Poorest 75 nations face ‘tidal wave’ of debt repayments to China in 2025, study warns

 

Helen Davidson in Taipei

Tue, May 27, 2025 at 1:54 PM GMT+8

3 min read

https://www.yahoo.com/news/poorest-75-nations-face-tidal-055402523.html

Kenya’s standard gauge railway connecting connecting Mombasa and Nairobi was built using Chinese financing.Photograph: Baz Ratner/Reuters

The most vulnerable nations on Earth are facing a “tidal wave” of debt repayments as a Chinese lending boom starts to be called in, a new report has warned.

The analysis, published on Tuesday by Australian foreign policy thinktank the Lowy Institute, said that in 2025 the poorest 75 countries were on the hook for record high debt repayments US$22bn to China. The 75 nations’ debt formed the bulk of the total $35bn calculated by Lowy for 2025.

“Now, and for the rest of this decade, China will be more debt collector than banker to the developing world,” the report said.

The pressure to repay was putting strain on local funding for health and education as well as climate change mitigation.

Related: China spent $240bn on belt and road bailouts from 2008 to 2021, study finds

“China’s lending has collapsed exactly when it is needed most, instead creating large net financial outflows when countries are already under intense economic pressure,” it said.

The loans were largely issued under President Xi Jinping’s signature belt and road initiative (BRI), a state-backed global infrastructure investment programme which has underwritten national projects from schools, bridges and hospitals to major roads and shipping and air ports.

The lending spree turned China into the largest supplier of bilateral loans, peaking with a total of more than $50bn in 2016 – more than all western creditors combined.

The BRI focused primarily in developing nations, where governments struggled to access private or other state-backed investment. But the practice has raised concerns about Chinese influence and control and drawn accusations that Beijing was seeking to entrap recipient nations with unserviceable debt. Last month another analysis by the Lowy Institute found that Laos was now trapped in a severe debt crisis, in part because of over-investment in the domestic energy sector, mostly financed by China.

China’s government denies accusations it deliberately creates debt traps, and recipient nations have also pushed back, saying China was a more reliable partner and offered crucial loans when others refused.

But the Lowy report said the record high debt now due to China could be used for “political leverage”, noting that it comes amid huge cuts to foreign aid by the Trump administration.

The report also highlighted new large-scale loans given to Honduras, Nicaragua, Solomon Islands, Burkina Faso and the Dominican Republic, all within 18 months of those countries switching diplomatic recognition from Taiwan to Beijing.

China also continues to finance some strategic partners, including Pakistan, Kazakhstan, Laos and Mongolia, as well as countries that produce critical minerals and metals, such as Argentina, Brazil and Indonesia.

But the situation also put China in a bind, pulled between diplomatic pressure to restructure unsustainable debt in vulnerable nations and domestic pressure to recall loans amid China’s own economic downturn.

China publishes little data on its BRI scheme, and the Lowy Institute said its estimates – based on World Bank data – likely underestimated the full scale of China’s lending. In 2021 AidData estimated China was owed a “hidden debt” of about $385bn.

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• 27 May, 2025

  I’m wondering what will happen when these countries don’t pay their bills. China built a geothermal power plant in Jordan that was more expensive to use than the facilities that they already had so they don’t use it. An empty unused power plant just sits. I wonder if they’ll pay for it.

https://www.yahoo.com/news/poorest-75-nations-face-tidal-055402523.html?

Brazil Joins India, Rejects China's BRI

Brazil has become the second BRICS nation after India to reject China's Belt and Road Initiative, citing concerns over potential debt traps and seeking alternative collaborations with Chinese investors.

By K J M Varma, Beijing   Oct 29, 2024 10:46

Beijing, Oct 29 (PTI) In a major setback to China's BRI, Brazil has decided against joining Beijing's multi-billion-dollar initiative becoming the second country after India in the BRICS bloc not to endorse the mega project.

Brazil, headed by President Lula da Silva, will not join the Belt and Road Initiative (BRI) and instead seek alternative ways to collaborate with Chinese investors, Celso Amorim, special presidential adviser for international affairs, said on Monday.

Brazil wants to “take the relationship with China to a new level, without having to sign an accession contract”, he told Brazilian newspaper O Globo.

“We are not entering into a treaty,” Amorim said, explaining that Brazil does not want to take Chinese infrastructure and trade projects as “an insurance policy”.

According to Amorim, the aim is to use some of the Belt and Road framework to find “synergy” between Brazilian infrastructure projects and the investment funds associated with the initiative, without necessarily formally joining the group, the Hong Kong-based South China Morning Post quoted him as saying.

The Chinese “call it the belt [and road] … and they can give whatever names they want, but what matters is that there are projects that Brazil has defined as a priority and that may or may not be accepted [by Beijing]”, Amorim said.

The decision contradicts China's plans to make Brazil's joining of the initiative a centrepiece of Chinese President Xi Jinping's state visit to Brasilia on November 20, the Post reported.

Officials from Brazil's economy and foreign affairs ministries recently voiced opposition to the idea, it said.

The prevailing opinion in Brazil was that joining China's flagship infrastructure project would not only fail to bring any tangible benefits for Brazil in the short term but could also make relations with a potential Trump administration more difficult.

Last week, Amorim and the president's chief of staff Rui Costa travelled to Beijing to discuss the initiative. According to sources, they returned “unconvinced and unimpressed” by China's offers, the Post reported.

Lula did not attend this month's BRICS summit at Kazan due to an injury and his close associate and former Brazilian President Dilma Rousseff currently heads the Shanghai-based BRICS New Development Bank (NDB).

BRICS originally consisted of Brazil, Russia, India, China and South Africa. Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates have been admitted as new members.

Brazil will be the second member of the BRICS after India not to endorse the BRI.

India was the first country to voice reservations and stood steadfast in its opposition to BRI, a pet project of Chinese President Xi Jinping to further the global influence of China with investments to build infrastructure projects.

India has protested against China for building the USD 60 billion China-Pakistan Economic Corridor (CPEC), stated to be the flagship project of the BRI through the Pakistan-occupied Kashmir (POK) in violation of its sovereignty.

India is also vocal about its criticism of BRI projects stating they should be based on universally recognised international norms, good governance, and the rule of law and follow principles of openness, transparency and financial sustainability.

China subsequently faced criticism that the BRI projects in smaller countries like Sri Lanka, especially for its take-over of the Hambantota for a 99-year lease as a debt swap turned out to be debt traps resulting in a deep financial crisis in both smaller countries.

Indian diplomats here point out that besides staying away from three annual high-profile meetings of the BRI in Beijing in the past few years, India continued to voice its opposition to it both in the BRICS and Shanghai Cooperation Organisation, (SCO).

US Trade Representative Katherine Tai recently urged Brazil to view the proposal to join BRI through an “objective lens” and “risk management".

The Chinese embassy in Brasilia called her remarks “irresponsible” and “disrespectful”.

China's state-run Global Times in an editorial on Monday termed Tai's comments against BRI as “steeped in the spectre of "Monroe Doctrine".

“Brazil does not need others to dictate who to cooperate with or what kind of partnerships to conduct, and the normal economic and trade cooperation between China and Latin American countries should not be subject to scrutiny from third countries," it said.

“Currently, the US is attempting to build a "small yard, high fence" against China in Brazil and other Latin American countries”, it said.

"The cooperation between China and Brazil not only aligns with the interests of both countries but also meets the need for the Global South to build a more just and equitable international economic order. This trend is something that Washington cannot stop,” it said.

Source: PTI

https://money.rediff.com/news/market/brazil-joins-india-rejects-china-s-bri/17780120241029

China ‘world’s biggest debt collector’ as poorer nations struggle with its loans

 China has become the world’s biggest debt collector, as the money it is owed from developing countries has surged to between $1.1tn (£889bn) and $1.5tn, according to a new report. An estimated 80% of China’s overseas lending portfolio in the global south is now supporting countries in financial distress.

Story by Amy Hawkins Senior China correspondent  • 17h

Photograph: Thomas Mukoya/Reuters© Provided by The Guardian

Since 2017, China has been the world’s biggest bilateral lender; its main development banks issued nearly $500bn between 2008 and 2021. While some of this predates the belt and road initiative (BRI), Beijing’s flagship development programme has mobilised much of the investment in developing countries.

But a new report by researchers at the AidData research lab at William & Mary, a public university in Virginia, found that China, the world’s second largest economy, is now navigating the role of international debt collector as well as being a bilateral funder of major infrastructure projects.

Lending from Chinese state-backed banks has helped to build railways in Kenya and power plants in Cambodia, along with thousands of other projects. The AidData researchers analysed 20,985 projects in 165 low- and middle-income countries, which were financed with grants and loans worth $1.34tn between 2000 and 2021.

The researchers found that as the debts to Chinese lenders have mounted, the number of suspended or cancelled projects has also increased. With a high share of lending directed towards countries in, or at risk of, financial distress, Beijing is now increasingly worried about the risk of defaults.

In June, Zambia reached a historic deal to restructure $6.3bn of debt, two-thirds of which is owed to the Export-Import Bank of China, one of the country’s two main policy banks.

To mitigate the risk of future defaults, Chinese policymakers have introduced a number of measures, including reducing loans for infrastructure projects while ramping up emergency lending. In 2015, infrastructure project lending accounted for more than 60% of China’s loan portfolio. By 2021, the share was just over 30%, with emergency lending accounting for nearly 60%.

“China is increasingly behaving like an international crisis manager,” the researchers concluded. China has created “a safety net” for countries in financial distress – “and, by extension, their highly exposed Chinese creditors”.

Related: China spent $240bn on belt and road bailouts from 2008 to 2021, study finds

Another way in which Chinese lenders have been trying to lower their exposure to risk is by increasing the penalties for late repayments, a move that may alienate borrowers. The AidData report cites figures from the Gallup World Poll which shows that public approval ratings for China in low- and middle-income countries fell from 56% in 2019 to 40% in 2021.

The terms and conditions of specific Chinese loans are often not transparent, but economists estimate that Chinese government loans to low-income countries typically have a 2% interest rate compared with the 1.54% norm for the World Bank’s concessional loans. But the AidData researchers found that between the early years of the BRI (2014-2017) and the latter period (2018-2021), Chinese lenders increased the maximum penalty interest rate for late repayments from 3% to 8.7%.

Bradley Parks, one of the report’s authors and the executive director of AidData, said: “Beijing is trying to find its footing as the world’s largest official debt collector at a time when many of its biggest borrowers are illiquid or insolvent. And debt collectors don’t win a lot of popularity contests.”

Still, Parks noted, “China is not going to stand by and watch its flagship global infrastructure initiative crash and burn.” Beijing is currently on a “rescue mission” to minimise debt distress, but the government is also “playing the long game”, Parks said. “It is putting in place a set of loan repayment safeguards … that are designed to futureproof the belt and road initiative.”

China ‘world’s biggest debt collector’ as poorer nations struggle with its loans (msn.com)

Sri Lanka Crisis | China upset with ‘opportunist’ Colombo, warns against non-payment of debt

The Chinese Internet is condemning Sri Lanka and accusing it of taking advantage of China. Why is the Chinese strategic community furious at Sri Lanka?

JULY 30, 2022 / 08:11 AM IST

China's President Xi Jinping (File image)

Antara Ghosal Singh

From shock to sympathy, the recent economic, political, and humanitarian crisis in Sri Lanka has elicited strong emotions across global capitals. In Beijing, however, the sentiment has been somewhat different, mostly that of anger and indignation.

There has been largescale condemnation on the Chinese internet, of what is being called Sri Lanka’s “victim rhetoric”. There are accusations that the island nation “took advantage” of China, used it as an ATM, and is now “publicly embarrassing China”.

The words being used for Sri Lanka and its political class are far from flattering, which include “white-eyed wolf(白眼狼), “backstabber”, “ungrateful”, “capricious”, “completely untrustworthy”, “treacherous”, and so on and so forth, and therefore, “unworthy of China’s pity or assistance”. Instead, they say, that it is time for Sri Lanka to be taught a lesson and made to pay a heavy price.

So, why is the Chinese strategic community so furious at Sri Lanka? Why is China unwilling to provide adequate assistance to the nation, whom it once called “an all-weather friend and partner”, particularly at the time of its dire needs?

Various articles on the Chinese internet claim that when Sri Lanka encountered the economic crisis, China had originally offered to negotiate on China’s debt, extend the repayment period, help in the “new debt to repay old debt” type of restructuring, and has even been willing to provide Sri Lanka’s US $1 billion sovereign bonds, on condition that Sri Lanka steps up cooperation with China. What kind of cooperation? On January 10, just before the upcoming 14th round of China–India military commander-level talks, Chinese State Councillor and Foreign Minister Wang Yi visited Sri Lanka, along with other Indian Ocean countries like Comoros and Maldives, etc. and floated the idea of holding a ‘development forum of Indian Ocean countries’, which aimed at gathering consensus, forming synergy, and thus “stringing the pearls together” in the Indian Ocean under Chinese leadership. This, he said, was a part of China’s ‘global development initiative’ proposed by President Xi Jinping in September 2021, especially meant to address the development needs of the Indian Ocean Island countries and their post-pandemic recovery and sustainable development.

He further proposed that China–Sri Lanka make good use of the “dual-engine role of Colombo Port City and the Hambantota Port,” collaborate under the Regional Comprehensive Economic Partnership Agreement and discuss the re-start of the China–Sri Lanka Free Trade Agreement negotiations, to release important signals to the outside world (particularly to India ). Chinese analysts at that time argued that for China a few billion dollars in loan to Sri Lanka is nothing compared to the role it can play in containing India to South Asia, enhancing China’s influence in the IOR and successfully implementing the Belt and Road Initiative.

However, in the following months, not only did the Chinese proposals make little headway, but China got further disappointed as Sri Lanka decided to suspend foreign debt payments in April, defaulted on its debts in May, declared bankruptcy in July, and went to the IMF for assistance. Sri Lanka’s decisions, the Chinese side argues, are detrimental to Chinese interests, as it will cause serious economic losses to China.

China had wanted Sri Lanka to keep repaying its debts, while China helped it to secure better deals at the international financial institutions, which, in a way, would have also ensured that the money continued to make its way back into the Chinese coffers. But the course that Sri Lanka has taken “under Western/Indian influence”, the Chinese side stated, has positioned it as an “economic enemy” of China, forcing it (China) to offer debt relief to Sri Lanka, under unfavourable IMF conditionalities. The Chinese side has been opposing the IMF’s condition of debt haircut (平均剃头) (which requires all the creditors to voluntarily forgive an equal amount of debt) on grounds that it will be a bigger loss for a creditor of new debts like China, while most of Sri Lanka’s existing debt is “old debt”.

The growing chorus in Beijing is that Sri Lanka, like most other South Asian nations, is “scheming and opportunist”. It wants to benefit from China but remains highly vigilant against Chinese influence and refuses to carry out substantive and in-depth cooperation, as expected by China. It has a long history of flip-flops on the China issue and now even while getting bailed out, it is swinging between China, the West and India.

Therefore, although Sri Lanka remains an important fulcrum of the Maritime Silk Road, it must not be allowed to hold the Belt and Road Initiative (BRI) to ransom, use it as a bargaining chip to force China to repay Sri Lanka’s debt to the West, India, US, Japan, and others. After all, the bankruptcy of Sri Lanka is not going to be the end of this crisis but is most likely just the beginning. And, the disposal of Sri Lanka’s debt is most likely to set a precedent and affect the settlement of China’s and other countries’ debts vis-á-vis multiple nations. China, therefore, must not allow itself to be a “scapegoat”, but instead make active efforts to scuttle Sri Lanka’s bid to obtain IMF assistance.

What has been further irking the Chinese side is that Sri Lankan leaders including ex-President Gotabaya Rajapaksa, Sri Lankan ambassador to China Palitha Kohona, among others, are publicly raising their concern from time to time over the lack of Chinese interest in helping Sri Lanka.

This, they argue, is further strengthening the western/Indian discourse of Chinese culpability in Sri Lanka’s debt crisis as well as the economic crisis presently faced by several other developing countries and building up international pressure on China to align its stance with the Paris Club and re-consider its position on the ‘Common Framework for Debt Treatment’. All this, while China has been reportedly seeking to stall the G20 debt relief plan for distressed countries, on grounds that it wants to “cut its debt deals” with these nations before the G20 Common Framework for Debt Treatments process is fully implemented.

It is against this backdrop that one can see angry assertions on the Chinese internet claiming “China doesn’t owe Sri Lanka anything” and that “BRI is not free relief” for laggards or insincere partners. It is being argued that if Sri Lanka wants more money from China, it must repay the previously owed money, fulfil its obligation of ensuring the safety of Chinese investments in the country and not play the game of moral kidnapping. Not to mention, it must bargain from its position of a bankrupt country and not like some gold dust, trying to balance various forces, seeking to benefit from all.

To sum up, for now, the popular discourse in China on the Sri Lankan crisis is that ‘Sri Lanka must pay back or face consequences’. As noted by some articles on the Chinese internet, with China’s strength, it is now completely possible that for debt recovery Chinese warships sail over and take control of the Colombo port and make it yet another Chinese port in Sri Lanka. Even if China chooses not to take such drastic measures to avoid global backlash, it will double down on its negotiations with Sri Lanka on the interests that China cares about the most which include joint exercises between the Chinese and the Sri Lankan Navy,  Chinese Navy being allowed to use the Sri Lankan ports for supplies, Chinese maintenance for Sri Lankan warships, dedicated piers at Sri Lankan ports for Chinese warships, or better still, if Sri Lanka agrees to a Djibouti-like transfer of rights for construction of a military base in the island nation, among others.

Antara Ghosal Singh is Fellow at the Strategic Studies Programme at Observer Research Foundation, New Delhi. Views are personal, and do not represent the stand of this publication.

https://www.moneycontrol.com/news/opinion/sri-lanka-crisis-china-upset-with-opportunist-sri-lanka-warns-against-non-payment-of-debt-8904561.html