Analysis: China Owed Massive Debts From Belt and Road Repayment Delays

TaiwanPlus News

A new report from Australian think tank the Lowy Institute says developing and low-income countries now owe record debts to China. Those loan repayments have piled up since they accepted funding through Beijing's Belt and Road Initiative in the 2010s. Now, China is holding back more funding as it waits to collect its debts--and faces domestic and international pressure to do so. Riley Duke, the author of the report says that Beijing now faces a balancing act in maintaining political and economic relationships with its loan recipients.

Transcript

00:00So your report touches on the changing trajectory of China's Belt and Road Initiative,

00:05from being a major lender to developing countries to now holding back as it waits to collect on its

00:11debts. Why do so many countries owe money to China now? And where is China still lending out funding

00:18to, if any? China's Belt and Road Initiative was in full swing in around 2016, 2017. And for most

00:26of those, or a majority of those loans, China's actual loan terms offer five to eight year grace

00:31periods. And so five to eight years on the mid 2010s meant that this period now around the sort of mid

00:382020s was always going to be a crunch period. And then there was one other factor that has sort of

00:43increased the wave of repayments that we're seeing now. And that's China's participation in the debt

00:49service suspension initiative, the G20 initiative during the pandemic. So this was an international

00:54deal that saw countries pause repayments. That is why we're at record levels in 2025.

01:00On the topic of where China's lending has been most resilient, you know, our analysis shows

01:06two key groups. One of them we sort of think about as being sort of strategic and the other one's more

01:13about resources. China has continued to lend, you know, the majority of its remaining lending has gone

01:19to countries that are critical minerals producers and battery metals exporters. But on the strategic

01:26front, China still lends to all of its neighboring countries quite heavily. And then the other factor,

01:33and the one that's most relevant for Taiwan, is that China has lent a lot to countries when it's tried to

01:40secure the one China policies. Honduras in 2023, Nicaragua in 2021, the Solomon Islands, Burkina Faso,

01:48the Dominican Republic, all these countries saw big, largest of their kind loan deals from China

01:55in the aftermath of swapping from Taiwan and adopting the one China policy.

02:01So China has now responded to your report saying that they do follow international conventions and

02:06market rules. Now, do you think the international community will put on more pressure to China

02:12to try to change the way that its infrastructure funding works? And what do you think China's strategy will

02:17be going forward? I think public outreach from China on the topic is likely to increase in the next few

02:23years, because, you know, for all developing countries, 2024 was a record year for payments.

02:29And then for the most vulnerable and low-income countries, 2025 was a record year. So for each

02:35country that China is engaged with as a partner that it has also lent to, being a debt collector is not

02:41diplomatic by nature. And so it will have to play this balancing act between recouping the money that

02:46it's lent out and then also managing its relationship with that country. Whether that causes a sort of a

02:53big change in how China approaches these things is very difficult to say. But there has been some

02:59positive signs that China has been more likely to engage in debt restructuring deals. We've seen a few

03:06cases in Africa where China has come to the table, but there are still big barriers to China offering,

03:14you know, debt haircuts right down of its debts.

Category

Transcript

Recommended