China will flip from a capital supplier to a debt collector of 75 developing nations, together with the world’s poorest and most weak, this year as they’re due to pay again a record $22 billion loans owed to Beijing, in accordance to knowledge launched by an Australian suppose tank.
China has change into the main debt collector of developing nations, shifting from a internet capital supplier, “as bills coming due from its Belt and Road lending surge in the 2010s now far outstrip new loan disbursements”, the most recent analysis report of the Australian suppose tank, the Lowy Institute, mentioned.
In 2025, about 75 of the world’s poorest and most weak nations will make “record high debt repayments” totalling $22 billion to China on account of peaks in new mortgage commitments made from 2012 to 2018, the report mentioned.
China faces a dilemma and rising diplomatic stress to restructure unsustainable debt moreover mounting home stress, notably from its quasi-commercial establishments, to get well excellent money owed, in accordance to the report ready by Riley Duke.
Mr. Duke mentioned that the analysis was being revealed now as a result of China’s Belt and Road Initiative (BRI) lending spree peaked within the mid-2010s, and people grace intervals started expiring within the early 2020s— a possible “crunch period” for developing-country repayments to China.
How China’s shift to chief debt collector will impression its status as a growth companion stays to be seen, the Hong Kong-based South China Morning Post quoted Mr. Duke as saying.
On Tuesday (May 27, 2025), the Chinese Foreign Ministry sought to play down the report, saying {that a} handful of nations are spreading rumours towards Chinese mortgage help to developing nations.
China’s funding and financing cooperation with the developing nations is consistent with the worldwide frequent practices, the market ideas and the precept of debt sustainability, Foreign Ministry Spokesperson Mao Ning instructed a media briefing right here whereas commenting on the report.
A handful of nations are spreading the rumours, citing China risk, however they don’t speak about the truth that multilateral establishments are the most important collectors of developing nations and the supply of the debt compensation, she mentioned.
Under its influential BRI initiative, the signature initiative of President Xi Jinping, China has doled out billions of {dollars} of loans to dozens of infrastructure tasks in developing nations to additional its world affect.
However, the investments attracted criticism of being debt traps after China acquired Sri Lanka’s Hambantota port for a 99-year lease as a debt swap.
Several recipient nations struggled to pay again the loans for the tasks, particularly after the COVID-19 pandemic and the resultant financial disaster and poor viability of the undertakings.
In 54 of 120 developing nations with obtainable knowledge, debt-service funds to China now exceed the mixed repayments owed to the Paris Club – a bloc that features all main Western bilateral lenders, the report mentioned.
The analysis confirmed that China stays the biggest bilateral lender in seven of its 9 land neighbours: Laos, Pakistan, Mongolia, Myanmar, Kazakhstan, Kyrgyzstan and Tajikistan.
“A majority have received new Chinese loan commitments since 2019 and together account for a quarter of all disbursements since China’s lending downturn began in 2018,” Mr. Duke added.
Last year, China turned the biggest creditor of Pakistan, Beijing’s all-weather ally, with virtually $29 billion in loans, in accordance to a World Bank report.
China had the only largest share of debt to Pakistan with 22% share (about $28.786 billion), adopted by the World Bank’s 18% share ($23.55 billion) and the Asian Development Bank’s 15% share ($19.63 billion), it mentioned.
This year, Pakistan is predicted to have important debt rollover and compensation wants, with estimates ranging from $22 billion to over $30 billion in exterior debt maturing.
In March, Beijing, which is pursuing a $60 billion China-Pakistan Economic Corridor (CPEC) rolled over a USD two billion mortgage for Pakistan, considered one of a number of such rollovers in the previous few years.
For its half, China which itself is going through an financial slowdown at residence has trimmed its future BRI investments from mega tasks to “small but beautiful” undertakings.
The BRI, proposed by China in 2013, goals to construct a commerce and infrastructure community connecting Asia with Europe, Africa and past.
Published – May 27, 2025 05:25 pm IST
