China is no longer the world’s biggest development lender. It’s now the largest debt collector for many of the world’s poorest countries. This is the main finding from a new report by the Lowy Institute, an Australian foreign policy think tank.

According to the report, China’s Belt and Road Initiative (BRI), launched by President Xi Jinping in 2013, has financed roads, ports, and railways across the developing world. These loans typically included grace periods of three to five years, which began expiring in the early 2020s.

Lending peaked in 2016 at over $50 billion but the money flow began to slow before COVID-19. Now, countries that borrowed heavily are facing steep repayments.

The report stated that this year alone, 75 poorest countries throughout Africa, South America and the Pacific Islands, as well as South, Central and Southeast Asia, are expected to pay China $22 billion. 

Despite a wider decline in its global lending, China continues to finance strategic and resource-rich partners.

The biggest recipients of new loans are neighboring countries like Pakistan, Kazakhstan, and Mongolia, as well as developing nations that export critical minerals or battery metals, including Argentina, Brazil, the Democratic Republic of Congo, and Indonesia.

While China has denied using debt for political control, the report found new loans were often given to countries that recently cut diplomatic ties with Taiwan—such as Honduras and the Solomon Islands.

The Lowy report warned that the record-high debt owed to China could be exploited as “political leverage,” especially given the significant cuts to foreign aid under the Trump administration.

Without increased international support, the report says debt repayments will continue to divert resources from development, fuel political instability, and weaken Western influence on the global stage.

“China is grappling with a dilemma of its own making: it faces growing diplomatic pressure to restructure unsustainable debt, and mounting domestic pressure to recover outstanding debts, particularly from its quasi-commercial institutions,” the report states. “But a retrenchment in Western aid and trade is compounding difficulties for developing countries while squandering any geopolitical advantage for the West.”