China’s position as a dominant financier for developing nations has undergone a significant transformation over the past decade, with new lending to poorer countries declining sharply even as debt repayments to Beijing continue to rise. This shift is placing growing financial pressure on low and middle income countries, particularly across Africa, according to new analysis released by ONE Data.
The inaugural report by the ONE Data initiative highlights a stark reversal from the early 2010s, when Chinese loans surged as part of Beijing’s global infrastructure push. During that period, China emerged as the single largest bilateral lender to many developing countries, financing roads, railways, power plants and ports under initiatives linked to its broader global economic strategy. Today, that era of expansive lending has given way to a far more restrained and selective approach.
The analysis shows that new loans from China to poorer countries have fallen dramatically, while repayments on existing debts have increased steadily. As a result, many countries now find themselves sending more money to China each year in debt servicing than they receive in fresh financing. This dynamic is particularly pronounced in Africa, where Chinese lending once played a central role in closing infrastructure gaps but has since slowed to a trickle in several countries.
According to ONE Data, the situation reflects both China’s changing priorities and the financial strain faced by borrower countries. Beijing has become more cautious after years of heavy overseas lending exposed Chinese policy banks and state lenders to rising default risks. At the same time, many recipient countries are grappling with weaker currencies, higher global interest rates and sluggish economic growth, making it harder to service debts contracted during more optimistic times.
The report underscores how this shift is reshaping development finance. Instead of acting as a net source of capital inflows, China has effectively become a net recipient of funds from some of the world’s poorest economies. This reversal is constraining fiscal space for governments already struggling to fund health care, education and climate adaptation, while also limiting their ability to invest in new growth enhancing projects.
African countries are among the most affected. Several governments that once relied heavily on Chinese loans for large scale infrastructure are now diverting scarce public resources to debt repayments. In some cases, this has forced spending cuts, delayed projects or renewed appeals to multilateral lenders such as the International Monetary Fund and the World Bank for emergency support and restructuring.
The findings also feed into broader debates about global debt sustainability and the role of major creditors. While China has participated in some international debt relief initiatives, progress has often been slow and complex, with disagreements over restructuring terms and burden sharing among creditors. The ONE Data report suggests that without more comprehensive solutions, the imbalance between repayments and new financing could deepen economic stress in vulnerable countries.
For China, the shift marks a strategic recalibration rather than a complete withdrawal. Lending has increasingly focused on smaller, commercially viable projects and on countries deemed lower risk, while Beijing has sought to protect its financial interests by prioritising debt recovery. However, for developing nations, the transition has been abrupt and costly.
Overall, the analysis paints a picture of a changing global financial landscape in which the easy availability of Chinese development loans can no longer be taken for granted. As repayments mount and new funding dries up, many poorer countries face difficult choices about debt management, development priorities and their future sources of external finance.
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