China’s position as a major financier to developing countries has undergone a significant shift over the past decade, with fresh lending to poorer nations declining sharply even as debt repayments continue to increase, according to new analysis released by ONE Data.
The inaugural report by the ONE Data initiative reveals that many low- and middle-income countries, particularly across Africa, are now paying more in debt servicing to China than they are receiving in new loans from the world’s second-largest economy. This marks a notable reversal from earlier years when Chinese financing played a central role in supporting infrastructure and development projects across the Global South.
The report indicates that this change has coincided with a substantial rise in net financing from multilateral institutions, which have now become the primary source of development finance globally once debt-service obligations are taken into account. Over the past decade, multilateral lenders increased their net financing by 124 percent and currently account for 56 percent of net financial flows, equivalent to approximately 379 billion dollars between 2020 and 2024.
According to David McNair, Executive Director of ONE Data, the growing outflows are largely the result of past borrowing commitments. He explained that while new lending from China has slowed, existing loans still require servicing, creating a situation where repayments now exceed inflows.
Africa has experienced the most pronounced impact of this shift. The continent moved from receiving about 30 billion dollars in net inflows from China during the 2015 to 2019 period to recording net outflows of roughly 22 billion dollars between 2020 and 2024. This represents a dramatic swing of approximately 52 billion dollars, making Africa the region most affected by the decline in Chinese net financing.
The data analysed does not yet account for reductions that took effect in 2025. However, early indications suggest further pressure on developing economies, particularly in Africa, following the closure of the United States Agency for International Development last year and reduced aid allocations from several developed countries.
McNair described the outlook for African countries as largely unfavourable, noting that declining external financing could make it more difficult for governments to fund public services and long-term investments. At the same time, he suggested that reduced reliance on foreign financing may encourage stronger domestic accountability and improved revenue mobilisation within affected countries.
The report also points to a broader decline in bilateral finance flows and private external debt, trends that are expected to intensify as aid cuts from 2025 take effect. These developments collectively signal a tightening global financing environment for developing nations.
Despite the slowdown in net lending, separate research suggests that China’s overseas dealmaking activity rebounded strongly in 2025. A report by the Griffith Asia Institute found that agreements linked to China’s Belt and Road Initiative reached record levels of 213.5 billion dollars last year. This included 128.4 billion dollars in construction contracts and 85.2 billion dollars in investments, with Africa emerging as the largest recipient.
Launched in 2013 by President Xi Jinping, the Belt and Road Initiative, sometimes referred to as the New Silk Road, is regarded as one of the most ambitious infrastructure programmes in the world. Initially focused on linking East Asia and Europe through major transport and trade corridors, the initiative has since expanded across Africa, Oceania, and Latin America, significantly extending China’s economic and political influence over the past decade.
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