China's first African debt rodeo is playing out in Zambia

• Unable to pay their bills, and unable to restructure their debt, countries like Zambia will be unable to attract any investors to help them them improve their economy — and grow out of poverty.

The big picture: China has agreed, in principle, to help restructure the debt of struggling Africa economies. But the question remains if China is willing, in practice, to take a haircut on any of its loans.

• Zambia, which defaulted on $17 billion of its external debt two years ago, is China's first debt rodeo under the new so-called "Common Framework" program.
• That makes the debt question in Zambia, Africa's second largest copper producer, bigger than just a single country.

Driving the news: The Biden administration and the International Monetary Fund are swinging into action.

• Putting pressure on China, the biggest holder of Zambia’s external debt, has been a central push of Treasury Secretary Janet Yellen’s private and public diplomacy on the first two stops of her 10-day Africa tour.
• "We will continue to press for all official bilateral and private-sector creditors to meaningfully participate in debt relief for Zambia, especially," Yellen told Zambia’s president on Monday. She also called China a "barrier."
• The IMF’s Managing Director Kristalina Georgieva also flew to the capital of Lusaka, where new Chinese-built roads lead onto old British traffic circles, for private talks on Monday.
• China's embassy in Lusaka shot back at Yellen's comments. In a statement, a spokesperson accused the U.S. of "sabotaging" efforts to find a debt solution and needled the U.S. on its own "catastrophic debt problem."

The intrigue: The U.S. and China discussions over Zambia could also be a game of footsie for two countries, testing their willingness to cooperate on a range of global issues after President Biden and President Xi promised to communicate better at the G-20 last November.

• Yellen had a largely positive meeting with her Chinese counterpart, Vice Premier Liu He, in Zurich before heading to Africa.
• And while she has name-checked China in prepared remarks, calling on Beijing to do more, she’s also gone out of way to call the talks with Liu “constructive.”

• A senior Treasury official expressed some optimism that a call could be complete soon, but didn’t specific a timeline.

Go deeper: In response to the global pandemic – which increased the odds of debt defaults in emerging economies – the G-20 in 2020 devised so-called “Common Framework for Debt Treatments.”

• The goal was to create a process that would include China, a new player the lending game, in any likely international debt-relief negotiations.
• Zambia, which elected a new president in 2021 after its default in 2020, asked the IMF for $8.4 billion in debt relief last September, making it the first for the Common Framework program.
• Ethiopia and Ghana have also applied for debt restructuring under the program. (Chad initially applied, but reached an agreement with creditors that didn't involve a restructuring.)

Be smart: As African countries assumed some $700 billion in debt over the last two decades, China emerged as one of the continent's biggest lenders.

• Despite its reach across Africa, Beijing is still a relatively new creditor.
• If China continues to slow-walk the talks, other African countries will be on notice, and it will be clear that Beijing plans to drive a hard bargain.

Editor's note: This article has been corrected to note that roughly $700 billion in outstanding African debt belongs to many countries and institutions, not just China, which has emerged as one of the continent's biggest lenders.