Chinese loans have shorter repayment terms and higher interest rates than bilateral loans from Paris Club nations or loans from international organizations like the World Bank or the International Monetary Fund. This is the list of Countries that are most in debt to China.
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Countries with high Chinese debt are primarily found in Africa, but they may also be found in Central Asia, Southeast Asia, and the Pacific, according to Statista’s analysis of World Bank data. As Statista’s Katharina Buchholz explains below, China currently holds 37% of the debt of low-income countries, making it the new favored lender to these countries. In 2022, only 24% of the bilateral debt owed by the nations is owed to the rest of the world.
The “New Silk Road” initiative, which funds the development of port, rail, and land infrastructure around the world, has left participant nations deeply in debt to China. Pakistan ($77.3 billion in external debt to China), Angola (36.3 billion), Ethiopia (7.9 billion), Kenya (7.4 billion), and Sri Lanka (6.8 billion) had the highest debts to China by the end of 2020, out of the 97 nations for which data was available. Djibouti and Angola had the highest relative debt burdens, trailed by the Maldives and Laos, which just completed a debt-laden railway route to China. In January, World Bank President David Malpass labeled the level of debt held by several countries “unsustainable.”
The Paris Club used to retain the majority of low-income countries’ debt before it was reformed and mostly forgiven for qualifying developing nations after the turn of the millennium. It is uncertain whether such a procedure will be available for Chinese debt. China had officially lent over $170 billion to poor and middle-income nations as of 2020, up from around $40 billion in 2010.
Chinese loans have shorter repayment terms and higher interest rates than bilateral loans from Paris Club nations or loans from international organizations like the World Bank or the International Monetary Fund. Regarding the terms of repayment, secrecy, and the fact that they are designed to fund specific infrastructure projects rather than overall development aims, they are more similar to commercial loans.
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The previously challenging process of repaying Chinese loans has now been made considerably more harder by the Covid-19 outbreak. The Financial Times reports that in 2020 and 2021, the nation had to renegotiate debts totaling $52 billion, which is more than three times the amount that experienced this fate in the two before years. One such instance is Sri Lanka, one of China’s largest debtors, which in May became the first Asian nation to default on its debt in twenty years.