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.”
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