China’s position as a major lender to developing countries has changed over the past ten years, with fresh loans to poorer nations drastically declining while debt repayments are still rising.
Many low- and middle-income nations, especially those in Africa, are already sending more money to China in loan repayments than they are receiving in new funding from the second-largest economy in the world, according to the ONE Data initiative’s first report.
The swing has been accompanied by an increase in net financing from multilateral organizations, which, after accounting for debt-service outflows, are now the primary source of development finance.
Multilateral lenders currently account for 56% of net flows, or $379 billion between 2020 and 2024, after increasing net financing by 124% during the previous ten years.
According to David McNair, executive director of ONE Data, “The source of the outflows is the fact that there’s less lending coming in, but that previous lending from China still needs to be serviced.”
Cuts implemented in 2025 are not included in the data. Developing economies, particularly in Africa, have already been impacted by the closing of the U.S. Agency for International Development last year and a decrease in funding from other affluent nations.
Data from 2025 will probably reveal a significant decline in Official Development Assistance flows.
He claimed that while the trend was “a net negative” for African countries since many governments struggle to finance investments and public services, it would also encourage local responsibility as governments depend less on outside assistance.
The research also noted a more general drop in private foreign debt and bilateral finance flows, both of which are anticipated to be made worse by aid cuts starting in 2025.
