The most vulnerable nations on Earth are facing a significant challenge as Chinese lending starts to be called in, resulting in a “tidal wave” of debt repayments, according to a new report. The analysis, published by the Lowy Institute, an Australian think tank, reveals that in 2025, the poorest 75 countries will have a record high debt of US$22bn to China. This accounts for the majority of the total $35bn calculated by Lowy for 2025.
As per the report, China will now focus more on collecting debts than acting as a banker to the developing world. This pressure to repay is straining funding for health and education, as well as efforts to mitigate climate change. The loans were primarily issued under President Xi Jinping’s Belt and Road Initiative, which has funded various infrastructure projects worldwide. This lending spree has made China the largest supplier of bilateral loans, with a peak of over $50bn in 2016.
While China has denied accusations of deliberately creating debt traps, concerns about Chinese influence and control have been raised. There are also accusations that Beijing is leveraging the debt to gain political influence. China continues to provide loans to strategic partners and countries producing critical minerals and metals. However, the situation presents a dilemma for China, as it must balance diplomatic pressure to restructure unsustainable debt in vulnerable nations with the need to recall loans due to its own economic downturn.
Source: https://www.theguardian.com/world/2025/may/27/poorest-750-nations-face-tidal-wave-of-debt-repayments-to-china-in-2025-study-warns
