Developing Nations Face Record Debt Repayments to China Amid BRI Slowdown, Warns Lowy Institute Report

 A growing number of the world’s most economically vulnerable countries are confronting a looming debt crisis, as repayments on Chinese loans—issued during a peak in Beijing’s Belt and Road Initiative (BRI)—reach historic highs, a new report by the Lowy Institute has revealed.

According to the Sydney-based foreign policy think tank, the 75 poorest countries are due to repay an estimated US$22 billion to China in 2025, forming the bulk of a record US$35 billion in total Chinese loan repayments due globally. This marks a dramatic shift in China’s global financial posture, transitioning from a major lender to an assertive debt collector.

“Now, and for the rest of this decade, China will be more debt collector than banker to the developing world,” the report stated, warning that mounting repayments are increasingly crowding out domestic funding for essential services such as health, education, and climate resilience.

The debt crisis stems largely from loans issued under President Xi Jinping’s flagship BRI—a sweeping, state-backed initiative aimed at expanding infrastructure across the Global South. Since its launch, the BRI has funded a vast range of projects, including roads, ports, schools, bridges, and energy facilities, making China the largest bilateral lender to developing economies. Chinese overseas lending peaked in 2016, surpassing US$50 billion—more than all Western nations combined.

However, the collapse in new Chinese lending comes at a time when many developing countries are grappling with severe economic stress, creating what the Lowy Institute calls “large net financial outflows” that are exacerbating fiscal vulnerabilities.

The report highlights the dual challenge China now faces: balancing its diplomatic ambitions with growing domestic pressures to recover outstanding debts amid a slowdown in its own economy. While Beijing has rejected accusations of orchestrating “debt-trap diplomacy,” several recipient nations, such as Laos, have entered deep debt distress, partly due to heavy Chinese-financed investments in sectors like energy.

The report also raises concerns that China's position as a dominant creditor could enable it to leverage debt repayments for political influence, particularly as Western aid budgets are being slashed. Notably, it points out that countries such as Honduras, Nicaragua, Solomon Islands, Burkina Faso, and the Dominican Republic all received major Chinese loans shortly after switching diplomatic allegiance from Taiwan to Beijing.

Despite growing criticism, many nations have defended China’s role, noting that Beijing extended financial support at times when Western institutions were unwilling to engage. At the same time, Beijing continues to extend credit to strategic allies, including Pakistan, Kazakhstan, Laos, and Mongolia, as well as to nations with abundant supplies of critical minerals and metals, such as Argentina, Brazil, and Indonesia.

While exact figures remain opaque due to limited official data, the Lowy Institute’s estimates—based on World Bank figures—may underrepresent the full extent of China’s global lending. A 2021 report by AidData suggested that recipient countries collectively owe China an estimated “hidden debt” of US$385 billion.

As the international community wrestles with rising global debt burdens, the Lowy Institute’s findings underscore the urgent need for transparent, coordinated debt management strategies—particularly as a new wave of repayments threatens to undermine development in the world’s poorest regions.