As the maturity of the large-scale funds supplied by China through the 'Belt and Road Initiative (BRI)' project comes to fruition, there are analyses suggesting that China, which was previously a net capital provider, is now transitioning to the largest creditor recovery country for developing countries.
The Wall Street Journal (WSJ) reported, citing a report released by the Lowy Institute in Australia on the 26th (local time), that 'the surge in China's external lending in the mid-2010s is now reaching its repayment point, and in 2025 alone, 75 countries must repay a total of $22 billion in liabilities to China.'
Riley Duke, a researcher who authored the report, noted that 'China is facing pressure diplomatically to restructure its liabilities, and internally, the burden of unrecovered loans from quasi-commercial financial institutions is growing.'
China played the role of a net capital provider by concentrating on supplying BRI loans from 2012 to 2018, but it has since transitioned to a net capital outflow country as repayments have increased compared to new loans. As of 2023, 60 countries have recorded net repayments to China, which is more than three times that of 2012.
Notably, among 120 countries, 54 countries have exceeded the amount they owe to China compared to the total repayments to the Paris Club, a group of Western creditor nations.
The report analyzed that with the proportion of trade with BRI countries exceeding half of China's total trade, it remains uncertain how the transition into a creditor recovery country will affect China's image as a development partner. However, China still maintains the status of the largest bilateral lender to seven countries, including Laos, Pakistan, and Mongolia.
It was also highlighted that China continues to provide funding to certain strategically important mineral-exporting countries. The report stated that in 2023 alone, over $8 billion was executed for four resource-rich countries, including Argentina, Brazil, Indonesia, and the Democratic Republic of the Congo, which accounts for 36% of total loan outflows.
Meanwhile, Western countries, including the United States and Europe, are showing a trend of reducing or halting aid to developing countries due to internal political and budgetary constraints. President Trump directed in January this year to halt the execution of all existing overseas aid.