Debt, AI and Ukraine oust China at IMF annual meetings

Finance chiefs from around the world spent the past week in Bangkok debating the biggest risk facing the global economy – with debt, artificial intelligence and trade imbalances topping the list. Meanwhile, China, long a major risk factor in these discussions, was no longer at the top of the list of concerns.

The Bangkok meetings were the first in Asia since 2018, when the gathering was held in Bali, Indonesia. Thailand last hosted the country in 1991, six years before the decoupling of the baht from the U.S. dollar triggered the Asian financial crisis.

Fast forward to 2026, and anything from global imbalances to an AI boom to a massive debt buildup in the “North” could trigger the next financial crisis, said Kevin Gallagher, director of the Global Development Policy Center at Boston University, who spoke to reporters in Beijing after attending IMF and World Bank meetings.

The IMF was optimistic about economies positioned to benefit from the global AI supply chain, such as South Korea, Japan and China, and pessimistic about those that are not, warning that the development of AI is widening gaps between economies.

AI-related borrowing also drives up debt levels and competes with governments for capital, further increasing borrowing costs. The IMF has warned that if AI technology fails to deliver promised productivity gains, it could have serious global economic consequences.

Gallagher said he was monitoring whether the IMF, Federal Reserve and People’s Bank of China could coordinate, or end up going in different directions and “making things worse.”

The US Treasury is at odds with the Fund over its own debt. IMF Managing Director Kristalina Georgieva said strong growth would not be enough to put the United States on a sustainable path, with federal debt above $40 trillion. David Zervos, an adviser to Treasury Secretary Scott Bessent, dismissed the warning. “It’s good to remember how messy their forecasts have been in the past,” he said. “So take all of this with a grain of salt.”

There was also little sign of coordination. Chinese and U.S. financial officials were seated remotely at the G20 finance ministers and central bank governors’ meeting Thursday in Bangkok, according to a plan seen by CNBC.

China’s central bank governor Pan Gongsheng told the International Monetary and Financial Committee on Saturday that China supports closer monitoring by the IMF of the fallout from “fiscal risks in major advanced economies.” He said countries should tackle their own budget deficits, while those running surpluses should boost consumption and investment.

Russia and Ukraine returned to the focus of the week’s meetings as tensions rose. Russian officials were also back in the room at a meeting of G20 finance chiefs on the sidelines of the IMF meeting last Thursday.

Finance Minister Anton Siluanov attended in person for the second time this year, after an August G20 session in Asheville, North Carolina, drew sharp criticism from European leaders who forced him out of a group photo.

German Finance Minister Lars Klingbeil reiterated his dissatisfaction with the presence of the Russian delegation, saying in a statement to CNBC that “pretending that Russia returns as a normal member of the G20 and sits at the table again – that will not happen with me, and it will not happen with other Europeans either.”

Nearly half of the IMFC delegates left the room when Siluanov addressed the group in Russian on Saturday. Ukraine’s central bank chief Andriy Pyshnyi told Reuters he was surprised by the large number of financial officials who expressed solidarity with Ukraine, calling it a “profound and emotional moment.”

After a three-hour meeting Thursday evening, the Group of Seven announced 260 million euros ($300 million) in funding for Ukraine to repair infrastructure at the Chernobyl nuclear power plant, and hopes to raise that amount to 500 million euros – which would finance the entire project – at a donor conference in Paris next month.

The IMF warned that rising public debt was reducing governments’ room to finance priorities such as defense.

China featured prominently at the 2018 IMF meeting, when the US-China trade war was just getting underway. But this year, the panels and interviews have little to say about the country.

Tim Adams, president and CEO of the Washington-based Institute of International Finance, said China rarely came up in conversations during his recent visits to Singapore and Bangkok.

“We would have had a long discussion about the U.S.-China relationship, China’s impact on (export) shock 2.0 in Europe and China’s impact on global trade and global manufacturing. (But) actually we had very little of that,” Adams told CNBC in an interview Friday.

The reason, he says, is that U.S.-China relations appear to have achieved “a certain sense of stability,” leading investors to downplay their concerns about China and view them as a risk.

“The perception is that the relationship is stable and strong, without much visible tension beyond the set of ongoing issues that have existed for some time,” Adams said.

Investors remain reluctant to make direct investments in the country, he said, but are supportive of ongoing Chinese technology IPOs. He also spoke of a real appetite for Chinese bonds, with the currency stable to slightly stronger.

“It seems more like a normal, standard assessment, as if China represents any other risk rather than something unique and special,” Adams said.

—Penny Chen of CNBC contributed to this report.