Debt, AI and Ukraine many out of China at the annual meeting of the IMF

The world’s financial leaders gathered last week in Bangkok to debate the biggest risks facing the global economy – with debt, artificial intelligence and trade imbalances high on the list. Meanwhile, China, which is the main risk factor in the discussion, is not at the top of the list of worries.

The Bangkok meeting is the first in Asia since 2018, when the meeting was held in Bali, Indonesia. Thailand last hosted in 1991, six years before unpegging the baht from the US dollar triggered the Asian financial crisis.

Fast forward to 2026, and anything from global imbalances to the AI ​​boom or massive debt accumulation in the “Global North” could lead to the next financial crisis, said Kevin Gallagher, director of Boston University’s Center for Global Development Policy, who spoke to reporters in Beijing after attending a meeting of the IMF and the World Bank.

The IMF is optimistic about economies positioned to benefit from global AI supply chains, such as South Korea, Japan and China, and down for those that are not, warning that AI development is widening the gap between economies.

AI-related lending also increases debt levels and competes with governments for capital, which increases borrowing costs. The IMF warns that if AI technology fails to deliver the productivity it promises, it could have severe global economic consequences.

Gallagher said he was watching to see if 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 disagrees with the Fund on its own debt. IMF Managing Director Kristalina Georgieva said strong growth will not put the US on a sustainable path, with a federal debt of more than $40 trillion. David Zervos, an adviser to Treasury Secretary Scott Bessent, dismissed the warning. “It’s good to remember how messed up the predictions were in the past,” he said. “So take everything with a grain of salt.”

There are also some signs of coordination. Chinese and U.S. finance officials sat across from each other at a meeting of G20 finance ministers and central bank governors in Bangkok, according to a layout seen by CNBC.

China’s central bank governor Pan Gongsheng told the International Monetary and Financial Committee on Friday that China supports the Fund’s stronger monitoring of spillovers from “major advanced economies’ fiscal risks”. He said countries should deal with their own fiscal deficits, while running surpluses should boost consumption and investment.

Russia and Ukraine are back as the main focus of the week’s meetings as tensions rise. Russian officials were also back in the room at the 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, following the August G20 session in Asheville, North Carolina, drawing harsh criticism from European leaders who insisted he not participate in 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 “pretend that Russia returns as a normal member of the G20 and sits at the table again – that will not happen to me, and will not happen to other Europeans.”

Nearly half of the IMFC delegation left the room when Siluanov addressed the group in Russian on Saturday. The head of Ukraine’s central bank, Andriy Pyshnyi, told Reuters he was surprised by so many financial officials expressing solidarity with Ukraine, calling it “a deep and emotional moment.”

After a three-hour meeting on Thursday evening, the Group of Seven announced funding of 260 million euros ($300 million) for Ukraine to repair infrastructure at the Chornobyl nuclear power plant, and expects to bring it to 500 million euros – which will pay for the entire project – at a donor conference in Paris next month.

The IMF has warned that rising public debt is squeezing government room to spend on priorities such as defence.

China made a strong appearance at the IMF meeting in 2018 as the US-China trade war was just beginning. But this year, the panel and the interviewer couldn’t talk about the country.

Tim Adams, president and CEO of the Washington, D.C.-based Institute of International Finance, said China rarely spoke during his visits to Singapore and Bangkok.

“We will have a long discussion about US-China relations, China’s influence on it [exports] shock 2.0 in Europe, and China’s influence on global trade and global manufacturing. [But] actually, we’ve had very little,” Adams told CNBC in an interview Friday.

The reason, he said: US-China relations appear to have reached “some sense of stability,” leading investors to dismiss concerns about China as a risk.

“The perception is that the relationship is stable and solid, with no apparent tension beyond the problematic issues that have existed for some time,” Adams said.

Investors remain reluctant to invest directly in the country, he said, but are keen on Chinese tech IPOs in the pipeline. He also cited a real appetite for Chinese bonds, with the currency stable to slightly stronger.

“It seems like just a standard normal assessment, like China is another risk rather than something unique and special,” Adams said.

– CNBC’s Penny Chen contributed to this report.