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Qatar Tribune
14 hours ago
- Business
- Qatar Tribune
Developing nations face ‘tidal wave' of China debt: Report
Agencies 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 Tuesday. China's Belt and Road Initiative lending spree of the 2010s has paid for shipping ports, railways, roads and more from the deserts of Africa to the tropical South Pacific. But new lending is drying up, according to Australia's Lowy Institute, and is now 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 said. 'Now, and for the rest of this decade, China will be more debt collector than banker to the developing world.' 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'. 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. It found that the poorest 75 countries were set to make 'record high debt repayments' to China in 2025 of a combined US$22 billion. 'As a result, China's net lending position has shifted rapidly,' Duke said. 'Moving from being a net provider of financing—where it lent more than it received in repayments—to a net drain, with repayments now exceeding loan disbursements.' Paying off debts was starting to jeopardize spending on hospitals, schools, and climate change, the Lowy report found. 'Pressure from Chinese state lending, along with surging repayments to a range of international private creditors, is putting enormous financial strain on developing economies.' 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 such as Honduras and Solomon Islands, which received massive new loans 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.
Miami Herald
a day ago
- Business
- Miami Herald
How China Became the World's Largest Debt Collector
China was the leading financier for developing nations throughout the 2010s, channeling over $1 trillion into infrastructure projects under President Xi Jinping's Belt and Road Initiative (BRI). Yet as lending has tapered off and grace periods on many loans have expired, China has emerged as the world's largest official creditor, according to a new report from the Lowy Institute, an Australian foreign policy think tank. The BRI, signed on to by approximately 150 countries, has funded thousands of projects worldwide. Some low-income nations took on more debt than they could repay, in some cases leading to Chinese state-owned enterprises taking control of strategic infrastructure-such as in 2017 when China Merchants Port Holdings famously gained control Sri Lanka's Hambantota Port on a 99-year lease. Critics, including the United States government, have accused China of "debt-trap diplomacy," or leveraging these debts to gain control over critical infrastructure. China has consistently denied these allegations, saying its overseas lending is conducted on mutually beneficial terms. Newsweek reached out to the Chinese Foreign Ministry by email with a request for comment. In the 2020s, Chinese bilateral lending has declined in both size and scope, influenced by a domestic property sector crisis and slowing economic growth. This reduction coincides with the end of 3- to 5-year grace periods on many loans issued during the height of Chinese lending in the late 2010s. "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," wrote Riley Duke, Lowy Institute research fellow and author of the report. Now, debt collecting is peaking, with China expected to receive a record $35 billion in interest and principal repayments this year. Of that total, $22 billion is owed by 75 of the poorest and most vulnerable nations, Duke wrote. "At this new baseline, China's post-pandemic lending has retreated back to levels not seen since the late 2000s and only a quarter of that during the 2010s when the Belt and Road Initiative was in full swing," Duke said. He said that in 54 of the 120 developing countries for which the World Bank has relevant data, debt service payments to China now exceed the combined repayments owed to the Paris Club-a group of 22 Organization for Economic Cooperation and Development (OECD) countries including major lenders such as the U.S., United Kingdom and France. "No single bilateral creditor has been responsible for such a large share of developing country debt service in the past 50 years," Duke said. Mao Ning, Chinese Foreign Ministry spokesperson, told reporters Tuesday: "A handful of countries are spreading the narrative that China is responsible for these countries' debt. "However, they ignore the fact that multilateral financial institutions and commercial creditors from developed countries are the main creditors of developing countries and the primary source of debt repayment pressure. Lies cannot cover truth and people can tell right from wrong." U.S. Secretary of State Marco Rubio said during a May 20 Senate Foreign Relations Committee hearing: "China doesn't do humanitarian aid. China does predatory lending. That's what Belt and Road Initiative is.... They have no interest in doing [foreign aid]. What they're very good at is going into some country, making you a loan, and then holding that debt over your head. And that's what they continue to do, and by the way, you have to hire a Chinese company to do it." China faces mounting international pressure to collaborate with debt-distressed nations on restructuring their obligations. This presents a potential opening for Western countries, and the U.S. in particular, to claw back influence lost to China amid that country's significant investments in the Global South over the past decade. However, the Trump administration's significant reductions in foreign aid-slashing over 90 percent of USAID's foreign aid contracts and making deep cuts to the State Department-may keep Washington from capitalizing on this opportunity. Related Articles China Learns New Lessons From Russia-Ukraine War: ReportChina Responds to Latest Trump Visa Move: 'US Lie'Satellite Imagery Captures Chinese Aircraft Carrier in Contested WatersMarco Rubio Announces New Plan to Revoke Chinese Student Visas 2025 NEWSWEEK DIGITAL LLC.
Newsweek
a day ago
- Business
- Newsweek
How China Became the World's Largest Debt Collector
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. China was the leading financier for developing nations throughout the 2010s, channeling over $1 trillion into infrastructure projects under President Xi Jinping's Belt and Road Initiative (BRI). Yet as lending has tapered off and grace periods on many loans have expired, China has emerged as the world's largest official creditor, according to a new report from the Lowy Institute, an Australian foreign policy think tank. Why It Matters The BRI, signed on to by approximately 150 countries, has funded thousands of projects worldwide. Some low-income nations took on more debt than they could repay, in some cases leading to Chinese state-owned enterprises taking control of strategic infrastructure—such as in 2017 when China Merchants Port Holdings famously gained control Sri Lanka's Hambantota Port on a 99-year lease. Cambodian Prime Minister Hun Manet awards a medal to Chinese personnel involved in the construction of National Road 71C on April 12, 2025, in Tbong Khmum Province, Cambodia. Cambodian Prime Minister Hun Manet awards a medal to Chinese personnel involved in the construction of National Road 71C on April 12, 2025, in Tbong Khmum Province, Cambodia. Critics, including the United States government, have accused China of "debt-trap diplomacy," or leveraging these debts to gain control over critical infrastructure. China has consistently denied these allegations, saying its overseas lending is conducted on mutually beneficial terms. Newsweek reached out to the Chinese Foreign Ministry by email with a request for comment. What To Know In the 2020s, Chinese bilateral lending has declined in both size and scope, influenced by a domestic property sector crisis and slowing economic growth. This reduction coincides with the end of 3- to 5-year grace periods on many loans issued during the height of Chinese lending in the late 2010s. "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," wrote Riley Duke, Lowy Institute research fellow and author of the report. Now, debt collecting is peaking, with China expected to receive a record $35 billion in interest and principal repayments this year. Of that total, $22 billion is owed by 75 of the poorest and most vulnerable nations, Duke wrote. "At this new baseline, China's post-pandemic lending has retreated back to levels not seen since the late 2000s and only a quarter of that during the 2010s when the Belt and Road Initiative was in full swing," Duke said. He said that in 54 of the 120 developing countries for which the World Bank has relevant data, debt service payments to China now exceed the combined repayments owed to the Paris Club—a group of 22 Organization for Economic Cooperation and Development (OECD) countries including major lenders such as the U.S., United Kingdom and France. "No single bilateral creditor has been responsible for such a large share of developing country debt service in the past 50 years," Duke said. What People Are Saying Mao Ning, Chinese Foreign Ministry spokesperson, told reporters Tuesday: "A handful of countries are spreading the narrative that China is responsible for these countries' debt. "However, they ignore the fact that multilateral financial institutions and commercial creditors from developed countries are the main creditors of developing countries and the primary source of debt repayment pressure. Lies cannot cover truth and people can tell right from wrong." U.S. Secretary of State Marco Rubio said during a May 20 Senate Foreign Relations Committee hearing: "China doesn't do humanitarian aid. China does predatory lending. That's what Belt and Road Initiative is.... They have no interest in doing [foreign aid]. What they're very good at is going into some country, making you a loan, and then holding that debt over your head. And that's what they continue to do, and by the way, you have to hire a Chinese company to do it." What Happens Next China faces mounting international pressure to collaborate with debt-distressed nations on restructuring their obligations. This presents a potential opening for Western countries, and the U.S. in particular, to claw back influence lost to China amid that country's significant investments in the Global South over the past decade. However, the Trump administration's significant reductions in foreign aid—slashing over 90 percent of USAID's foreign aid contracts and making deep cuts to the State Department—may keep Washington from capitalizing on this opportunity.
Independent Singapore
a day ago
- Business
- Independent Singapore
Tidal wave of debt: 75 nations must repay China US$22B next year under BRI loans
CHINA: The latest report from the Australian Lowy Institute warns that the world's most impoverished nations are confronted with an unparalleled outpouring of debt settlements to China, prompting worries of an impending financial catastrophe across developing nations. Record debt repayments due in 2025 According to the study featured in The Guardian , these 75 destitute countries are jointly projected to pay a confounding $22 billion to China in 2025 alone. This indicates the ultimate in the repayment series following years of concentrated Chinese lending. The report bluntly states: 'China will be more debt collector than banker to the developing world' for the rest of the decade. This move puts at risk essential subsidies for education, climate initiatives, and health as countries redirect meagre resources to pay these loans. Belt and Road: Boom turns to bust The bulk of the liability came from credit issued under President Xi Jinping's Belt and Road Initiative (BRI), a gigantic international infrastructure venture designed to build roads, schools, ports, and hospitals in developing countries. At its height in 2016, China's lending topped out at more than $50 billion per annum, surpassing all Western financiers and debt holders combined. See also China tells US to stop 'unreasonable suppression' of Huawei Although the BRI assisted in filling a capital gap in countries habitually deprived of Western outlay, it has triggered allegations of 'debt-trap diplomacy,' with apprehensions that China intentionally entangles countries in unrestrainable debt to wield political pressure and influence. Current examination shows Laos, severely beholden to China, now faces an incapacitating debt predicament partially instigated by BRI funds. China refutes these claims, with country-beneficiaries frequently shielding the alliance as more reliable than Western counterparts. Still, the Lowy report cautions that China's repayments could become a powerful instrument for political power, particularly as foreign assistance from other powerful countries like the U.S. has been deeply weakened. Diplomatic moves and economic dilemmas The report puts emphasis on fresh loans to countries like Honduras, Nicaragua, Solomon Islands, Burkina Faso, and the Dominican Republic immediately after they swapped political allegiance from Taiwan to Beijing, raising apprehensions over Beijing's calculated use of debt to inflate its power and influence. Transparency is still a challenge, as China divulges little about the full scope of its BRI credit. Lowy's speculations, built on World Bank statistics, probably played down the scale, with preceding studies signifying a 'hidden debt' of nearly $385 billion payable to China. As the debt surge intensifies, the international community watches meticulously, curious about how these financial undercurrents will rewrite the future of development, international relations, peacekeeping, and economic solidity for some of the world's most defenceless republics.
Business Times
a day ago
- Business
- Business Times
Australia aims to avoid Panama repeat in China port showdown
[CANBERRA] Prime Minister Anthony Albanese is confronting a fresh diplomatic dilemma with China: How to fulfil a pledge to regain control of a strategic port without jeopardising improved relations with his country's largest trading partner. Ahead of an election earlier this month, Albanese promised to return to Australian control the Port of Darwin from Chinese company Landbridge Group. It was awarded a 99-year lease in 2015 by the Northern Territory government in a move that sparked criticism from an array of politicians in Australia and in the US, which uses a nearby military training facility. China is Australia's biggest trading partner by far and previously expressed anger over pressure from the Trump administration concerning the Panama Canal, which resulted in a potential sale by a Hong Kong-based conglomerate of its two Panama port operations – a deal Beijing has said it will review. Albanese potentially faces a similar backlash from the Chinese government if Beijing perceives it's being treated unfairly at the Port of Darwin. 'The key is whether it's a commercial or ostensibly a commercial transaction or not,' said Richard McGregor, a senior fellow at Sydney-based Lowy Institute, who serves on the board of a government body advising on relations with China. A simple buyout of Landbridge by an Australian company would be significantly less controversial than a sale to a US business or an attempt to cancel the lease and nationalise it, he said. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Speaking on Wednesday, Albanese appeared to pour some cold water on the idea of an acquisition by a US company while restating his desire to get the port back under Australian control. 'It's in the national interest for it to be in Australian hands,' Albanese said at a press conference in Darwin. 'But if there are other proposals, we'll work those through. But we'll work those through on a commercial basis.' Terry O'Connor, a non-executive director for Landbridge in Australia, said on Wednesday there's been interest among investors in Australia and abroad on whether the port is for sale. They have also received calls from international investors, some of whom are in talks with the local administration, about whether the national government's plan to acquire the port is real, he said. Like many countries in the Asia-Pacific region, Australia is caught in a bind. The US is the largest single investor in Australia and the country's main security ally, but China is by far its biggest export market. High stakes China's government would like for its firms to be able to invest more into Australia, especially in the minerals sector, but Canberra has blocked a series of investment proposals since the two signed a free-trade agreement more than a decade ago. That raises the stakes for how Albanese manages the port dispute. Bilateral relations collapsed during the pandemic, when China imposed tariffs and trade barriers on Australian goods, but have gradually improved since Albanese first took power in 2022. Xiao Qian, China's ambassador to Australia, has warned Canberra to proceed cautiously in its handling of the lease, which he said was awarded to Landbridge 'through an open and transparent bidding process'. He made the point of personally visiting Darwin in the past week to press Beijing's request for Landbridge to be treated fairly. While Landbridge has been reported to be having financial difficulties, Chinese state media also cautioned against forcing Landbridge to give up the lease. A Global Times editorial this week said the Australian government should 'prioritise the broader picture, uphold the spirit of contract, return to the rule of law, and stop distorting economic cooperation with political bias.' The port is Australia's northernmost maritime facility, positioned close to South-east Asia. During the election campaign, Albanese raised the possibility of nationalising the facility in case a private owner couldn't be found. US private equity company Cerberus held an initial meeting with the Port of Darwin to discuss taking over the lease, while other Australian entities including large pension funds are also running a ruler over the numbers. 'Far from ideal' Since 2001, Chinese firms have increasingly invested in overseas ports. That's often been portrayed as part of President Xi Jinping's 'Belt and Road Initiative' to build up trade links between China and the rest of the world, according to Zongyuan Zoe Liu at the Council at Foreign Relations, who tracks such investments. Some of those investments have become controversial or been criticised as a vehicle for greater Chinese influence, although some, such as the purchase of Piraeus Port in Greece by Chinese shipping giant Cosco Shipping Holdings, can be seen as a success, she said in a recent interview. While the Port of Darwin has not attracted the same level of attention from Washington as the Panama Canal, that does not mean that the US is not watching closely 'For many of our allies and partners, the current status quo is far from ideal,' said Luke Gosling, a military veteran and lawmaker for Darwin in Albanese's Labor government. 'That has fed into obviously our decision-making around making that commitment that the Port of Darwin come back into Australian hands.' BLOOMBERG
