Time for China’s belt and road partners to pony up as debt comes due, think tank finds
Report by Lowy Institute finds that China has shifted from a net capital provider to developing countries to their biggest debt collector
China has become the leading debt collector of developing countries, shifting from a net capital provider, “as bills coming due from its belt and road lending surge in the 2010s now far outstrip new loan disbursements”, according to new research.
In 2025, about 75 of the world’s poorest and most vulnerable countries will make “record high debt repayments” totalling US$22 billion to China, according to research released on Monday by an Australian think tank, the Lowy Institute, as a result of peaks in new loan commitments made from 2012 to 2018.
The author, Riley Duke, said China was grappling with a dilemma.
“It faces growing diplomatic pressure to restructure unsustainable debt, and mounting domestic pressure to recover outstanding debts, particularly from its quasi-commercial institutions,” his report said. “But a retrenchment in Western aid and trade is compounding difficulties for developing countries while squandering any geopolitical advantage for the West.”
Duke explained that the research was being published now because China’s belt and road lending spree peaked in the mid-2010s, and those grace periods began expiring in the early 2020s – a likely “crunch period” for developing-country repayments to China.
How China’s shift to chief debt collector will impact its reputation as a development partner … remains to be seen
In 54 of 120 developing countries with available data, debt-service payments to China now exceed the combined repayments owed to the Paris Club – a bloc that includes all major Western bilateral lenders.
In 2024, the trade value between China and countries participating in the Belt and Road Initiative exceeded 50 per cent of China’s total foreign trade for the first time, according to figures from China’s customs.
As Beijing shifts into the role of debt collector, Duke added that Western governments remain “internally focused”, with aid declining and multilateral support waning.
“An increasingly isolationist United States and a distracted Europe are withdrawing or sharply cutting their aid support,” he noted. “Developing economies must also grapple with the impact of new trade war shocks and the spectre of punitive US tariffs being levelled against them.”