Exploring a Climate-Linked Debt Restructuring Framework for China’s Lending to the Global South

China has emerged as the world’s largest creditor to developing countries. Since 2016, debt restructurings involving Chinese creditors have increased significantly. Without a comprehensive and pragmatic debt relief framework, defaults are likely to mount in the future, thereby threatening the financial health of Chinese creditors and the sustainability of China’s investments in the Global South. As many low-income and developing countries are facing the dual challenges of debt crises and climate (natural) crises, forming a vicious cycle. Against this backdrop, China should establish a targeted debt relief framework, including debt cancellation conditional on climate (natural) investments and debt-for -climate (natural) swaps. Such a framework would help debtor countries restore fiscal sustainability—serving creditors’ long-term interests—while supporting countries of the Global South in coping with climate impacts, promoting an inclusive global low-carbon transition, and enhancing China’s leadership in global financial architecture and global climate governance.