The world’s 75 poorest countries are projected to make “record debt payments” to China in 2025, amounting to $21.62 billion (€19.5 billion), out of the $35 billion (€30.8 billion) that China is set to receive from developing countries, according to a study by the Lowy Institute.
“Now, and during the rest of this decade, China will be more of a debt collector than a creditor to the developing world,” explained study author Riley Duke, noting that the costs of loans have surpassed the new amounts disbursed by China under the Belt and Road Initiative, which aims to expand its global influence through infrastructure development.
Beijing has shifted from being a net supplier of capital to becoming a financial burden for developing countries, whose spending priorities will move from crucial areas like health, education, poverty reduction, and climate adaptation to debt servicing, the Lowy Institute reported.
While foreign lending by the world’s second-largest economy is declining, countries such as Honduras and the Solomon Islands in the Pacific have received substantial new loans after changing their diplomatic recognition from Taiwan to China, experts noted in the report.
In countries like Indonesia and Brazil, China has signed new loan agreements to secure battery metals and other critical minerals.
Having previously provided loans for the construction of bridges, roads, commercial ports, power plants, and telecommunications projects with Chinese capital, aiming to establish connections to Europe, Asia, Africa, and Latin America in particular, Beijing is now facing increasing diplomatic pressure to restructure unsustainable debt, as well as growing internal pressure to recover outstanding debts, the study indicated.
China is the largest bilateral lender in 53 countries and ranks among the top five in three-quarters of all developing countries, the Lowy Institute reported.
JPI // SB
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