what would stop Zimbabwe from telling China to jump in a lake
withregards to collecting its debt collateral, and refusing to
provideChina with either the land it promised or with other
concessions pursuant to a debt restructuring? What would be China's
options for reacting to such a declaration? Presumably there's some
kind of international court that arbitrates this sort of thing, but
what if Zimbabwe tells that court to jump in a lake too?
Collateral and Self-Help
China is not likely not have land in Zimbabwe as collateral. Land would be an unlikely form of collateral because it is hard to seize and China doesn't want or need or have a use for land in a bankrupt African nation. Instead, China very likely might have:
international monetary reserves in foreign banks as collateral, which could easily be seized.
collateral in the form of Chinese trade goods en route to Zimbabwe.
loan disbursements from other businesses and organizations that lend money to Zimbabwe.
goods sitting in warehouses in Zimbabwe.
China also probably provides something to Zimbabwe that it needs on a regular basis, perhaps food exports or coal or some other stable whose shipments could be suspended if payment was not made.
Other permutations on this theme are possible.
Suppose that China was building a cell phone and Internet network for Zimbabwe. China could probably shut down that network. And, since consumer banking in Africa is mostly conducted via cell phone, it could effectively shut down the payment and banking system for the country as well by doing so.
Suppose that China supplied advance military supplies like guided missiles, aircraft, etc. to Zimbabwe. It might have including "kill codes" in the firmware that serves that equipment to render it useless.
There is not an international court for this kind of thing. The debt agreement would specify a dispute resolution forum. It could be international arbitration (which is not a court, but would be enforced in the domestic court of some country controlling assets from which China could collect its debt afterwards), it could be enforced directly in Zimbabwe's domestic courts, it could be enforced in the courts of some other country with jurisdiction over key assets of Zimbabwe (such as a Swiss court with jurisdiction over international monetary reserves kept in Swiss banks).
Zimbabwe's domestic courts could and often would order it to pay the debt to China, but how strong rule of law is in Zimbabwe is hard to determine. There are also financial institutions that could insure China against the political risk of an unlawful debt default, either through an insurance policy or some form of derivative contract.
Litigation by holders of Venezuelan bond holders in U.S. courts to collect their defaulted sovereign bond debts which is ongoing as of 2020, is an example of the kinds of litigation that could be utilized. There was first an international arbitration panel set up on an ad hoc basis in the bond instruments, and then a suit in U.S. District Court to enforce the $1.2 billion arbitration award against various guarantors and collateral subject to the U.S. District Court's jurisdiction.
Impact On Sovereign Credit Rating
A brazen default on Zimbabwe's international debts without justification would also probably destroy its ability to raise funds by borrowing from anyone else who would fear the same treatment in turn, or would at least increase greatly the cost of acquiring such loans from new lenders. And, presumably it borrowed money in the first place because it needed it for something and will need to borrow more in the future.
Presumably, the end result would be some military goons, from China or
elsewhere, come into Zimbabwe and make the governmental decision
makers "mysteriously disappear" overnight, and that becomes that,
The United States conducted a series of military invasions of this type called the Banana Wars in Central America between 1898 and 1934. This would be an unlikely choice for China today, but it certainly isn't unprecedented.
In the classical era, it was common for one country to invade another and then withdraw conditional on paying tributes to the conquering country with the implicit understanding that the invasion would be repeated if the tributes were note paid.
It wouldn't take an all out war.
China could dispatch small numbers of troops (perhaps little more than its embassy guards) or local private security contractors to seize and secure collateral in a warehouse.
China could make deals with Mozambique, South Africa, Zambia and Botswana to interdict goods en route to Zimbabwe in exchange for something that China provides to them in return (e.g. loans, technical assistance, military sales).
China could deploy one of its two aircraft carriers to establish a "no fly zone" over Zimbabwe, perhaps with Mozambique cooperating minimally by allowing Chinese aircraft carrier based fights to fly over its territory en route to Zimbabwe.
China could bomb a handful of strategic bridges, rail lines, major highways, airports and power plants, and so on, limiting the ability of Zimbabwe to engage in trade and with others and carry on a functioning economy (and creating demand for Chinese built infrastructure when the fighting is over).
China could covertly arm and fund a local faction seeking to carry out a military coup in Zimbabwe which pledges to honor China's debts.
but what if we replace a country with little power or influence like
Zimbabwe, with a country that has a whole lot of debt with China that
it has to pay, but also holds a whole lot of international influence,
like the USA? What if the USA tells China and also the international
court to jump in a lake?
First, the U.S. would be violating its own constitution if it did so short of in the contingency of a declared war with China.
Second, the U.S. needs trade with China and China finances much of the U.S. national debt. If it failed to honor its debt obligations to China, China could cease to trade with the U.S., confiscate U.S. affiliated business and investment assets in China, withdraw all private investment of China in the U.S., recall its foreign students in the U.S., imprison U.S. expatriates in China, refuse to buy U.S. bonds, etc. wrecking havoc on the U.S. economy which is heavily dependent upon China for manufactured goods and many key raw materials. China would find permanent substitutes for U.S. exports destroying that stream of foreign trade from the U.S. forever.
Third, the U.S. credit rating would collapse destroying the ability of the U.S. to borrow money from any country at less than an extremely high interest rate, further damaging the U.S. economy.
If anything, the U.S. would be more vulnerable than Zimbabwe because its trade with China and reliance on international finance is much greater both in absolute scale and in relative importance to its economy. Zimbabwe still has lots of subsistence farmers. The U.S. does not.