By AFP and Focus | 2025-06-06

The world's poorest nations face a "tidal wave" of debt as repayments to China hit record highs in 2025, an Australian think-tank warned in a new report on May 27.

Debt service flows to China from developing countries are expected to total $35 billion in 2025 and to emain elevated throughout the rest of the decade, according to the report published by the Lowy Institute.

Specifically, the world's poorest and most vulnerable 75 countries alone are set to make record-high repayments of about $22 billion to China in that year.

By 2025, China is expected to account for more than 30% of all bilateral debt service paid by developing countries, and about 25% for low-income countries -- surpassing repayments to multilateral institutions or private creditors.

China's Belt and Road Initiative (BRI) lending spree of the 2010s has paid for seaports, railroads, roads and more from the deserts of Africa to the tropical South Pacific.

The state-backed global infrastructure program, launched under President Xi Jinping in 2013, has underwritten projects ranging from schools, bridges and hospitals to major roads and ports.

China subsequently became the largest single-country creditor for 53 developing countries and ranks among the top five creditors for many others.

Debt collector

However, new lending is drying up, according to the institute, and is outweighed by the debts that developing countries must pay back.

"Developing countries are grappling with a tidal wave of debt repayments and interest costs to China," researcher Riley Duke told AFP.

"Now, and for the rest of this decade, China will be more debt collector than banker to the developing world," Duke added.

Beijing's Foreign Ministry said it was "not aware of the specifics" of the report but that "China's investment and financing cooperation with developing countries abides by international conventions," according to AFP.

Ministry spokeswoman Mao Ning said "a small number of countries" sought to blame Beijing for miring developing nations in debt but that "falsehoods cannot cover up the truth."

The Lowy Institute sifted through World Bank data to calculate developing nations' repayment obligations.

This analysis reinforced that China's net lending position has shifted rapidly. It has moved from being a net provider of financing, meaning it lent more than it received in repayments, to a net drain, "with repayments now exceeding loan disbursements."

China publishes limited data on its BRI lending, and the Lowy Institute's estimates likely underestimate the full scale of China's exposure.

AidData estimated in 2021 that China is owed approximately $385 billion in "hidden debts," The Diplomat reported in 2021.

Securing influence

Furthermore, the Lowy Institute report found that paying off debts was starting to jeopardize spending on hospitals, schools and climate change.

The pressure to meet these repayments is "putting enormous financial strain on developing economies," the report reads.

The report also raised questions about whether China could seek to parlay these debts for "geopolitical leverage," especially after the United States slashed foreign aid.

While Chinese lending was falling almost across the board, the report said there were two areas that seemed to be bucking the trend.

The first was in nations including Honduras, Nicaragua, the Solomon Islands, Burkina Faso and the Dominican Republic, which received new large-scale loans within 18 months after switching diplomatic recognition from Taiwan to China.

The other was in countries such as Indonesia or Brazil, where China has signed new loan deals to secure battery metals or other critical minerals.

[Part II of IV in a series on China's Belt and Road Initiative in Southeast Asia]