Sovereign debt, AI and Ukraine crowd out China at IMF annual meetings

The world’s finance chiefs spent last 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 main risk factor in these discussions, was no longer at the top of the worry list.

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

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

The IMF was upbeat on economies positioned to benefit from the global AI supply chain, such as South Korea, Japan and China, and downbeat on those that aren’t, warning that the AI build-out is widening gaps between economies.

AI-related borrowing is also pushing up debt levels and competing with governments for capital, which lifts borrowing costs further. The IMF warned that should AI technology fail to deliver the promised productivity gains, it could trigger severe global economic consequences.

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

The U.S. Treasury is at odds with the Fund over its own debt. IMF Managing Director Kristalina Georgieva said strong growth alone won’t put the U.S. on a sustainable path, with federal debt above $40 trillion. David Zervos, a counselor 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 it all with a grain of salt.”

There were also few signs of coordination. Chinese and U.S. finance officials were seated at a distance at Thursday’s G20 finance ministers’ and central bank governors’ meeting in Bangkok, according to a layout seen by CNBC.

Chinese central bank Governor Pan Gongsheng told the International Monetary and Financial Committee Saturday that China supports stronger Fund monitoring of spillovers from “major advanced economies’ fiscal risks.” He said countries should address their own fiscal deficits, while those running surpluses should boost consumption and investment.

Russia and Ukraine returned as a central focus of the week’s meetings as tensions flared. Russian officials were also back in the room at a G20 finance chiefs’…