The world’s 75 poorest countries are projected to make “record debt payments” to China in 2025, totaling $21.62 billion (€19.5 billion) out of the $35 billion (€30.8 billion) that China is expected to receive from developing nations, a study by the Lowy Institute reveals.
“Now, and for the rest of this decade, China will be more of a debt collector than a lender to the developing world,” stated Riley Duke, the study’s author, highlighting that loan costs surpass the new amounts disbursed by China under the Belt and Road Initiative, which aims to expand global influence through infrastructure development.
Beijing has transitioned from being a net provider of capital to becoming a financial burden on developing countries. These nations are compelled to redirect spending from critical areas like health, education, poverty reduction, and climate change adaptation to debt servicing, according to the Lowy Institute.
As foreign lending by the world’s second-largest economy decreases, countries such as Honduras and the Solomon Islands in the Pacific have secured substantial new loans after switching their diplomatic recognition from Taiwan to China, experts highlighted in the report.
In Indonesia and Brazil, China has signed new loan agreements to secure battery metals and other critical minerals.
Having provided loans for the construction of bridges, roads, commercial ports, power plants, and telecommunications projects, primarily with the aim of connecting to Europe, Asia, Africa, and Latin America, Beijing now faces growing diplomatic pressure to restructure a now-unsustainable debt and internal pressure to recover outstanding loans, the study indicates.
China is the largest bilateral creditor for 53 countries and ranks among the top five in three-quarters of all developing nations, as noted by the Lowy Institute.
