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Africa's Next Debt Crisis: A Relational Comparison of Chinese and Western Lending to Zambia

Africa's Next Debt Crisis: A Relational Comparison of Chinese and Western Lending to Zambia IntroductionAfrica is facing a new debt crisis. In November 2020, Zambia became the first country to default on its Eurobonds since the coronavirus pandemic broke. Although this crisis unfolded in the shadow of Covid‐19, which deepened poverty, widened inequality, and cast new debt burdens across Africa, the pandemic was only a proximate cause (Gold 2021). Lusaka is likely to be patient zero in a wider and still developing financial crisis that some fear may be the inevitable outcome of a “debt tsunami” that threatens the whole continent (IIF 2020:1). The ultimate cause has been continued borrowing over the preceding decade—a trend spread across sub‐Saharan Africa by assertive lending from China as well as new private creditors from the Organisation for Economic Co‐operation and Development (OECD) (Brautigam 2020; Kragelund 2022). Zambia had borrowed heavily to fund infrastructure with some of the highest per capita Chinese debts in Africa that were in excess of $10.1bn in 2020 (CLA Database 2022), yet these modernisation projects have failed to deliver sustained economic growth (Zajontz 2022a). Despite this new bilateral lending, an IMF (International Monetary Fund) conditional bailout remained on the table (Cotterill 2022), signalling the perseverance of Western financial influence. Amid the global health emergency in 2020, the Zambian economy shrunk as demand for copper was dented by the worldwide downturn. The Zambian kwacha lost a third of its value and Lusaka was unable to meet the demands of multiple creditors. Finance minister Bwalya Ng'andu testified to the seriousness of the morass in the aftermath of the default: “If I pay [Eurobonds], the moment I pay, the other creditors are going to put dynamite under my legs and blow off my legs” (quoted in Cotterill 2020). Zambia's situation was devastating, but not unprecedented. Africa's recent history has been stained by unsustainable borrowing. When the debt crisis of the 1980s bled through the continent, Zambia was at the forefront, among the first nations to face a default and endure a programme of structural adjustment that led to “‘lost decades’ for development” (Brooks 2017:13; Rist 2014). Throughout Africa a brutal pattern of debt‐induced social crises of hunger, health care, education, and civil conflict persisted (Harrison 2010).Four decades apart, both moments of financial crisis have their own characteristics and contingencies. That the African crisis of the 2020s will not be a facsimile of the 1980s is a given: the creditors are different, as are the terms of lending, and the national economic circumstances. Most significant, the global frame has shifted. The way in which the pending Africa‐wide crisis is worked through will reflect the struggles for, and against, Chinese hegemony in the continent (Arrighi 2007; IIF 2020). We follow a Gramscian reading of “hegemony” that recognises the integral nature of economic developments to a dialectical movement of consent and coercion, as “a particularly crucial element of the entire context in which political outcomes like hegemony are generated” (Glassman 2013:249). This urges us “not to neglect the complexity of coercion—such as through the adoption, in China, of rule by law” (Caterina 2021:1366)—but more importantly recognise the “integument of political‐ideological and economic forces in enabling the development of … hegemony” (Glassman 2013:250). Within this, the rise of China's influence in Africa and the coercive and consensual role of debt is debated in two bodies of work. Literature in the fields of International Relations and Political Science has effectively mapped some of the emerging relationships between China and Africa, but positions debt as a distinct policy level in service of wider political goals (see Alden 2007; Brautigam 2009; Large 2021). Alternatively, recent contributions in International Political Economy have again begun to mobilise Harvey's (1982) “spatial fix” to critically theorise global debt relations in the general longue durée of capitalism (Carmody et al. 2021; Zajontz 2022b). Building on such work and taking a lead from Gillian Hart's (2006, 2014, 2018) relational comparisons, we seek to understand the global framework within which the moment of Zambia's current default is situated; the rise of China and the apparent contestation of neoliberalism as a global, but situated, project.We present a discussion on the form of the November 2020 moment, rather than a detailed account of the background to the default, the granularity of which others have begun to unpack in Zambia (Simumba 2018; Zajontz 2022b), as well as for other African debtor nations facing similar defaults including Djibouti, Ethiopia, Kenya (Carmody et al. 2021), Ghana (Akolgo 2022), and Mozambique (Hanlon 2021). Thus, Zambia acts as a signal case for a wider discussion of the relations of force surrounding national external debt while we remain attentive to the specific Zambian conjuncture and avoid the reductive Africa‐is‐a‐country approach (Faloyin 2022): without positioning Africa as peripheral to the functioning of financial circuits but situating Zambia as a significant actor within a global “whole” (Hart 2006). Theorising the extension of capitalist social relations in Africa as a uniform project would be to understate the contingent see‐saw nature of economic logics that often seem contradictory on the surface (Chitonge 2018; Ouma 2017). Thus, as Corbridge (1993:197) notes elsewhere, a “case‐by‐case approach to debt management is misleading insofar as it fixes upon one symptom of this deeper malaise and not upon others”. Following their cue, our relational comparative approach aims to avoid reifying national events and instead considers the broader political economy in which Zambia is embroiled in as an active participant.Yet our argument extends further than this; the current Zambian crisis is discussed in concert with the earlier episode of the 1980s. This is not a case of making analogies between two geo‐historical periods or compiling a list of similarities and differences. As an analytical technique, undertaking such a “crude” comparison is limited to documenting two national moments one after another and providing a descriptive catalogue of local events. That approach funnels the author to a conclusion that reifies the local differences between the episodes, assigning agency to those internal contingencies (McMichael 1990). In contrast, a relational comparison requires us to look at the context beyond the single nation and consider the similarities and differences in the wider global relations of force (Brooks and Herrick 2019; Griffiths and Brooks 2022). Hence, we locate the processes of debt default within a global frame by looking at the borrowers’ relationships to the geographies of international lending while keeping sight of the social dynamics. Most importantly, we approach Chinese financial liquidity as enabling Zambian borrowing in particular ways, which targets, in many ways unsuccessfully, the gradual erosion of Western‐led neoliberal hegemony. Thus, we give methodological primacy to Chinese lending without claiming its ontological dominance over Western lending. In this article we then fix present‐day Zambia within the power‐geometries of financial circuits as a prescient example of the unfolding tragedy of African indebtedness and understand borrowing as something which is at the centre of global affairs (Massey 2005). As such our work advances an understanding of the spatialities of debt that takes the agency of both borrower and lender seriously, rather than primarily providing an empirical summary of Zambia's borrowing or the wider African balance sheet.The article proceeds with our theoretical argument on the agency of debt and positions this work within the emerging literature on relational comparison. We then provide a thumbnail of the two Zambian crises to contextualise how each occurred within different global frames, with the later discussion bookended by the election of President Hakainde Hichilema in August 2020. Following that, we detail our key contributions, which are three‐fold. The first considers the terrain of debt struggles: we draw from Harvey (1996, 2001) in arguing that international lending affords a spatial‐temporal fix for the over‐accumulation of capital. However, following Hart (2006), we argue that the manifestation of debt in African economies is not a mere “effect” of a global capitalism on the “peripheral”, but that indebtedness has a vanguard role in shaping the combined and uneven development of the global economy. Second, we argue that Africa's relationship with debt is part of the extension of Chinese and Western hegemony, and thereby the processes of uneven development, rather than the political economy of Africa passively reflecting the leadership of the world economy. This active notion of hegemony revolves in particular around the contestation of the “development‐as‐modernisation” ideal and the subsequent Chinese‐attempted displacement of neoliberalism as a dominant financial ideology. Finally, we posit that both episodes of debt crisis illustrate, in different ways, how the construction of capitalist hegemony comes to be partly engineered in Zambia. The shift to post‐neoliberal practices of lending by Chinese banks should not understate the continued perseverance of the “Dollar‐Wall Street Regime” but highlights that the solution to economic disaster is a yielding of political power from national to “global” authorities, the human cost of which is borne by the world's poorest.A Critical Geography of Money, Power, and Space in the “African” ContextIn October 2020, as Lusaka was on the brink of defaulting on its Eurobonds, the IMF determined that China overtook the US to become the world's largest economy: a momentous historical watershed that had been anticipated for decades (Arrighi 2007), yet in the midst of the global Covid‐19 pandemic, received little attention (IMF 2020). Against this backdrop the Zambian case provides a moment to analyse the unfolding assertion of Chinese hegemony through debt extension, and the role of Western lenders in framing this shift, thus placing these new economic ties at the forefront of global capitalism (Arrighi 2004). Here we employ Hart's (2018) framework of relational comparison to contribute to a revived interest in the critical geographies of money, power, and space, applied to an “African” context (Carmody et al. 2021; Zajontz 2022a, 2022b). By focusing on the extended relations of Zambia's changing external public debt—the portion of debt borrowed from foreign lenders through national or international institutions—we depart from a “debt‐diplomacy” type of argument that puts capitalist relations purely at the service of geopolitics. Relational comparison allows us to analyse the ways through which Zambian debt naturalises, stabilises, and universalises the material conditions for bourgeois capitalism. In so doing, Zambian debt plays its part in making Chinese economic contestation concrete.Our reading of external debt in turn connects to recent work on the financial geographies of sovereign payment flows. This work breaks from orthodox views of debt as something placed in an idealised realm external from social relations, a beat that reoccurs in work that understands African debt as an important geopolitical lever for “debt‐trap diplomacy” (Brautigam 2020). For instance, then US National Security Advisor, John Bolton, characterised the strategic use of Chinese lending as means to hold “Africa captive to Beijing's wishes and demands” (quoted in Lander and Wong 2018). In contrast, critical work rejects such simplistic framings, arguing that financial ties should not be seen as effects of Chinese geopolitical influence but essential means that establish its hegemony and legibility (Mann 2012). When African leaders acquiesce to new Chinese lending, and the oblique and unfavourable terms that accompany loans (Hanlon 2021), they actively participate in building China's nascent hegemony (Bayart 2009). Still, S. Potts (2020) shows that the role of specific transnational financial flows remains understudied, and subsequently contributes an analysis of creditor litigation against Argentina, highlighting the legal mechanisms through which variegated capitalist relations are extended. Similarly, assemblage inspired work has focused on the way “financial technologies” differentiate themselves in varied contexts, whereby financial inclusion comes to offset accountability into the future (Harker 2021; Kirwan 2021).These recent pieces provide useful insights on the performativity of financial mechanisms, pointing to the concrete practices and (il)legalities that sustain uneven economic relations. Where emphasis is placed on the embedded nature of financial relations, these mechanisms are not necessarily sedimented within the longue durée of global capitalism, therefore missing an engagement with the fundamental capitalist relations that give rise to such exploitations (Alami et al. 2021; Hart 2020). Analysing financial specifics is also tricky when transparency principles hold little sway, as is the case in much of Chinese lending (Africa Confidential 2021). Still, evidence from the context of uneven and global financial subordination in Ghana highlights how such principles shape the conditions of what is possible (Akolgo 2022). Thus, in relation to the assertions of Chinese hegemony, we employ Gillian Hart's framework of relational comparison in order to “illuminate constitutive processes and interconnections, and thereby contribute to the production of concrete conceptions” (Hart 2008:687).Massey's (1991) extroverted sense of place lies centrally within Hart's work, which understands places as comprised of different historical and (de)centralising processes. Where for Massey localities are clearly constituted through extended relations of power, here it allows us to place lender–debt relations in a critical frame that does not take for granted isolated units of analysis. Relational comparison in turn provides an epistemological toolset to study spatial extensions in situ. Crucially, Ekers et al. (2020), in a careful review of Hart's framework, posit that the Gramscian concept of “articulation” is central to the way Hart points to the unfolding processes of uneven development. “For Hart, articulation is a concept that allows her to account for how different relations of class, race, nationalism, and populism become linked to different political economic and hegemonic projects” (Ekers et al. 2020:1580). For example, in Hart's (2019) analysis of authoritarian populism, the use of articulation allows her to see the rise of Trump not as an “aberration” but as actively constituted through the diverse processes of nationalisms and class contradictions. In the context of South Africa, Hart (2002, 2007, 2014) has sought to analyse how specific historiographic processes constitute the lifeworlds of racial capitalism. Here, she argues, the deepening of financialisation occurs not through abstract theorisation but by running up against the “concrete counter‐knowledges situated in the arenas of everyday life” (Hart 2018:374). In other words, by using a conjunctural framework Hart does not merely “apply” a methodological device to an individual “case” but aims to contribute to a political project that critically situates the contradictions of capitalism.We aim to contribute to this developing body of work that looks beyond debt's purely quantitative properties (Harker 2017; Harker and Kirwan 2019; Peebles 2010) and break with the dominant neo‐positivist perspective on Chinese lending in Africa. In the African context, Zajontz (2022b:175) has begun this work, critiquing the International Political Economy “problem‐solving” literature (i.e. Brautigam 2020; Singh 2020) for ignoring the hegemonic powers built through institutional lending practices. The IMF—even as its lending conditionalities continually uphold a cycle of global South debt‐dependency detrimental to sustained growth (Zajontz 2022b)—still happily points to the ideal‐types of debt actors, recently promoting primary budget restructuring in countries such as Mozambique and Zimbabwe as well as Zambia (IMF 2021a, 2021b). An approach that is as a “recipe for stagnation at best” (quoted in Sylla and Doyle 2020), one that will most likely open up new rounds of indebtedness and usher in a repeat of the governance failures of the 1980s debt crisis (Danso 1990). These continuing neoliberal “recovery strategies” again advocated by the IMF, along with the more obscure government‐to‐government lending by China, point to a potential renewed wave of financial violence in different African countries (Bassett 2017), the consequences of which are already starting to unfold in places like Ghana (Akolgo 2022).Debt Crises in ZambiaThe 1980sThe frame of lending and borrowing that covered Africa in debt by the 1980s has its roots in the consolidation of US hegemony post‐World War Two—its histories tracing back to the privatisation and liberalisation of finance within an American‐led global economy (Panitch and Gindin 2004). By the 1960s contradictions in international production had started to fracture the Keynesian class compromise (Cleaver 1989), as working‐class struggles erupted over a variety of frictions in an already globally diversified sphere of production (Braverman 1974; Swyngedouw 1992). Growing balance deficits turned to the global circulation of credit and the outflow of US dollars latched onto markets willing to take up credit (Danso 1990), essentially culminating in the early “diffusion of power through the dollar”, as Seabrooke (2001:68) describes it. Subsequent declining American foreign aid, along with a constrained Eurodollar market, caused a boom in private foreign direct investment as countries sought alternative means for compensatory finance (Alami 2019)—a change further catalysed by Nixon's decision in 1971 to abolish the dollar‐gold conversion, which pried open international markets to the “merits” of American finance capital (Gowan 1999). African sovereign debt was conversely deemed a low‐risk destination for surplus petrodollars and the growing supply of credit increasingly provided a spatial fix for capital (Harvey 2001). This growth in turn directed itself against future returns rather than a country's existing possessions, signalling a further transformation of credit into fictitious capital: “money that is thrown into circulation as capital without any material basis in commodities or productive activity” (Harvey 1982:95).Given this temporal direction of sovereign credit extension, lenders, which included the European nations alongside the US, justified the expansion of borrowing by advocating “inevitable” trajectories of modernisation (Rostow 1959). Trajectories which anticipated economic growth due to the ever‐expanding nature of capital accumulation—by then already strongly contested by critical scholars (Rodney 1980; Warren 1980). With investments going on dams, roads, and factories, or loans spent on consumer imports rather than inputs for industrialisation, economic bets were confidently placed on the relative prosperity of post‐colonial African nations. As Nabudere (1997) puts it, modernisation presented itself as a paradigm for social process, which beyond its structural contradictions (Ferguson 1999), also ran up against normative disintegration in different African contexts. As a social framework it was steeped in structural prejudice, or Eurocentrism, as Samir Amin (1989) convincingly showed, with the “modern” principles of rationality and universalism intimately connected to ideas about Euro‐American superiority (see also Parsons 1966).With most economies across sub‐Saharan Africa entwined into the global economic system, there was no yielding to capital's hold and poor countries resorted to unrestrained borrowing as they bought into the modernisation myth (Corbridge and Thrift 1994). Countries like Zambia committed to new loans in support for consumption, against the background of declining export commodities prices, and exposed themselves to interest payments that would prove unsustainable—lending that consolidated the US control of the international monetary system (Brooks 2017; Ferguson 1999; Panitch and Gindin 2004). Control, wrought through consent and coercion, extended to other capitalist economies, where American penetration “determined that inter‐state tensions were limited to renegotiating the terms of the imperial relationship, not questioning its essence” (Panitch and Gindin 2004:59). Simultaneously, spatial differentiation in production and consumption challenged global capitalism's systemic stability. And when disciplinary mechanisms to adjust to a spiking dollar inflation were crucially missing, especially in the US (Gowan 1999), and as banks became sceptical of long‐term loans returning, a sudden shift to short‐term lending occurred at the end of 1970s (Corbridge 1993). The subsequent crisis of overaccumulation and the Volcker shock sparked a deep global recession in 1981/82 (Harvey 2006). Non‐oil producing developing countries experienced repeated decline in demand for their export commodities. Prices for metals, minerals, and foodstuffs dropped by 28% in 1981/82 and interest payments on loans increased by 75% between 1980 and 1982 (Ferrano and Rosser 1994). Unsurprisingly, given the pervasive hold of US‐directed foreign lending, this sudden decline was partly compensated for by further increases in borrowing for interest relief, extending the reach of financialisation.In August 1982, Mexico was the first to announce it could not pay off its loans: the debt crisis was sparked. By mid‐1982, foreign borrowing had virtually ceased. And for many countries on the African continent, “the 1980s were the start of an ongoing nightmare with average incomes plummeting 30% in real terms between 1980 and 1988” (Hart 2010:126; see also Ghai 1991). The solution, drawn up by the IMF, was to offer conditional loans under the terms of structural adjustment programmes (Grindle 1989). Washington‐backed restructuring, which would become a model for indebted nations everywhere, was marked through with the early stamp of neoliberal ideology and included stark cuts in the public sector as part of a wider rolling back of the state—this “shock therapy” leading to devastating livelihood outcomes for African households across the continent (Harrison 2010). And the democracy spawned through this lending was superficial, as African governments that were supposedly accountable to their electorates were ultimately beholden to their Western creditors (Abrahamsen 2000). The good governance agenda failed to establish stable multiparty democracies, but “helped legitimate the North's continued power and hegemony in the South” (Abrahamsen 2012:48).Before the crisis, Zambia had been on a stable growth trajectory and outperformed most African neighbours, and in the 1960s and 1970s, modern industrial workers employed in mines and factories received relatively high wages and benefitted from modern healthcare and education. Even countries such as Brazil and South Korea were easily eclipsed by its “middle‐income” status (Chang 2008). Given its promising economic performance, the industrialising Copperbelt attracted a steady stream of international investment. Still, Lusaka inherited a debt from the colonial government at independence and borrowed further to fund expected economic growth. External debt stocks as a percent of GNI were at 45.8% in 1970, but this would climb rapidly to 415.6% in 1986, at the peak of the first crisis (World Bank 2020). As cheap petrodollars became available the government first borrowed to fund infrastructure projects and secondly to address the shortfall in consumption resulting from deteriorating terms of trade (Ferguson 1999). In response to the oil‐crisis‐induced international recession, President Kenneth Kaunda's government was hopeful of revitalising the economy through expansionary budgetary policies (Barry 1991). Regardless, a stagnation in global copper prices caused economic hurt as the price of not just oil, but a wide basket of other imports rose starkly against copper, increasing by more than 300% between the 1970s and mid‐1980s (Jamal and Weeks 1993).1 Given this increase in costs and the collapse in copper value, national production dwindled.Operating in tandem with Zambia's relative decline in output was the vicious cycle of new loans to alleviate revenue lost to repayment. Borrowing increased from US$814 million in the early 1970s to US$6,916 million by the end of the 1980s (Situmbeko and Zulu 2004:12). The debt service ratio rose dramatically and exceeded 100% by 1986, by which point the interest on debt was two billion kwacha, equivalent to 40% of the government's budget (Clark and Allison 1989:2). Faced with an impossible financial situation, Lusaka turned to the IMF and the World Bank. Here too the Washington‐based institutions insisted upon a “structural adjustment” of the economy. Imposed intermittently throughout the 1980s, the attached measures included the devaluation of the kwacha and the privatisation of state‐owned corporations and mines (Ferguson 1999). Average per capita incomes plummeted, from a peak in 1981 of $700 to just $250 in 1986 (Brooks 2017:118). The social crisis was deepened by the removal of subsidies on fuel and grain, and prices for basic goods skyrocketed (Jamal and Weeks 1993). By 1994, per capita income had fallen by more than 50% as compared to 1974 (World Bank 1996).Despite these macroeconomic shifts, simplistic critiques of Zambian mismanagement became the predominant explanation for the failure of the principal sector of the economy (e.g. Good 1989). Even crude economic geographies attributed Africa's crisis conditions to the constraints of the “natural environment” (e.g. Collier 2006). Talk of a bloated state bureaucracy (Clark and Allison 1989) and a supposed rural–urban income gap that were to be equalised through such efforts were, as D. Potts (1995) argues, largely exaggerated. The consequences however were not. As President Levy Mwanawasa later stated, the IMF programme of “privatization of crucial state enterprises has led to poverty, asset stripping and job losses” (quoted in BBC News 2003). Between 1980 and 1988 the Zambian food budget rose by more than 650% with wages unable to keep up (Jamal and Weeks 1993). The weakening of import tariffs moreover essentially erased the infant modern industry (Brooks 2010). Structural adjustment left Zambia to the mercy of import liberalisation yet strengthened US imperialism and global capitalism.The precedent of unprecedented lending in Zambia, in particular as born through the World Bank, has created a normative and financial frame that posits economic prosperity as only being facilitated through further lending. Whereas in the 1970s US loans had been handmaiden to the myth of Western “modernisation”, by the late 1980s the strictures of borrowing heralded its breakdown, furthering the financial circuits through which US financial hegemony was asserted (Ferguson 1999; Nabudere 1997). Meaning that, as Panitch and Gindin (2004:47) argue, “the globalization of finance has included the Americanization of finance, and the deepening and extension of financial markets has become more than ever fundamental to the reproduction and universalization of American power”. The efforts to establish “free markets”, in the case of Zambia and other structural adjustment programmes, were explicitly aimed at a reduction in consumption, leading overwhelmingly to a devastating erosion in living standards.While the structural adjustment conditionalities were premised on an abstract conception of a modernisation ladder that placed Africa “behind” the West (Nabudere 1997), the decline of Zambia's living conditions demonstrates that the erosion of the modernist endeavour situated itself onto actual occurring lifeworlds. Ferguson's (1999) ethnography of the 1980s moment then shows the debt crisis was first and foremost a crisis of modernity, and a colossal human tragedy. While the amount of debt in dollars or kwacha gives an abstract picture of the tragedy that befell Zambia, discussing these vast deficits of fictitious capital can never render the human impacts of the crisis. The real cost was in the uncounted number of lessons not taught, life‐saving operations missed, and meals foregone (George 1988). Crises that endured for a generation as the impacts led to persistent poverty in the 1990s and 2000s with the debt crisis not definitively resolved, and albeit on a less seismic scale, cycles of borrowing and lending continued.The 2020sDecades later, Zambia lies on the shoreline of a new, so‐called, African “debt tsunami” (IIF 2020). Now, there are noticeable changes in the space of international development finance. The Washington‐dominated, multilateral “Unholy Trinity” of the World Bank, IMF, and WTO that determined the course of lending to the global South in the late 20th century (Peet 2003) has been joined by new sources of bilateral and private capital. Chinese‐led development finance has received particularly widespread attention (e.g. Alden 2007; Kragelund 2022). Between 2000 and 2020, US$160 billion worth of new Chinese loan commitments were made to African governments or state‐owned enterprises (CLA Database 2022), and the question of a looming debt crisis has increasingly focused on Chinese lending (Brautigam 2022). Despite this growth, other types of lending are collectively greater, with Debt Justice (2022a) calculating that across Africa 35% of government external debt is owed to private Western lenders, whereas only 12% of is owed to Chinese lenders. While Chinese lending is a minority of the total, it is the biggest single lender with its volume far surpassing that of any other Western lender, as well as any of the multilaterals including the World Bank and the European Union (Morris et al. 2020). As the prime lender, Beijing merits special attention, but its pre‐eminence is insufficient to guarantee Chinese financial dominance across Africa.The scale of Chinese loans is highly variegated across African countries; however, it predominates in certain key economies. Drawing on figures up until the end of 2018 (Debt Justice 2022b), China was the greatest source of bilateral debt ($2.0bn) and second only to the World Bank ($2.9bn) in Mozambique. In Kenya debts owed to all the multilateral institutions stood at $11.0bn whereas Chinese debts alone were $7.5bn. In the most extreme case of Angola, China's loans of $17.7bn dwarfed all the other sources of bilateral lending, as well as the collective debt of the IMF, African Development Bank, and World Bank ($3.6bn) (Debt Justice 2022c). Alongside Angola, the countries of Djibouti, the Republic of the Congo, and Zambia receive the majority of Chinese loans, and their commitments, between 2000 and 2019, were over 40% of their GNI (Acker and Brautigam 2021). The public external debt owed by the Zambian government to Chinese creditors was reportedly around US$6.6bn as of August 2021 (Brautigam and Wang 2021), which is much higher than both the official World Bank (2020) data and what the Lungu administration claimed (Africa Confidential 2018; CUTS 2018). Elsewhere, Lusaka's debt to Beijing was reported as $10.1bn in 2020 across 78 loans (CLA Database 2022). Thus, a case like Zambia, where we return to below, may offer a prescient example of China emerging as the most influential lender in Africa.Still, such disparate figures highlight the need to carefully consider the prevalence of Chinese international finance, as it remains difficult to quantify (Horn et al. 2021). Through the support of major infrastructure projects by China's banks, rather than Western‐style budget support, Chinese private firms have indeed gained strong footing in the continent (UNCTAD 2014) but given the direct government‐to‐government nature of financial flows to Africa from China, the real extent of Chinese FDI remains obscured (Lander and Wong 2018). Under the guise of “going out”, bringing Chinese capitalist development to the rest of the world has come in a range of financial options (Lee 2017). The aggressive expansion of Chinese's capital, driven in part by its colossal foreign exchange reserves and actively encouraged from within (Chin and Gallagher 2019), has been packaged in a rather ironic quest for a “harmonious world” which seeks to place a narrative of Chinese “peaceful development” at the forefront (Wang 2010). The opaqueness of Chinese lending is illustrative of its substantive difference to sources of Western finance, but further examination of its attributes illuminates that it is not a simple matter of debt hailing from Beijing as being either better or worse than loans extended from Washington or elsewhere in the West.What is clearer is that the large‐scale lending to certain debtor nations has served to shift attention away from the remaining dominance of the US dollar complex (Güven 2012)—a problematic discursive shift, as the dollar remains the most traded, and primary international reserve, currency (Panitch and Gindin 2018). China being the main purchaser of US Treasury securities also reifies the dollar's global power, with potential geopolitical arm‐twisting requiring large‐scale economic rebalancing on China's part, without necessarily displacing the dollar's global hegemony (Hung 2013). Moreover, the majority of international sovereign bonds and their contractual provisions are also governed under US or UK collective action clauses (IMF 2017). The focus on China's assertive financial expansion, while at times justified, should thus be seen within the growing crisis of confidence over the dollar's perseverance, and at times as the attempted shrouding of Western capitalist determination (Zajontz 2022a).Within this dynamic, Chinese lending has different characteristics to that of Western held loans, is not harmonised with that of the West, and it does not follow the Paris Accords’ conditionalities (Brautigam 2009). Instead, there is a more explicit focus on mutual benefit and the interests of Beijing, a prioritisation of opportunities for Chinese business, and a push towards monumental built projects—including parliaments, sports stadia, bridges, and railways—over budgetary support. This is most abundant in the controversial resource‐backed lending model for financing infrastructure projects, being associated with China's quest for natural resources to furnish its huge industrial base, both of which have grown rapidly in the last two decades. Indeed, Chinese financial engagement in Africa began on a small scale with lending for modernisation in the 1970s and 1980s, including an interest‐free loan for the TAZARA Railway that linked Tanzania and Zambia and clothing and textile factories across Africa (Brooks 2010).Despite this deeper history, which helps bolster a narrative of long‐running South–South cooperation, China's economic footprint in Africa was faint until the turn of the century. The 2006 Forum on China–Africa Cooperation (FOCAC) was herein a watershed in the expansion of Chinese loans. Lending has gone towards infrastructure intended to reduce the cost of production, with contracts tied to Chinese firms, and loans for Chinese machinery and equipment. More than 65% of Chinese loans are for infrastructure versus less than 13% of those from the OECD (Usman 2021). Here, the borrowing country commits future revenues from natural resource exports to pay loans secured from Chinese creditors; such arrangements have been made with the Democratic Republic of Congo (DRC), Ghana, and Guinea (Usman 2021). Moreover, Chinese lending terms often go beyond a rationale of simple economic profitability, as Morris et al. (2020:7) highlight: “More than 90 percent of the Chinese contracts we examined, including all CDB contracts, have clauses that allow the creditor to terminate the contract and demand immediate repayment in case of significant law or policy changes in the debtor or creditor country”.Thus, and perhaps most importantly, Chinese lending signals a clear departure from the neoliberal and globalised models of multilateral lending pushed by the West. Chinese lending rationality moves away from the practices of extending financial influence abroad by the usual Washington‐backed multilaterals (i.e. IMF; World Bank) which focus on affording legitimacy through processes of accountability and transparency (Carmody 2019). Post‐1980s restructuring conditionalities from such lending was explicitly linked to the spread of liberal democratic principles, targeting broader institutional governance and “corruption” (Harrison 2010). Instead, Beijing's lending relies on a pseudo‐public form of state finance. Loans are extended through national agencies, obscured through government‐to‐government negotiation, and spent on Chinese private contractors. In turn, we can conceive of Chinese state entities as facilitators and active participants in the process of reforming overseas political economies (Weber 2018).The particular rationalities applied through the extension of Chinese capital thus challenge a uniform unfolding of capitalist relations through US hegemony. But, as with the US‐inspired programmes of modernisation of the 1970s, this development model is actively embraced by many African leaders including in Namibia, Ghana, Kenya, and Mozambique (Melber 2017). They render it important and vital, and consolidate Chinese political influence, rather than loans and socio‐technologies being passively adopted, although the individual beneficial arrangements between local elites and Beijing often remain obscured to the wider populace (Dobler 2008). Where for the US financial mechanisms under the banner of transparency and reform heralded in the new age of imperialism (Panitch and Gindin 2014), Chinese hegemony then becomes constituted through related, but further obscured, indebted relations (Meulbroek 2022). As Chris Alden (2019:283) thus notes, China's development finance is a direct and often secretive procedure with many African countries actively adopting “Look East” policies that fit China's “alternative model of modernization without necessarily subscribing to liberal democracy”.Against this global background, here we highlight the varying facets of national debt in Zambia as it was in 2020, starting with the essential copper sector. First, the changing price and demand of copper forced Zambia into a precarious situation. In the nine months before the November 2020 default, copper prices were at a dramatic low—the latest set‐back to a moribund sector. The decline saw Glencore, the Swiss‐owned mining company, sell its stake in the Mopani Copper Mines to a state‐controlled investment body (Hume and Cotterill 2021). Glencore's exit was not surprising (Reid and Shabalala 2020). Falling copper prices during the 2010s and increasing taxation by the Zambian government put severe pressure on mining companies, and its assets, mostly held by private companies, have subsequently formed a preferred collateral for Chinese lenders (Africa Confidential 2019). The selling‐off of various Zambian mines has marked an indirect favourable avenue for Chinese financial flows to actualise, however, as the Mopani Copper Mines were acquired by a state‐owned mining company which took on $1.5 billion in debt from Chinese lenders (Wexler and Bariyo 2021). With such influence, Chinese companies are poised to take over this and other state‐owned mines in the face of further defaults. Extending loans under such precarious conditions has been, from a Chinese perspective, a productive endeavour: a low‐risk (indirect) investment opportunity where the social and environmental costs are borne by Zambians (Dobler and Kesselring 2019). These shifts highlight the strategic readjustment of Beijing's financial approach, fostering its own “developmental” capacities distinct from those that herald from Washington (Alami et al. 2021). A seeming difference from US‐led lending, while there are no structural adjustment programmes in place, Chinese lending still holds conditionalities.Similar to early Western capital‐intensive infrastructural financing, China has fostered a redux of modernisation in Zambia by lending heavily to support new infrastructure projects. This includes the $2 billion 750‐megawatt Kafue Gorge Lower hydropower station funded by the Exim Bank of China. Speaking at its commissioning, President Edgar Lungu celebrated the Chinese‐funded modernisation of the economy: “It is no secret that my government continues to invest in roads, clinics and hospitals, airports and power infrastructure…” (quoted in Hydro Review 2021). Borrowing for projects such as Kafue Gorge Lower are characterised by Xinhua, China's state‐run press agency, as unambiguously progressive: “There is … no doubt that Chinese overseas investment has gone a long way in transforming not only economies around the world but in improving people's lives” (quoted in Xinhua 2021). However, contrary to Xinhua's celebratory tone, the social benefits of Chinese megaprojects typically have limited extent (Large 2021); even that same article only cites an increase in commerce for local traders and temporary employment during the construction phase of the Kafue hydropower station. Small gains thus far, for a multi‐billion‐dollar loan that is helping push Zambia over the brink of debt crisis. Meanwhile the costs for Zambians are high, as Lungu implicitly acknowledged later in his speech: “The economic gains that will accrue from these investments will no doubt benefit our country and outlive not just the current hurdles but will benefit all of us who are present here” (quoted in Hydro Review 2021). Those hurdles being the already unsustainable interest payments.In Zambia as with elsewhere in Africa, the distribution of benefits follows the pattern of Chinese lending principally to pay contracts for Chinese companies, employing Chinese experts and sometimes Chinese labour working with Chinese machines and materials (Lee 2017). An extension of the historical “technical assistance” so central to the US foreign policy in the “aiding” of overseas infrastructure, as for instance in the Ethiopian Blue Nile investigations (Sneddon 2015). More impending are Chinese investments that are orientated towards supplying raw materials or fuels for the Chinese economy, such as copper mines and cotton ginneries in Zambia, or gas drilling in Angola and Mozambique (Gelpern et al. 2021). The revenues generated from primary commodity exports service the debts that enable their extraction—a virtuous circle for China. To date the developmental outcomes of Chinese‐funded infrastructure in Zambia have been very limited and the positive social footprint of these projects small (Zajontz 2022a). Chinese expat staff live enclaved lives with few spill‐over benefits to African economies. Employment conditions for local workers within these enterprises are often insufficient to sustain basic needs, nor is the work modern and meaningful, but rather low‐wage and exploitative (Brooks 2010). This stands in stark contrast to the development models of high modernisation, where clear contours of growth and de‐growth (through structural adjustment programmes) were sketched by the IMF and World Bank (Greig et al. 2007), even if only symbolically. What we are witnessing here is the development of Zambian infrastructure not under the guise of modernisation as a social measure (Ferguson 2006) but modernisation for the simple sake of extending the reach of capital. The Chinese‐led alternate model of modernity brings order in the shape of new roads and airports and rationalises the state ownership of mines, all of which is underpinned by lending inserted into spaces that were hitherto reductively thought of as marginal to global capitalism (Collier 2006).Unsurprisingly, Chinese encroachment on Western financial hegemony in Zambia has not gone unnoticed. At the end of 2017, the World Bank published the ironically titled report “How Zambia Can Borrow Without Sorrow” (Smith et al. 2017), a tone‐deaf title that elides the decades of punishing sorrow that resulted from 40 years of Western lending. Already on the verge of its Eurobond default, the report highlighted how Zambia should stop borrowing from sources outside of the Development Assistance Committee (DAC) co‐operation programme, to stop its sorrow—that is, from Chinese sources. At this point, national debt stood at 60.5% of its GDP, almost double the amount in 2014, at a total of $5 billion (Smith et al. 2017). Zambia had throughout the entirety of 2016 been in a near state of debt crisis and showed signs of borrowing at an unsustainable pace, according to the IMF (2016). In 2016, $1.7 billion, equivalent to 50% of all new loans contracted that year, was lent by Chinese sources (Simumba 2018:5). A seemingly cyclical narrative about debt restructuring inevitably resurfaced. Western lenders called for a clarification of the opaque debt conditions surrounding Zambia's financial situation, particularly as Chinese loans were often only added to the government's debt stock retrospectively.By mid‐2018, Zambia's foreign reserve dwindled amidst final efforts to stave off default on its Eurobonds. Reportedly, at this point, China was the largest creditor and accounted for 28% of Zambia's debt (Simumba 2018:5). Yet the search for new loans resumed, to continue previously blocked infrastructural projects such as the Lusaka–Ndola Road ($1.2 billion) and Kenneth Kaunda International Airport. The Chinese Exim Bank has been the predominant lender of such renewed government‐to‐government loans. Restructuring involves small write‐offs, however, in exchange for the take up of new infrastructural loans. These loans, including for the Lusaka–Ndola project, involve a direct investment into Chinese contractors, bypassing the local economy almost entirely (Zajontz 2022a). Hereby the timeline of immediate debt repayment is pushed back, but the total amount of debt and national dependency is increased, with Beijing becoming the most important lender for Lusaka. In contrast, however, in November 2020 the hammer came down as Zambia missed its October and November coupon payments on its $3bn of Eurobonds (Cotterill and Stubbington 2020). The aftermath was a fallout with the IMF, who had previously refused to bailout the Lungu government in 2016 over concern that they were not committed to a reform programme, evidencing the diminished authority of the DAC lenders. The IMF and Zambia resumed talks in 2021, but with no progress ahead of the mid‐year presidential ballot.We stop the clock on our empirical discussion of Zambia with the defeat of the Lungu government in the August 2021 elections. Lungu's campaign had been anchored around his success in building new infrastructure and securing governmental control of Zambia's mines, but the shallowness of this modernisation and the limited benefits of nationalisation were evident to the Zambians that rejected him at the ballot box. The nascent human impacts of the next African debt crisis—soaring inflation, a cost‐of‐living crisis, rampant joblessness, and a widespread struggle to meet basic needs—led the electorate to pick long‐term rival Hakainde Hichilema as president (Nshimbi 2021). On taking up office Hichilema faced the daunting prospect of managing a weak economy and unserviceable debt obligations.In 2021 the global frame of hegemony in which Zambia was situated was one that had been redrawn by the rise of China. But it was not one where debt was just a geopolitical policy lever being pulled by China; rather, the very process of lending money out, in and of itself, has helped propel Beijing's ascendency. The spread of financialisation, the modernisation of Zambian space, and the competition for authority over the Zambian state's balance sheet were all enabled by debt. In effect the rise of China was being partially subsidised by the lending of fictitious capital to pay for Chinese goods, services, and even labour. In concert, the limited and strategic modernisation of the Zambian economy opened up new territory for capital accumulation by Chinese businesses that were first in line for copper exports (Simumba 2018) and road construction (Zajontz 2022a). Lending to Zambia might quantitatively be relatively insignificant on the global scale, yet similar processes elsewhere in Africa, and also in, for example, Sri Lanka, Myanmar, and Pakistan, cumulatively help underwrite the triumph of Chinese bourgeoise capitalism (Arrighi 2007). Four decades earlier the global frame of hegemony that the first debt crisis occurred within was one in which, having grown its hegemony through financial imperialism, the West had determined that modernity had failed in Africa (Ferguson 1999), and instead it was regarded as a redundant space of capitalism ill‐suited to industry. Since the early 1980s the dual forces of coordinated DAC lending and neoliberal structural adjustment mobilised Africa as a space for financialisation. Zambia was at the forefront of this process and the government in Lusaka was permanently weakened and prone to the disciplining power of subsequent rounds of lending by new powers rich in liquidity, yet leaders like Lungu have themselves been active in the renewed redux of the Chinese infrastructural growth as modernisation.Africa's Next Debt Crisis?We have sketched out the architecture of Africa's next debt crisis by using Zambia's nascent experience as a model to illustrate how African indebtedness is anchored within emerging Chinese efforts at financial hegemony. Relational comparison has enabled us to draw together the default crises of the 1980s and 2020s, with each episode of borrowing occurring within contrasting global frames. Frames that are evolving through the debt crises, rather than African indebtedness being a collateral effect of the progression of capitalism elsewhere. In the 1980s structural adjustment programmes hit hard and early in Africa, in lockstep, if not before, the general neoliberal crisis that engulfed North America and Europe. As such we should consider how the coming debt crisis and the primacy of Chinese alterative modernity in Africa may be foreshadowing a future receding of neoliberalism, or an already ongoing crisis of its legitimacy.2 We argue that the arc of history is bent by the political economy of Africa rather than through disassociated global processes, such as “neoliberalism” or “the rise of China”, happening off‐stage and later alighting on the world's poorest continent. Our analysis has discussed the connections between borrowing and modernity, lending and authority, and debt restructuring and poverty. It has not been a comparison as a list of similarities and differences between geo‐historic moments four decades apart, rather we have drawn on lessons from the past to contextualise the present.To conclude we finish with our three key contributions. Our first concerns scale; although the unsustainable loans cast a huge shadow over the local balance sheet, Zambia's multi‐billion debt is small on a global scale. As such the world's poorest continent provides only a small sink to spatially “fix” the trillions of dollars of over‐accumulated capital held by China. Yet this relationship between lender and borrower can be read the other way around, as the African fix enables China and Western financial logics to actually be hegemonic, extending the explanatory power of Harvey‐style arguments (e.g. Carmody et al. 2021). Advancing loans in these spaces—which are clearly very active rather than peripheral or redundant spaces of global capitalism—expands financial imperialism. Our discussion on debts as social relations illustrate it is the African borrowing, not the existence of Chinese surplus capital, which is building China's global influence.Secondly, drawing analysis across both the 1970s/1980s and the contemporary moment together demonstrates how different modalities of development become materialised in African states. In both eras versions of development‐as‐modernisation have been projected by lenders and willingly received by borrowers. Chinese models of modernisation recall earlier modes of big infrastructure funding, where Western lending has instead come to prioritise interest payments over infrastructural development. A shift focused less on modernisation as a social programme, with associated structural adjustments, liberalisation, and Western “technical assistance”; instead, Chinese financial rationality hinges on the explicit extension of capitalist relations into spaces hitherto deemed peripheral, with conditional loans that must be spent on Chinese contracts, labour, and experts. The underwriting of Chinese ownership of infrastructure, an even deeper conditionality, is a fundamental difference to projects being relinquished to the neoliberal whim of the global economy (and the US dollar complex). That new influential development models hail from Beijing rather than Washington has been a product of a wide‐ranging financial process, yet these global shifts are not external to Africa but are material forces being cemented in spaces of African indebtedness.Finally, both episodes of unsustainable borrowing resulted in defaults due to the flawed models of development they financed, yet the 1980s and the subsequent lost decades for development demonstrated how the cost of these failures are ultimately paid for by the indebted population and not the lenders that co‐authored the programmes. The uneven development born through the 1980s Zambian default, and similar financial crises across Africa and elsewhere in the global South, resulted in a strengthening of US hegemony at the cost of a deepening of poverty (Harrison 2010). As the global frame has shifted with the nascent global hegemony of Beijing, our relational comparison leads us to conclude that the contestation of the US dollar complex will sadly bring more economic suffering for the world's poorest. The fictitious capital of debt becomes real and tragically comprehensible when it leads to declines in education, untreated illnesses, and empty stomachs. Such disasters cannot be measured in dollars, kwacha, or renminbi, but are human crises ultimately marked by the loss of life.AcknowledgementsJoris Gort is supported by the ESRC (ES/P000703/1) and King's College London as a member of the London Interdisciplinary Social Sciences Doctoral Training Partnership. We would like to thank colleagues and friends at King's College London who have indirectly, emotionally, supported us during the writing process. We would also like to thank the editor, Stefan Ouma, and three anonymous referees for their constructive comments on earlier versions.Data Availability StatementData sharing not applicable to this article as no datasets were generated or analysed during the current study.Endnotes1Published numerical data on income and debt as it pertains to the African continent often contains known weaknesses. Sporadic and uneven data, key to World Bank and IMF database conceptions of economies, thus rarely provides conclusive evidence on the more extensive state of economic and social change (Jerven 2013).2Western governments’ development financial commitments are both shrinking and becoming re‐tied to specific geopolitical objectives. Take for example the UK's shift of aid money to support Ukrainian refugees resettled in Britain.ReferencesAbrahamsen R (2000) Discipling Democracy: Development Discourse and Good Governance in Africa. 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New York: RoutledgeWexler A and Bariyo N (2021) After default, Zambia's outsized bet on copper could play into China's hands. The Wall Street Journal 27 April https://www.wsj.com/articles/after-default-zambias-outsized-bet-on-copper-could-play-into-chinas-hands-11619514520 (last accessed 12 December 2022)World Bank (1996) “World Development Report 1996: From Plan to Market.” https://openknowledge.worldbank.org/handle/10986/5979 (last accessed 12 December 2022)World Bank (2020) “External Debt Stocks, Total (DOD, Current US$)—Zambia.” https://data.worldbank.org/indicator/DT.DOD.DECT.CD?locations=ZM (last accessed 12 December 2022)Xinhua (2021) China‐funded projects, investments transforming Zambian lives. 25 July http://www.xinhuanet.com/english/africa/2021-07/25/c_1310083403.htm (last accessed 9 December 2022)Zajontz T (2022a) The Chinese infrastructural fix in Africa: Lessons from the Sino‐Zambian “road bonanza”. Oxford Development Studies 50(1):14–29Zajontz T (2022b) Debt, distress, dispossession: Towards a critical political economy of Africa's financial dependency. Review of African Political Economy 49(171):173–183 http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Antipode Wiley

Africa's Next Debt Crisis: A Relational Comparison of Chinese and Western Lending to Zambia

Gort, Joris; Brooks, Andrew
Antipode , Volume 55 (3) – May 1, 2023
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0066-4812
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Abstract

IntroductionAfrica is facing a new debt crisis. In November 2020, Zambia became the first country to default on its Eurobonds since the coronavirus pandemic broke. Although this crisis unfolded in the shadow of Covid‐19, which deepened poverty, widened inequality, and cast new debt burdens across Africa, the pandemic was only a proximate cause (Gold 2021). Lusaka is likely to be patient zero in a wider and still developing financial crisis that some fear may be the inevitable outcome of a “debt tsunami” that threatens the whole continent (IIF 2020:1). The ultimate cause has been continued borrowing over the preceding decade—a trend spread across sub‐Saharan Africa by assertive lending from China as well as new private creditors from the Organisation for Economic Co‐operation and Development (OECD) (Brautigam 2020; Kragelund 2022). Zambia had borrowed heavily to fund infrastructure with some of the highest per capita Chinese debts in Africa that were in excess of $10.1bn in 2020 (CLA Database 2022), yet these modernisation projects have failed to deliver sustained economic growth (Zajontz 2022a). Despite this new bilateral lending, an IMF (International Monetary Fund) conditional bailout remained on the table (Cotterill 2022), signalling the perseverance of Western financial influence. Amid the global health emergency in 2020, the Zambian economy shrunk as demand for copper was dented by the worldwide downturn. The Zambian kwacha lost a third of its value and Lusaka was unable to meet the demands of multiple creditors. Finance minister Bwalya Ng'andu testified to the seriousness of the morass in the aftermath of the default: “If I pay [Eurobonds], the moment I pay, the other creditors are going to put dynamite under my legs and blow off my legs” (quoted in Cotterill 2020). Zambia's situation was devastating, but not unprecedented. Africa's recent history has been stained by unsustainable borrowing. When the debt crisis of the 1980s bled through the continent, Zambia was at the forefront, among the first nations to face a default and endure a programme of structural adjustment that led to “‘lost decades’ for development” (Brooks 2017:13; Rist 2014). Throughout Africa a brutal pattern of debt‐induced social crises of hunger, health care, education, and civil conflict persisted (Harrison 2010).Four decades apart, both moments of financial crisis have their own characteristics and contingencies. That the African crisis of the 2020s will not be a facsimile of the 1980s is a given: the creditors are different, as are the terms of lending, and the national economic circumstances. Most significant, the global frame has shifted. The way in which the pending Africa‐wide crisis is worked through will reflect the struggles for, and against, Chinese hegemony in the continent (Arrighi 2007; IIF 2020). We follow a Gramscian reading of “hegemony” that recognises the integral nature of economic developments to a dialectical movement of consent and coercion, as “a particularly crucial element of the entire context in which political outcomes like hegemony are generated” (Glassman 2013:249). This urges us “not to neglect the complexity of coercion—such as through the adoption, in China, of rule by law” (Caterina 2021:1366)—but more importantly recognise the “integument of political‐ideological and economic forces in enabling the development of … hegemony” (Glassman 2013:250). Within this, the rise of China's influence in Africa and the coercive and consensual role of debt is debated in two bodies of work. Literature in the fields of International Relations and Political Science has effectively mapped some of the emerging relationships between China and Africa, but positions debt as a distinct policy level in service of wider political goals (see Alden 2007; Brautigam 2009; Large 2021). Alternatively, recent contributions in International Political Economy have again begun to mobilise Harvey's (1982) “spatial fix” to critically theorise global debt relations in the general longue durée of capitalism (Carmody et al. 2021; Zajontz 2022b). Building on such work and taking a lead from Gillian Hart's (2006, 2014, 2018) relational comparisons, we seek to understand the global framework within which the moment of Zambia's current default is situated; the rise of China and the apparent contestation of neoliberalism as a global, but situated, project.We present a discussion on the form of the November 2020 moment, rather than a detailed account of the background to the default, the granularity of which others have begun to unpack in Zambia (Simumba 2018; Zajontz 2022b), as well as for other African debtor nations facing similar defaults including Djibouti, Ethiopia, Kenya (Carmody et al. 2021), Ghana (Akolgo 2022), and Mozambique (Hanlon 2021). Thus, Zambia acts as a signal case for a wider discussion of the relations of force surrounding national external debt while we remain attentive to the specific Zambian conjuncture and avoid the reductive Africa‐is‐a‐country approach (Faloyin 2022): without positioning Africa as peripheral to the functioning of financial circuits but situating Zambia as a significant actor within a global “whole” (Hart 2006). Theorising the extension of capitalist social relations in Africa as a uniform project would be to understate the contingent see‐saw nature of economic logics that often seem contradictory on the surface (Chitonge 2018; Ouma 2017). Thus, as Corbridge (1993:197) notes elsewhere, a “case‐by‐case approach to debt management is misleading insofar as it fixes upon one symptom of this deeper malaise and not upon others”. Following their cue, our relational comparative approach aims to avoid reifying national events and instead considers the broader political economy in which Zambia is embroiled in as an active participant.Yet our argument extends further than this; the current Zambian crisis is discussed in concert with the earlier episode of the 1980s. This is not a case of making analogies between two geo‐historical periods or compiling a list of similarities and differences. As an analytical technique, undertaking such a “crude” comparison is limited to documenting two national moments one after another and providing a descriptive catalogue of local events. That approach funnels the author to a conclusion that reifies the local differences between the episodes, assigning agency to those internal contingencies (McMichael 1990). In contrast, a relational comparison requires us to look at the context beyond the single nation and consider the similarities and differences in the wider global relations of force (Brooks and Herrick 2019; Griffiths and Brooks 2022). Hence, we locate the processes of debt default within a global frame by looking at the borrowers’ relationships to the geographies of international lending while keeping sight of the social dynamics. Most importantly, we approach Chinese financial liquidity as enabling Zambian borrowing in particular ways, which targets, in many ways unsuccessfully, the gradual erosion of Western‐led neoliberal hegemony. Thus, we give methodological primacy to Chinese lending without claiming its ontological dominance over Western lending. In this article we then fix present‐day Zambia within the power‐geometries of financial circuits as a prescient example of the unfolding tragedy of African indebtedness and understand borrowing as something which is at the centre of global affairs (Massey 2005). As such our work advances an understanding of the spatialities of debt that takes the agency of both borrower and lender seriously, rather than primarily providing an empirical summary of Zambia's borrowing or the wider African balance sheet.The article proceeds with our theoretical argument on the agency of debt and positions this work within the emerging literature on relational comparison. We then provide a thumbnail of the two Zambian crises to contextualise how each occurred within different global frames, with the later discussion bookended by the election of President Hakainde Hichilema in August 2020. Following that, we detail our key contributions, which are three‐fold. The first considers the terrain of debt struggles: we draw from Harvey (1996, 2001) in arguing that international lending affords a spatial‐temporal fix for the over‐accumulation of capital. However, following Hart (2006), we argue that the manifestation of debt in African economies is not a mere “effect” of a global capitalism on the “peripheral”, but that indebtedness has a vanguard role in shaping the combined and uneven development of the global economy. Second, we argue that Africa's relationship with debt is part of the extension of Chinese and Western hegemony, and thereby the processes of uneven development, rather than the political economy of Africa passively reflecting the leadership of the world economy. This active notion of hegemony revolves in particular around the contestation of the “development‐as‐modernisation” ideal and the subsequent Chinese‐attempted displacement of neoliberalism as a dominant financial ideology. Finally, we posit that both episodes of debt crisis illustrate, in different ways, how the construction of capitalist hegemony comes to be partly engineered in Zambia. The shift to post‐neoliberal practices of lending by Chinese banks should not understate the continued perseverance of the “Dollar‐Wall Street Regime” but highlights that the solution to economic disaster is a yielding of political power from national to “global” authorities, the human cost of which is borne by the world's poorest.A Critical Geography of Money, Power, and Space in the “African” ContextIn October 2020, as Lusaka was on the brink of defaulting on its Eurobonds, the IMF determined that China overtook the US to become the world's largest economy: a momentous historical watershed that had been anticipated for decades (Arrighi 2007), yet in the midst of the global Covid‐19 pandemic, received little attention (IMF 2020). Against this backdrop the Zambian case provides a moment to analyse the unfolding assertion of Chinese hegemony through debt extension, and the role of Western lenders in framing this shift, thus placing these new economic ties at the forefront of global capitalism (Arrighi 2004). Here we employ Hart's (2018) framework of relational comparison to contribute to a revived interest in the critical geographies of money, power, and space, applied to an “African” context (Carmody et al. 2021; Zajontz 2022a, 2022b). By focusing on the extended relations of Zambia's changing external public debt—the portion of debt borrowed from foreign lenders through national or international institutions—we depart from a “debt‐diplomacy” type of argument that puts capitalist relations purely at the service of geopolitics. Relational comparison allows us to analyse the ways through which Zambian debt naturalises, stabilises, and universalises the material conditions for bourgeois capitalism. In so doing, Zambian debt plays its part in making Chinese economic contestation concrete.Our reading of external debt in turn connects to recent work on the financial geographies of sovereign payment flows. This work breaks from orthodox views of debt as something placed in an idealised realm external from social relations, a beat that reoccurs in work that understands African debt as an important geopolitical lever for “debt‐trap diplomacy” (Brautigam 2020). For instance, then US National Security Advisor, John Bolton, characterised the strategic use of Chinese lending as means to hold “Africa captive to Beijing's wishes and demands” (quoted in Lander and Wong 2018). In contrast, critical work rejects such simplistic framings, arguing that financial ties should not be seen as effects of Chinese geopolitical influence but essential means that establish its hegemony and legibility (Mann 2012). When African leaders acquiesce to new Chinese lending, and the oblique and unfavourable terms that accompany loans (Hanlon 2021), they actively participate in building China's nascent hegemony (Bayart 2009). Still, S. Potts (2020) shows that the role of specific transnational financial flows remains understudied, and subsequently contributes an analysis of creditor litigation against Argentina, highlighting the legal mechanisms through which variegated capitalist relations are extended. Similarly, assemblage inspired work has focused on the way “financial technologies” differentiate themselves in varied contexts, whereby financial inclusion comes to offset accountability into the future (Harker 2021; Kirwan 2021).These recent pieces provide useful insights on the performativity of financial mechanisms, pointing to the concrete practices and (il)legalities that sustain uneven economic relations. Where emphasis is placed on the embedded nature of financial relations, these mechanisms are not necessarily sedimented within the longue durée of global capitalism, therefore missing an engagement with the fundamental capitalist relations that give rise to such exploitations (Alami et al. 2021; Hart 2020). Analysing financial specifics is also tricky when transparency principles hold little sway, as is the case in much of Chinese lending (Africa Confidential 2021). Still, evidence from the context of uneven and global financial subordination in Ghana highlights how such principles shape the conditions of what is possible (Akolgo 2022). Thus, in relation to the assertions of Chinese hegemony, we employ Gillian Hart's framework of relational comparison in order to “illuminate constitutive processes and interconnections, and thereby contribute to the production of concrete conceptions” (Hart 2008:687).Massey's (1991) extroverted sense of place lies centrally within Hart's work, which understands places as comprised of different historical and (de)centralising processes. Where for Massey localities are clearly constituted through extended relations of power, here it allows us to place lender–debt relations in a critical frame that does not take for granted isolated units of analysis. Relational comparison in turn provides an epistemological toolset to study spatial extensions in situ. Crucially, Ekers et al. (2020), in a careful review of Hart's framework, posit that the Gramscian concept of “articulation” is central to the way Hart points to the unfolding processes of uneven development. “For Hart, articulation is a concept that allows her to account for how different relations of class, race, nationalism, and populism become linked to different political economic and hegemonic projects” (Ekers et al. 2020:1580). For example, in Hart's (2019) analysis of authoritarian populism, the use of articulation allows her to see the rise of Trump not as an “aberration” but as actively constituted through the diverse processes of nationalisms and class contradictions. In the context of South Africa, Hart (2002, 2007, 2014) has sought to analyse how specific historiographic processes constitute the lifeworlds of racial capitalism. Here, she argues, the deepening of financialisation occurs not through abstract theorisation but by running up against the “concrete counter‐knowledges situated in the arenas of everyday life” (Hart 2018:374). In other words, by using a conjunctural framework Hart does not merely “apply” a methodological device to an individual “case” but aims to contribute to a political project that critically situates the contradictions of capitalism.We aim to contribute to this developing body of work that looks beyond debt's purely quantitative properties (Harker 2017; Harker and Kirwan 2019; Peebles 2010) and break with the dominant neo‐positivist perspective on Chinese lending in Africa. In the African context, Zajontz (2022b:175) has begun this work, critiquing the International Political Economy “problem‐solving” literature (i.e. Brautigam 2020; Singh 2020) for ignoring the hegemonic powers built through institutional lending practices. The IMF—even as its lending conditionalities continually uphold a cycle of global South debt‐dependency detrimental to sustained growth (Zajontz 2022b)—still happily points to the ideal‐types of debt actors, recently promoting primary budget restructuring in countries such as Mozambique and Zimbabwe as well as Zambia (IMF 2021a, 2021b). An approach that is as a “recipe for stagnation at best” (quoted in Sylla and Doyle 2020), one that will most likely open up new rounds of indebtedness and usher in a repeat of the governance failures of the 1980s debt crisis (Danso 1990). These continuing neoliberal “recovery strategies” again advocated by the IMF, along with the more obscure government‐to‐government lending by China, point to a potential renewed wave of financial violence in different African countries (Bassett 2017), the consequences of which are already starting to unfold in places like Ghana (Akolgo 2022).Debt Crises in ZambiaThe 1980sThe frame of lending and borrowing that covered Africa in debt by the 1980s has its roots in the consolidation of US hegemony post‐World War Two—its histories tracing back to the privatisation and liberalisation of finance within an American‐led global economy (Panitch and Gindin 2004). By the 1960s contradictions in international production had started to fracture the Keynesian class compromise (Cleaver 1989), as working‐class struggles erupted over a variety of frictions in an already globally diversified sphere of production (Braverman 1974; Swyngedouw 1992). Growing balance deficits turned to the global circulation of credit and the outflow of US dollars latched onto markets willing to take up credit (Danso 1990), essentially culminating in the early “diffusion of power through the dollar”, as Seabrooke (2001:68) describes it. Subsequent declining American foreign aid, along with a constrained Eurodollar market, caused a boom in private foreign direct investment as countries sought alternative means for compensatory finance (Alami 2019)—a change further catalysed by Nixon's decision in 1971 to abolish the dollar‐gold conversion, which pried open international markets to the “merits” of American finance capital (Gowan 1999). African sovereign debt was conversely deemed a low‐risk destination for surplus petrodollars and the growing supply of credit increasingly provided a spatial fix for capital (Harvey 2001). This growth in turn directed itself against future returns rather than a country's existing possessions, signalling a further transformation of credit into fictitious capital: “money that is thrown into circulation as capital without any material basis in commodities or productive activity” (Harvey 1982:95).Given this temporal direction of sovereign credit extension, lenders, which included the European nations alongside the US, justified the expansion of borrowing by advocating “inevitable” trajectories of modernisation (Rostow 1959). Trajectories which anticipated economic growth due to the ever‐expanding nature of capital accumulation—by then already strongly contested by critical scholars (Rodney 1980; Warren 1980). With investments going on dams, roads, and factories, or loans spent on consumer imports rather than inputs for industrialisation, economic bets were confidently placed on the relative prosperity of post‐colonial African nations. As Nabudere (1997) puts it, modernisation presented itself as a paradigm for social process, which beyond its structural contradictions (Ferguson 1999), also ran up against normative disintegration in different African contexts. As a social framework it was steeped in structural prejudice, or Eurocentrism, as Samir Amin (1989) convincingly showed, with the “modern” principles of rationality and universalism intimately connected to ideas about Euro‐American superiority (see also Parsons 1966).With most economies across sub‐Saharan Africa entwined into the global economic system, there was no yielding to capital's hold and poor countries resorted to unrestrained borrowing as they bought into the modernisation myth (Corbridge and Thrift 1994). Countries like Zambia committed to new loans in support for consumption, against the background of declining export commodities prices, and exposed themselves to interest payments that would prove unsustainable—lending that consolidated the US control of the international monetary system (Brooks 2017; Ferguson 1999; Panitch and Gindin 2004). Control, wrought through consent and coercion, extended to other capitalist economies, where American penetration “determined that inter‐state tensions were limited to renegotiating the terms of the imperial relationship, not questioning its essence” (Panitch and Gindin 2004:59). Simultaneously, spatial differentiation in production and consumption challenged global capitalism's systemic stability. And when disciplinary mechanisms to adjust to a spiking dollar inflation were crucially missing, especially in the US (Gowan 1999), and as banks became sceptical of long‐term loans returning, a sudden shift to short‐term lending occurred at the end of 1970s (Corbridge 1993). The subsequent crisis of overaccumulation and the Volcker shock sparked a deep global recession in 1981/82 (Harvey 2006). Non‐oil producing developing countries experienced repeated decline in demand for their export commodities. Prices for metals, minerals, and foodstuffs dropped by 28% in 1981/82 and interest payments on loans increased by 75% between 1980 and 1982 (Ferrano and Rosser 1994). Unsurprisingly, given the pervasive hold of US‐directed foreign lending, this sudden decline was partly compensated for by further increases in borrowing for interest relief, extending the reach of financialisation.In August 1982, Mexico was the first to announce it could not pay off its loans: the debt crisis was sparked. By mid‐1982, foreign borrowing had virtually ceased. And for many countries on the African continent, “the 1980s were the start of an ongoing nightmare with average incomes plummeting 30% in real terms between 1980 and 1988” (Hart 2010:126; see also Ghai 1991). The solution, drawn up by the IMF, was to offer conditional loans under the terms of structural adjustment programmes (Grindle 1989). Washington‐backed restructuring, which would become a model for indebted nations everywhere, was marked through with the early stamp of neoliberal ideology and included stark cuts in the public sector as part of a wider rolling back of the state—this “shock therapy” leading to devastating livelihood outcomes for African households across the continent (Harrison 2010). And the democracy spawned through this lending was superficial, as African governments that were supposedly accountable to their electorates were ultimately beholden to their Western creditors (Abrahamsen 2000). The good governance agenda failed to establish stable multiparty democracies, but “helped legitimate the North's continued power and hegemony in the South” (Abrahamsen 2012:48).Before the crisis, Zambia had been on a stable growth trajectory and outperformed most African neighbours, and in the 1960s and 1970s, modern industrial workers employed in mines and factories received relatively high wages and benefitted from modern healthcare and education. Even countries such as Brazil and South Korea were easily eclipsed by its “middle‐income” status (Chang 2008). Given its promising economic performance, the industrialising Copperbelt attracted a steady stream of international investment. Still, Lusaka inherited a debt from the colonial government at independence and borrowed further to fund expected economic growth. External debt stocks as a percent of GNI were at 45.8% in 1970, but this would climb rapidly to 415.6% in 1986, at the peak of the first crisis (World Bank 2020). As cheap petrodollars became available the government first borrowed to fund infrastructure projects and secondly to address the shortfall in consumption resulting from deteriorating terms of trade (Ferguson 1999). In response to the oil‐crisis‐induced international recession, President Kenneth Kaunda's government was hopeful of revitalising the economy through expansionary budgetary policies (Barry 1991). Regardless, a stagnation in global copper prices caused economic hurt as the price of not just oil, but a wide basket of other imports rose starkly against copper, increasing by more than 300% between the 1970s and mid‐1980s (Jamal and Weeks 1993).1 Given this increase in costs and the collapse in copper value, national production dwindled.Operating in tandem with Zambia's relative decline in output was the vicious cycle of new loans to alleviate revenue lost to repayment. Borrowing increased from US$814 million in the early 1970s to US$6,916 million by the end of the 1980s (Situmbeko and Zulu 2004:12). The debt service ratio rose dramatically and exceeded 100% by 1986, by which point the interest on debt was two billion kwacha, equivalent to 40% of the government's budget (Clark and Allison 1989:2). Faced with an impossible financial situation, Lusaka turned to the IMF and the World Bank. Here too the Washington‐based institutions insisted upon a “structural adjustment” of the economy. Imposed intermittently throughout the 1980s, the attached measures included the devaluation of the kwacha and the privatisation of state‐owned corporations and mines (Ferguson 1999). Average per capita incomes plummeted, from a peak in 1981 of $700 to just $250 in 1986 (Brooks 2017:118). The social crisis was deepened by the removal of subsidies on fuel and grain, and prices for basic goods skyrocketed (Jamal and Weeks 1993). By 1994, per capita income had fallen by more than 50% as compared to 1974 (World Bank 1996).Despite these macroeconomic shifts, simplistic critiques of Zambian mismanagement became the predominant explanation for the failure of the principal sector of the economy (e.g. Good 1989). Even crude economic geographies attributed Africa's crisis conditions to the constraints of the “natural environment” (e.g. Collier 2006). Talk of a bloated state bureaucracy (Clark and Allison 1989) and a supposed rural–urban income gap that were to be equalised through such efforts were, as D. Potts (1995) argues, largely exaggerated. The consequences however were not. As President Levy Mwanawasa later stated, the IMF programme of “privatization of crucial state enterprises has led to poverty, asset stripping and job losses” (quoted in BBC News 2003). Between 1980 and 1988 the Zambian food budget rose by more than 650% with wages unable to keep up (Jamal and Weeks 1993). The weakening of import tariffs moreover essentially erased the infant modern industry (Brooks 2010). Structural adjustment left Zambia to the mercy of import liberalisation yet strengthened US imperialism and global capitalism.The precedent of unprecedented lending in Zambia, in particular as born through the World Bank, has created a normative and financial frame that posits economic prosperity as only being facilitated through further lending. Whereas in the 1970s US loans had been handmaiden to the myth of Western “modernisation”, by the late 1980s the strictures of borrowing heralded its breakdown, furthering the financial circuits through which US financial hegemony was asserted (Ferguson 1999; Nabudere 1997). Meaning that, as Panitch and Gindin (2004:47) argue, “the globalization of finance has included the Americanization of finance, and the deepening and extension of financial markets has become more than ever fundamental to the reproduction and universalization of American power”. The efforts to establish “free markets”, in the case of Zambia and other structural adjustment programmes, were explicitly aimed at a reduction in consumption, leading overwhelmingly to a devastating erosion in living standards.While the structural adjustment conditionalities were premised on an abstract conception of a modernisation ladder that placed Africa “behind” the West (Nabudere 1997), the decline of Zambia's living conditions demonstrates that the erosion of the modernist endeavour situated itself onto actual occurring lifeworlds. Ferguson's (1999) ethnography of the 1980s moment then shows the debt crisis was first and foremost a crisis of modernity, and a colossal human tragedy. While the amount of debt in dollars or kwacha gives an abstract picture of the tragedy that befell Zambia, discussing these vast deficits of fictitious capital can never render the human impacts of the crisis. The real cost was in the uncounted number of lessons not taught, life‐saving operations missed, and meals foregone (George 1988). Crises that endured for a generation as the impacts led to persistent poverty in the 1990s and 2000s with the debt crisis not definitively resolved, and albeit on a less seismic scale, cycles of borrowing and lending continued.The 2020sDecades later, Zambia lies on the shoreline of a new, so‐called, African “debt tsunami” (IIF 2020). Now, there are noticeable changes in the space of international development finance. The Washington‐dominated, multilateral “Unholy Trinity” of the World Bank, IMF, and WTO that determined the course of lending to the global South in the late 20th century (Peet 2003) has been joined by new sources of bilateral and private capital. Chinese‐led development finance has received particularly widespread attention (e.g. Alden 2007; Kragelund 2022). Between 2000 and 2020, US$160 billion worth of new Chinese loan commitments were made to African governments or state‐owned enterprises (CLA Database 2022), and the question of a looming debt crisis has increasingly focused on Chinese lending (Brautigam 2022). Despite this growth, other types of lending are collectively greater, with Debt Justice (2022a) calculating that across Africa 35% of government external debt is owed to private Western lenders, whereas only 12% of is owed to Chinese lenders. While Chinese lending is a minority of the total, it is the biggest single lender with its volume far surpassing that of any other Western lender, as well as any of the multilaterals including the World Bank and the European Union (Morris et al. 2020). As the prime lender, Beijing merits special attention, but its pre‐eminence is insufficient to guarantee Chinese financial dominance across Africa.The scale of Chinese loans is highly variegated across African countries; however, it predominates in certain key economies. Drawing on figures up until the end of 2018 (Debt Justice 2022b), China was the greatest source of bilateral debt ($2.0bn) and second only to the World Bank ($2.9bn) in Mozambique. In Kenya debts owed to all the multilateral institutions stood at $11.0bn whereas Chinese debts alone were $7.5bn. In the most extreme case of Angola, China's loans of $17.7bn dwarfed all the other sources of bilateral lending, as well as the collective debt of the IMF, African Development Bank, and World Bank ($3.6bn) (Debt Justice 2022c). Alongside Angola, the countries of Djibouti, the Republic of the Congo, and Zambia receive the majority of Chinese loans, and their commitments, between 2000 and 2019, were over 40% of their GNI (Acker and Brautigam 2021). The public external debt owed by the Zambian government to Chinese creditors was reportedly around US$6.6bn as of August 2021 (Brautigam and Wang 2021), which is much higher than both the official World Bank (2020) data and what the Lungu administration claimed (Africa Confidential 2018; CUTS 2018). Elsewhere, Lusaka's debt to Beijing was reported as $10.1bn in 2020 across 78 loans (CLA Database 2022). Thus, a case like Zambia, where we return to below, may offer a prescient example of China emerging as the most influential lender in Africa.Still, such disparate figures highlight the need to carefully consider the prevalence of Chinese international finance, as it remains difficult to quantify (Horn et al. 2021). Through the support of major infrastructure projects by China's banks, rather than Western‐style budget support, Chinese private firms have indeed gained strong footing in the continent (UNCTAD 2014) but given the direct government‐to‐government nature of financial flows to Africa from China, the real extent of Chinese FDI remains obscured (Lander and Wong 2018). Under the guise of “going out”, bringing Chinese capitalist development to the rest of the world has come in a range of financial options (Lee 2017). The aggressive expansion of Chinese's capital, driven in part by its colossal foreign exchange reserves and actively encouraged from within (Chin and Gallagher 2019), has been packaged in a rather ironic quest for a “harmonious world” which seeks to place a narrative of Chinese “peaceful development” at the forefront (Wang 2010). The opaqueness of Chinese lending is illustrative of its substantive difference to sources of Western finance, but further examination of its attributes illuminates that it is not a simple matter of debt hailing from Beijing as being either better or worse than loans extended from Washington or elsewhere in the West.What is clearer is that the large‐scale lending to certain debtor nations has served to shift attention away from the remaining dominance of the US dollar complex (Güven 2012)—a problematic discursive shift, as the dollar remains the most traded, and primary international reserve, currency (Panitch and Gindin 2018). China being the main purchaser of US Treasury securities also reifies the dollar's global power, with potential geopolitical arm‐twisting requiring large‐scale economic rebalancing on China's part, without necessarily displacing the dollar's global hegemony (Hung 2013). Moreover, the majority of international sovereign bonds and their contractual provisions are also governed under US or UK collective action clauses (IMF 2017). The focus on China's assertive financial expansion, while at times justified, should thus be seen within the growing crisis of confidence over the dollar's perseverance, and at times as the attempted shrouding of Western capitalist determination (Zajontz 2022a).Within this dynamic, Chinese lending has different characteristics to that of Western held loans, is not harmonised with that of the West, and it does not follow the Paris Accords’ conditionalities (Brautigam 2009). Instead, there is a more explicit focus on mutual benefit and the interests of Beijing, a prioritisation of opportunities for Chinese business, and a push towards monumental built projects—including parliaments, sports stadia, bridges, and railways—over budgetary support. This is most abundant in the controversial resource‐backed lending model for financing infrastructure projects, being associated with China's quest for natural resources to furnish its huge industrial base, both of which have grown rapidly in the last two decades. Indeed, Chinese financial engagement in Africa began on a small scale with lending for modernisation in the 1970s and 1980s, including an interest‐free loan for the TAZARA Railway that linked Tanzania and Zambia and clothing and textile factories across Africa (Brooks 2010).Despite this deeper history, which helps bolster a narrative of long‐running South–South cooperation, China's economic footprint in Africa was faint until the turn of the century. The 2006 Forum on China–Africa Cooperation (FOCAC) was herein a watershed in the expansion of Chinese loans. Lending has gone towards infrastructure intended to reduce the cost of production, with contracts tied to Chinese firms, and loans for Chinese machinery and equipment. More than 65% of Chinese loans are for infrastructure versus less than 13% of those from the OECD (Usman 2021). Here, the borrowing country commits future revenues from natural resource exports to pay loans secured from Chinese creditors; such arrangements have been made with the Democratic Republic of Congo (DRC), Ghana, and Guinea (Usman 2021). Moreover, Chinese lending terms often go beyond a rationale of simple economic profitability, as Morris et al. (2020:7) highlight: “More than 90 percent of the Chinese contracts we examined, including all CDB contracts, have clauses that allow the creditor to terminate the contract and demand immediate repayment in case of significant law or policy changes in the debtor or creditor country”.Thus, and perhaps most importantly, Chinese lending signals a clear departure from the neoliberal and globalised models of multilateral lending pushed by the West. Chinese lending rationality moves away from the practices of extending financial influence abroad by the usual Washington‐backed multilaterals (i.e. IMF; World Bank) which focus on affording legitimacy through processes of accountability and transparency (Carmody 2019). Post‐1980s restructuring conditionalities from such lending was explicitly linked to the spread of liberal democratic principles, targeting broader institutional governance and “corruption” (Harrison 2010). Instead, Beijing's lending relies on a pseudo‐public form of state finance. Loans are extended through national agencies, obscured through government‐to‐government negotiation, and spent on Chinese private contractors. In turn, we can conceive of Chinese state entities as facilitators and active participants in the process of reforming overseas political economies (Weber 2018).The particular rationalities applied through the extension of Chinese capital thus challenge a uniform unfolding of capitalist relations through US hegemony. But, as with the US‐inspired programmes of modernisation of the 1970s, this development model is actively embraced by many African leaders including in Namibia, Ghana, Kenya, and Mozambique (Melber 2017). They render it important and vital, and consolidate Chinese political influence, rather than loans and socio‐technologies being passively adopted, although the individual beneficial arrangements between local elites and Beijing often remain obscured to the wider populace (Dobler 2008). Where for the US financial mechanisms under the banner of transparency and reform heralded in the new age of imperialism (Panitch and Gindin 2014), Chinese hegemony then becomes constituted through related, but further obscured, indebted relations (Meulbroek 2022). As Chris Alden (2019:283) thus notes, China's development finance is a direct and often secretive procedure with many African countries actively adopting “Look East” policies that fit China's “alternative model of modernization without necessarily subscribing to liberal democracy”.Against this global background, here we highlight the varying facets of national debt in Zambia as it was in 2020, starting with the essential copper sector. First, the changing price and demand of copper forced Zambia into a precarious situation. In the nine months before the November 2020 default, copper prices were at a dramatic low—the latest set‐back to a moribund sector. The decline saw Glencore, the Swiss‐owned mining company, sell its stake in the Mopani Copper Mines to a state‐controlled investment body (Hume and Cotterill 2021). Glencore's exit was not surprising (Reid and Shabalala 2020). Falling copper prices during the 2010s and increasing taxation by the Zambian government put severe pressure on mining companies, and its assets, mostly held by private companies, have subsequently formed a preferred collateral for Chinese lenders (Africa Confidential 2019). The selling‐off of various Zambian mines has marked an indirect favourable avenue for Chinese financial flows to actualise, however, as the Mopani Copper Mines were acquired by a state‐owned mining company which took on $1.5 billion in debt from Chinese lenders (Wexler and Bariyo 2021). With such influence, Chinese companies are poised to take over this and other state‐owned mines in the face of further defaults. Extending loans under such precarious conditions has been, from a Chinese perspective, a productive endeavour: a low‐risk (indirect) investment opportunity where the social and environmental costs are borne by Zambians (Dobler and Kesselring 2019). These shifts highlight the strategic readjustment of Beijing's financial approach, fostering its own “developmental” capacities distinct from those that herald from Washington (Alami et al. 2021). A seeming difference from US‐led lending, while there are no structural adjustment programmes in place, Chinese lending still holds conditionalities.Similar to early Western capital‐intensive infrastructural financing, China has fostered a redux of modernisation in Zambia by lending heavily to support new infrastructure projects. This includes the $2 billion 750‐megawatt Kafue Gorge Lower hydropower station funded by the Exim Bank of China. Speaking at its commissioning, President Edgar Lungu celebrated the Chinese‐funded modernisation of the economy: “It is no secret that my government continues to invest in roads, clinics and hospitals, airports and power infrastructure…” (quoted in Hydro Review 2021). Borrowing for projects such as Kafue Gorge Lower are characterised by Xinhua, China's state‐run press agency, as unambiguously progressive: “There is … no doubt that Chinese overseas investment has gone a long way in transforming not only economies around the world but in improving people's lives” (quoted in Xinhua 2021). However, contrary to Xinhua's celebratory tone, the social benefits of Chinese megaprojects typically have limited extent (Large 2021); even that same article only cites an increase in commerce for local traders and temporary employment during the construction phase of the Kafue hydropower station. Small gains thus far, for a multi‐billion‐dollar loan that is helping push Zambia over the brink of debt crisis. Meanwhile the costs for Zambians are high, as Lungu implicitly acknowledged later in his speech: “The economic gains that will accrue from these investments will no doubt benefit our country and outlive not just the current hurdles but will benefit all of us who are present here” (quoted in Hydro Review 2021). Those hurdles being the already unsustainable interest payments.In Zambia as with elsewhere in Africa, the distribution of benefits follows the pattern of Chinese lending principally to pay contracts for Chinese companies, employing Chinese experts and sometimes Chinese labour working with Chinese machines and materials (Lee 2017). An extension of the historical “technical assistance” so central to the US foreign policy in the “aiding” of overseas infrastructure, as for instance in the Ethiopian Blue Nile investigations (Sneddon 2015). More impending are Chinese investments that are orientated towards supplying raw materials or fuels for the Chinese economy, such as copper mines and cotton ginneries in Zambia, or gas drilling in Angola and Mozambique (Gelpern et al. 2021). The revenues generated from primary commodity exports service the debts that enable their extraction—a virtuous circle for China. To date the developmental outcomes of Chinese‐funded infrastructure in Zambia have been very limited and the positive social footprint of these projects small (Zajontz 2022a). Chinese expat staff live enclaved lives with few spill‐over benefits to African economies. Employment conditions for local workers within these enterprises are often insufficient to sustain basic needs, nor is the work modern and meaningful, but rather low‐wage and exploitative (Brooks 2010). This stands in stark contrast to the development models of high modernisation, where clear contours of growth and de‐growth (through structural adjustment programmes) were sketched by the IMF and World Bank (Greig et al. 2007), even if only symbolically. What we are witnessing here is the development of Zambian infrastructure not under the guise of modernisation as a social measure (Ferguson 2006) but modernisation for the simple sake of extending the reach of capital. The Chinese‐led alternate model of modernity brings order in the shape of new roads and airports and rationalises the state ownership of mines, all of which is underpinned by lending inserted into spaces that were hitherto reductively thought of as marginal to global capitalism (Collier 2006).Unsurprisingly, Chinese encroachment on Western financial hegemony in Zambia has not gone unnoticed. At the end of 2017, the World Bank published the ironically titled report “How Zambia Can Borrow Without Sorrow” (Smith et al. 2017), a tone‐deaf title that elides the decades of punishing sorrow that resulted from 40 years of Western lending. Already on the verge of its Eurobond default, the report highlighted how Zambia should stop borrowing from sources outside of the Development Assistance Committee (DAC) co‐operation programme, to stop its sorrow—that is, from Chinese sources. At this point, national debt stood at 60.5% of its GDP, almost double the amount in 2014, at a total of $5 billion (Smith et al. 2017). Zambia had throughout the entirety of 2016 been in a near state of debt crisis and showed signs of borrowing at an unsustainable pace, according to the IMF (2016). In 2016, $1.7 billion, equivalent to 50% of all new loans contracted that year, was lent by Chinese sources (Simumba 2018:5). A seemingly cyclical narrative about debt restructuring inevitably resurfaced. Western lenders called for a clarification of the opaque debt conditions surrounding Zambia's financial situation, particularly as Chinese loans were often only added to the government's debt stock retrospectively.By mid‐2018, Zambia's foreign reserve dwindled amidst final efforts to stave off default on its Eurobonds. Reportedly, at this point, China was the largest creditor and accounted for 28% of Zambia's debt (Simumba 2018:5). Yet the search for new loans resumed, to continue previously blocked infrastructural projects such as the Lusaka–Ndola Road ($1.2 billion) and Kenneth Kaunda International Airport. The Chinese Exim Bank has been the predominant lender of such renewed government‐to‐government loans. Restructuring involves small write‐offs, however, in exchange for the take up of new infrastructural loans. These loans, including for the Lusaka–Ndola project, involve a direct investment into Chinese contractors, bypassing the local economy almost entirely (Zajontz 2022a). Hereby the timeline of immediate debt repayment is pushed back, but the total amount of debt and national dependency is increased, with Beijing becoming the most important lender for Lusaka. In contrast, however, in November 2020 the hammer came down as Zambia missed its October and November coupon payments on its $3bn of Eurobonds (Cotterill and Stubbington 2020). The aftermath was a fallout with the IMF, who had previously refused to bailout the Lungu government in 2016 over concern that they were not committed to a reform programme, evidencing the diminished authority of the DAC lenders. The IMF and Zambia resumed talks in 2021, but with no progress ahead of the mid‐year presidential ballot.We stop the clock on our empirical discussion of Zambia with the defeat of the Lungu government in the August 2021 elections. Lungu's campaign had been anchored around his success in building new infrastructure and securing governmental control of Zambia's mines, but the shallowness of this modernisation and the limited benefits of nationalisation were evident to the Zambians that rejected him at the ballot box. The nascent human impacts of the next African debt crisis—soaring inflation, a cost‐of‐living crisis, rampant joblessness, and a widespread struggle to meet basic needs—led the electorate to pick long‐term rival Hakainde Hichilema as president (Nshimbi 2021). On taking up office Hichilema faced the daunting prospect of managing a weak economy and unserviceable debt obligations.In 2021 the global frame of hegemony in which Zambia was situated was one that had been redrawn by the rise of China. But it was not one where debt was just a geopolitical policy lever being pulled by China; rather, the very process of lending money out, in and of itself, has helped propel Beijing's ascendency. The spread of financialisation, the modernisation of Zambian space, and the competition for authority over the Zambian state's balance sheet were all enabled by debt. In effect the rise of China was being partially subsidised by the lending of fictitious capital to pay for Chinese goods, services, and even labour. In concert, the limited and strategic modernisation of the Zambian economy opened up new territory for capital accumulation by Chinese businesses that were first in line for copper exports (Simumba 2018) and road construction (Zajontz 2022a). Lending to Zambia might quantitatively be relatively insignificant on the global scale, yet similar processes elsewhere in Africa, and also in, for example, Sri Lanka, Myanmar, and Pakistan, cumulatively help underwrite the triumph of Chinese bourgeoise capitalism (Arrighi 2007). Four decades earlier the global frame of hegemony that the first debt crisis occurred within was one in which, having grown its hegemony through financial imperialism, the West had determined that modernity had failed in Africa (Ferguson 1999), and instead it was regarded as a redundant space of capitalism ill‐suited to industry. Since the early 1980s the dual forces of coordinated DAC lending and neoliberal structural adjustment mobilised Africa as a space for financialisation. Zambia was at the forefront of this process and the government in Lusaka was permanently weakened and prone to the disciplining power of subsequent rounds of lending by new powers rich in liquidity, yet leaders like Lungu have themselves been active in the renewed redux of the Chinese infrastructural growth as modernisation.Africa's Next Debt Crisis?We have sketched out the architecture of Africa's next debt crisis by using Zambia's nascent experience as a model to illustrate how African indebtedness is anchored within emerging Chinese efforts at financial hegemony. Relational comparison has enabled us to draw together the default crises of the 1980s and 2020s, with each episode of borrowing occurring within contrasting global frames. Frames that are evolving through the debt crises, rather than African indebtedness being a collateral effect of the progression of capitalism elsewhere. In the 1980s structural adjustment programmes hit hard and early in Africa, in lockstep, if not before, the general neoliberal crisis that engulfed North America and Europe. As such we should consider how the coming debt crisis and the primacy of Chinese alterative modernity in Africa may be foreshadowing a future receding of neoliberalism, or an already ongoing crisis of its legitimacy.2 We argue that the arc of history is bent by the political economy of Africa rather than through disassociated global processes, such as “neoliberalism” or “the rise of China”, happening off‐stage and later alighting on the world's poorest continent. Our analysis has discussed the connections between borrowing and modernity, lending and authority, and debt restructuring and poverty. It has not been a comparison as a list of similarities and differences between geo‐historic moments four decades apart, rather we have drawn on lessons from the past to contextualise the present.To conclude we finish with our three key contributions. Our first concerns scale; although the unsustainable loans cast a huge shadow over the local balance sheet, Zambia's multi‐billion debt is small on a global scale. As such the world's poorest continent provides only a small sink to spatially “fix” the trillions of dollars of over‐accumulated capital held by China. Yet this relationship between lender and borrower can be read the other way around, as the African fix enables China and Western financial logics to actually be hegemonic, extending the explanatory power of Harvey‐style arguments (e.g. Carmody et al. 2021). Advancing loans in these spaces—which are clearly very active rather than peripheral or redundant spaces of global capitalism—expands financial imperialism. Our discussion on debts as social relations illustrate it is the African borrowing, not the existence of Chinese surplus capital, which is building China's global influence.Secondly, drawing analysis across both the 1970s/1980s and the contemporary moment together demonstrates how different modalities of development become materialised in African states. In both eras versions of development‐as‐modernisation have been projected by lenders and willingly received by borrowers. Chinese models of modernisation recall earlier modes of big infrastructure funding, where Western lending has instead come to prioritise interest payments over infrastructural development. A shift focused less on modernisation as a social programme, with associated structural adjustments, liberalisation, and Western “technical assistance”; instead, Chinese financial rationality hinges on the explicit extension of capitalist relations into spaces hitherto deemed peripheral, with conditional loans that must be spent on Chinese contracts, labour, and experts. The underwriting of Chinese ownership of infrastructure, an even deeper conditionality, is a fundamental difference to projects being relinquished to the neoliberal whim of the global economy (and the US dollar complex). That new influential development models hail from Beijing rather than Washington has been a product of a wide‐ranging financial process, yet these global shifts are not external to Africa but are material forces being cemented in spaces of African indebtedness.Finally, both episodes of unsustainable borrowing resulted in defaults due to the flawed models of development they financed, yet the 1980s and the subsequent lost decades for development demonstrated how the cost of these failures are ultimately paid for by the indebted population and not the lenders that co‐authored the programmes. The uneven development born through the 1980s Zambian default, and similar financial crises across Africa and elsewhere in the global South, resulted in a strengthening of US hegemony at the cost of a deepening of poverty (Harrison 2010). As the global frame has shifted with the nascent global hegemony of Beijing, our relational comparison leads us to conclude that the contestation of the US dollar complex will sadly bring more economic suffering for the world's poorest. The fictitious capital of debt becomes real and tragically comprehensible when it leads to declines in education, untreated illnesses, and empty stomachs. Such disasters cannot be measured in dollars, kwacha, or renminbi, but are human crises ultimately marked by the loss of life.AcknowledgementsJoris Gort is supported by the ESRC (ES/P000703/1) and King's College London as a member of the London Interdisciplinary Social Sciences Doctoral Training Partnership. We would like to thank colleagues and friends at King's College London who have indirectly, emotionally, supported us during the writing process. We would also like to thank the editor, Stefan Ouma, and three anonymous referees for their constructive comments on earlier versions.Data Availability StatementData sharing not applicable to this article as no datasets were generated or analysed during the current study.Endnotes1Published numerical data on income and debt as it pertains to the African continent often contains known weaknesses. Sporadic and uneven data, key to World Bank and IMF database conceptions of economies, thus rarely provides conclusive evidence on the more extensive state of economic and social change (Jerven 2013).2Western governments’ development financial commitments are both shrinking and becoming re‐tied to specific geopolitical objectives. Take for example the UK's shift of aid money to support Ukrainian refugees resettled in Britain.ReferencesAbrahamsen R (2000) Discipling Democracy: Development Discourse and Good Governance in Africa. 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Journal

Antipode – Wiley

Published: May 1, 2023

Keywords: Africa; China; debt crisis; relational comparison; Zambia

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