Poorest Nations Face Record Debt Repayments to China in 2025
A new report from the Lowy Institute warns that the 75 poorest nations are on track to make record debt repayments totaling $22 billion to China in 2025. This figure is part of a broader $35 billion debt obligation to China, driven primarily by loans from President Xi Jinping's Belt and Road Initiative (BRI). The analysis highlights that these repayments are placing immense pressure on local funding for essential services such as health and education.
According to the report, China's lending, which peaked in 2016 with over $50 billion in new loans, has shifted from a supportive role to that of a debt collector, raising fears of potential “political leverage.” The report also raised concerns about recent large-scale loans to countries like Honduras and Nicaragua, coinciding with their diplomatic recognition shifts from Taiwan to Beijing.
While China denies claims of creating debt traps, the situation remains precarious as it juggles domestic economic pressures with international diplomatic relations. The Lowy Institute’s findings underscore the urgent need for transparency in China’s lending practices, especially as the global economy faces significant challenges.
