Peak repayment: China’s global lending - Lowy Institute
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Soaring debt repayments and collapsed lending have flipped China role in development countries from capital provider to debt collector. A retrenchment in Western aid and trade is compounding these difficulties while squandering any geopolitical advantage for the West.

Developing countries are grappling with a tidal wave of debt repayments and interest costs to China, as bills come due from its Belt and Road lending surge in the 2010s, new Lowy Institute analysis reveals.

Pressure from Chinese state lending, along with surging repayments to a range of international private creditors, is putting enormous financial strain on developing economies. The result is rising debt vulnerability and the crowding out of critical spending priorities such as health, education, poverty reduction, and climate adaptation.

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Key findings

  • In 2025, the world’s poorest and most vulnerable countries will make record high debt repayments totalling $22 billion to China. Beijing has transitioned from capital provider to net financial drain on developing country budgets as debt servicing costs on Belt and Road Initiative projects from the 2010s now far outstrip new loan disbursements.

  • China is the largest source of bilateral debt service for developing countries, accounting for more than 30% of all such payments in 2025. For the poorest and most vulnerable countries, payments to China make up a quarter of all debt service costs, outweighing both multilateral lenders and private creditors. No single bilateral creditor has been responsible for such a large share of developing country debt service in the past 50 years.

  • China continues to finance strategic and resource-critical partners despite a broader collapse in its global lending. The largest recipients of new lending include immediate neighbours, Pakistan, Kazakhstan, and Mongolia, and developing countries that are critical mineral or battery metal exporters, such as Argentina, Brazil, Congo DR, and Indonesia.

  • China is grappling with a dilemma of its own making: it faces growing diplomatic pressure to restructure unsustainable debt, and mounting domestic pressure to recover outstanding debts, particularly from its quasi-commercial institutions. But a retrenchment in Western aid and trade is compounding difficulties for developing countries while squandering any geopolitical advantage for the West.

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