Thread: Developing nations face 'tidal wave' of China debt: Report

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 (May 27).


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 at 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 jeopardise 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 the 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.

Developing nations face 'tidal wave' of China debt: Report - CNA

Originally Posted by misskit

"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."

These poor countries knew what they were doing. It is the same for everyone, you borrow money and you have a schedule to repay the debt. No sympathy at all.
Where those countries might have miscalculated was assuming that the loans would be used for projects that would develop their economies and so make repayment easier. Of course a lot of them trousered the money. No projects, no expanded economy, problem.
Another issue is that China's economy is in difficulty. Probably these borrowing countries thought they could just borrow more to repay the first loans. In fact China has cut back a lot on foreign loans and is not yet forgiving any debts because they need the cash. If the Chinese economy is as bad as some pundits suggest, then these borrowers are going to be in bigger trouble. They'll go crawling to the IMF and the funds won't be there to bail them out.
In the end, like it or not, an economic crisis in China becomes a global problem.

Originally Posted by Shutree

These poor countries knew what they were doing.

Not quite: The corrupt leaders of these poor countries knew what they were doing.

As with the recent poisoning of the Kok River, the people don't have much of a say in it.

Originally Posted by Shutree

These poor countries knew what they were doing. It is the same for everyone, you borrow money and you have a schedule to repay the debt. No sympathy at all.
Where those countries might have miscalculated was assuming that the loans would be used for projects that would develop their economies and so make repayment easier. Of course a lot of them trousered the money. No projects, no expanded economy, problem.
Another issue is that China's economy is in difficulty. Probably these borrowing countries thought they could just borrow more to repay the first loans. In fact China has cut back a lot on foreign loans and is not yet forgiving any debts because they need the cash. If the Chinese economy is as bad as some pundits suggest, then these borrowers are going to be in bigger trouble. They'll go crawling to the IMF and the funds won't be there to bail them out.
In the end, like it or not, an economic crisis in China becomes a global problem.

100% correct..it is no different from.the west. The USA for example selling bonds to foreigners ..then forgetting that those foreigners suddenly hold so many bonds that if they all sold them at once. Carney knew that.

Originally Posted by harrybarracuda

Not quite: The corrupt leaders of these poor countries knew what they were doing.

As with the recent poisoning of the Kok River, the people don't have much of a say in it.

Harry. The west is just as corrupt except its in bigger numbers not just tea money. The kok River is pretty low on the corruption scale, but high on the environmental fuck up scale. Hard to blame a govt for that

Slip in and blow up the mine when no one is looking. Then act innocent.

Might work for the scam centers, too.

Good idea

Originally Posted by BLD

They don't have a govt Harry. Just gangsters and warlords.

And they're the ones taking the money to turn a blind eye.

That's how they roll. Damn shame but I fear Myanmar will never be a kind of regular country. The military won't let that happen. They are making to much money. Imho

Damn sneaky Chinks.

Originally Posted by HuangLao

Damn sneaky Chinks.

Not even sneaky, there is simply no-one of any authority who gives a shit what the chinky bastards do in SEA.

I wonder what happened to that loon chinese apologist in Chantaburi.

Originally Posted by BLD

That's how they roll. Damn shame but I fear Myanmar will never be a kind of regular country. The military won't let that happen. They are making to much money. Imho

I have sometimes wondered if China wouldn't do something in Myanmar, create some kind of security pretext to roll in there and administer the place. It would give them direct access to the Indian Ocean which would be ideal for trade and for their military. So much more convenient than goods making the long trip by sea around Malaysia or the long and relatively hazardous overland route to Gwadar. It seems unlikely now, although it might depend upon which faction comes out ahead when Xi steps down.