China Turns Shylock: BRI Debt Makes Beijing the Poor World’s Top Collector

China is set to become the world’s largest debt collector from developing countries in 2025. This transition occurs as BRI repayments reach an all-time high, a new report by Australia’s Lowy Institute reveals. The report cautions that Beijing’s decade of lending mania is now morphing into a financial straitjacket for some of the world’s poorest nations.

These debt loads are posing risks to crucial development objectives, such as education, healthcare, and climate resilience.

From Financier to Creditor

The Lowy Institute discovered that China has moved on from being a financier of global infrastructure. Rather, it is currently the biggest creditor to the Global South. According to researcher Riley Duke, developing nations are overwhelmed by Chinese repayments and interest. This represents a dramatic shift from China’s previous status as the benevolent lender to the big debt collector.

75 poor nations will together make a record payment of $22 billion to China in 2025. This will be the largest repayment ever made in a single year. Payments to China already surpass repayments to the Paris Club, a collection of Western creditors, in over 50 of the 120 countries surveyed.

Debt Burden Jeopardises Basic Services

The report emphasized that this rising debt is hitting public services in most countries squarely. Governments are being compelled to make cuts in essential sectors due to increasing repayment pressure. That comprises healthcare, education, and climate adaptation — all of which are critical for long-term growth and stability.

The economic squeeze comes as private creditors are seeing increasing repayments as well. Most countries now experience economic pressure from all directions.

China’s foreign ministry responded that they were “not aware of the specifics.” Foreign ministry spokesperson Mao Ning protested that China’s loans are in accordance with international norms. She blamed “a small number of countries” for spreading misinformation and asserted that Chinese assistance has assisted in development, not damaged it.

Diplomatic and Resource-Driven Loans Continue

Whereas China has reduced most international lending, two exceptions stand. It still lends to nations which recently severed diplomatic relations with Taiwan, such as Honduras and the Solomon Islands. It also focuses on mineral-rich nations such as Brazil and Indonesia in order to gain control of minerals essential for batteries.

Geopolitical Fears on the Rise

The report cautions that China’s increasing role as a creditor could provide it with new geopolitical influence. As Western assistance falls, China’s economic power could dictate the political course of many debtor states. China and BRI nations’ trade already made up more than 50% of foreign trade in China during 2024 — a marker of deepening economic interconnectedness.

As repayments rise, most worry that China’s hold will only strengthen. The world must now deal with a new reality — where debt, rather than diplomacy, determines China’s influence.