The poorest nations on earth are now battling a heavy wave of debt repayments to China. A recent report from the Lowy Institute, an Australian think tank, shows these payments will reach a record high in 2025.
The report reveals that the world’s 75 poorest countries will repay China about US$22 billion in 2025 alone. That’s a sharp rise compared to earlier years and reflects a growing financial burden on low-income nations.
The increase in payments is tied to China’s massive loans under the Belt and Road Initiative (BRI). This program funded roads, railways, ports, and bridges across Africa, Asia, and the Pacific between 2010 and 2020.
However, the report shows that China is now collecting more in repayments than it is giving out in new loans.
Belt and Road Loans Now Burden Developing Nations
According to Lowy Institute researcher Riley Duke, “Developing countries are grappling with a tidal wave of debt repayments and interest costs to China.” He added, “Now, and for the rest of this decade, China will be more debt collector than banker to the developing world.”
This shift means China’s role has changed from lender to collector. The result is a serious financial squeeze on poor countries. Many now struggle to fund basic services like hospitals and schools.
The report says the pressure is not only from China. Many countries also owe large amounts to private creditors. These combined debts are limiting the ability of governments to focus on climate action and public welfare.
China’s Influence May Grow As Debtors Struggle
The report also suggested that China may use these debts for political leverage. It warns that Beijing might push for more influence in countries where it holds large portions of the national debt.
Two patterns stood out in the Lowy Institute’s findings. Some countries like Honduras and the Solomon Islands got large new loans after switching diplomatic ties from Taiwan to China. Others, like Indonesia and Brazil, received fresh funding in exchange for access to key raw materials such as lithium and nickel.
As new Chinese loans slow down, repayments are rising. This situation is changing China’s image in many developing nations. Once seen as a generous lender, China is now increasingly seen as a strict creditor.
Rate, Like 👍, Comment, share this article and Follow us on our social media handles.
