house sovereign and country risk indicators, elevating macro-level risk signals above project-level assessments in lending decisions.
• Through comparative process tracing with France and India, the paper shows that China’s approach has evolved in response to rising debt distress and reputational pressures but that this evolution has taken the form of partial rather than full convergence with OECD practices.

The introduction of the BRI–DSF is both a practical response to repayment risks and a reputational strategy aimed at signaling responsible lending behavior. However, the model has also inherited some of the IMF–WB model’s shortcomings. The remaining gaps reflect a need to align the risk assessment practices with the developmental approach that has historically characterized Chinese overseas lending.

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