China’s role as a major financier of developing countries has changed over the past decade, with new loans to the poorest countries falling sharply while debt payments continue to rise, according to an analysis published by ONE Data. The first report by the ONE Data initiative found that many low- and middle-income countries, particularly in Africa, are now transferring more funds to China for debt payments than they receive in new financing from the world’s second-largest economy.
This shift has coincided with a sharp increase in net financing from multilateral institutions, which have become the main source of development finance after taking into account debt service outlays. Multilateral lenders have increased net financing by 124% over the past decade and now provide 56% of net flows, equivalent to $379 billion between 2020 and 2024, according to the analysis.
“The fact that there is less new lending, but that old loans from China still need to be repaid, that is the source of the outflows,” said David McNair, executive director of ONE Data, quoted by Reuters. In the 2020-24 period, the latest for which data is available, Africa saw the biggest impact. An inflow of $30 billion in 2015-19 turned into outflows of $22 billion. The data does not include cuts that took effect in 2025. The closure of the United States Agency for International Development last year and cuts in funding from other developed countries have already hit developing economies, particularly in Africa.