China is on track to receive a record volume of debt repayments from developing countries in 2025, with the bulk of those payments coming from the world’s 75 poorest nations, according to a new study by the Lowy Institute.
The Australian think tank’s latest report, Peak repayment: China’s global lending, warns that China is now collecting far more than it is lending, marking a major reversal from its previous role as a key financier for the Global South.
“Now, and for the rest of this decade, China will be more debt collector than banker to the developing world,” said research fellow Riley Duke.
This shift comes as new Chinese loans dry up and existing ones mature, particularly those linked to President Xi Jinping’s Belt and Road Initiative (BRI).
The BRI, Beijing’s expansive global infrastructure plan, has funded projects across dozens of low-income countries - from roads and ports to hospitals and power stations.
But the report finds that many of the most vulnerable countries are facing a “tidal wave” of repayments.
In total, the 75 poorest nations are expected to pay China US$22 billion in 2025 alone, forming the majority of the $35 billion in repayments forecasted to be made to Beijing.
Duke highlighted how China’s lending structures, which typically include grace periods, have made the recent surge in repayment demands “inevitable”.
“Because China’s Belt and Road Initiative lending spree peaked in the mid 2010s, those grace periods began expiring in the early 2020s. The combination of relatively short maturities and lower concessionality compared to other bilateral and multilateral creditors meant the early 2020s was always likely to be a crunch period for developing country repayments to China,” he said.
The data also show that China has overtaken traditional Western creditors in terms of repayments due. In 54 of 120 developing nations with available data, debt service to China now exceeds combined payments to the entire Paris Club of Western bilateral lenders.
China’s growing dominance as a creditor is compounded by its lack of transparency. The Lowy Institute notes that official figures likely understate the full extent of the debt burden.
In 2021, AidData estimated China was owed as much as US$385 billion in “hidden debt”.
The consequences are far-reaching. Duke warned that “the burden from Chinese debts coming due is also part of a broader set of severe headwinds, particularly for the poorest and most vulnerable economies”.
He added that the pressures strain local funding for basic services such as healthcare and education, as well as climate adaptation.
“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,” the report said.
Some recipient governments have accused China of saddling them with unserviceable debt, while critics in the West have argued that Beijing is using loans for “political leverage”.
The Lowy report noted recent large-scale loans to Honduras, Nicaragua, the Solomon Islands, Burkina Faso, and the Dominican Republic, all of which came within 18 months of switching diplomatic recognition from Taiwan to Beijing.
China has rejected claims of so-called “debt trap diplomacy”, while some borrowing nations defend the loans, saying China provided financing when others would not.
Nonetheless, the study suggests Beijing is caught in a difficult position. It faces diplomatic calls to restructure or forgive unsustainable debts in vulnerable states, while also managing domestic economic pressure to recover its own funds.
Meanwhile, China continues to support its key partners and resource-rich nations. Countries such as Pakistan, Kazakhstan, Laos, and Mongolia remain the top recipients of Chinese financing, along with nations rich in critical minerals like Argentina, Brazil and Indonesia.
The Lowy Institute also warns that as Western countries cut aid budgets - highlighting major reductions under the Trump administration - developing nations may become increasingly reliant on Beijing, even as the debt burden weighs more heavily.
