Lending from state-owned Chinese banks to developing countries took off around 2010. From China’s view, there were several justifications. The public name given to the wave of lending was the Belt and Road Initiative, with the broad idea of building infrastructure and trade connections across Asia, the Middle East, and Africa (for some posts in the last few years on the initiative, see here, here and here). The increasing trade ties would help to assure China’s economy of access to raw materials, while also providing additional market for China’s exports. In addition, these deals often involved other countries borrowing money from China in substantial part to hire Chinese companies to come and build the infrastructure. Hovering just behind these economic arguments was a hope or belief that China would deepen its political connections with the borrowing nations, and its influence over these nations.

Sebastian Horn, Carmen M. Reinhart, and Christoph Trebesch bring the story up to date in “The China’s Lending to Developing Countries: From Boom to Bust” (Journal of Economic Perspectives, Fall 2025). Here are two figures to show the trends:

This figure shows net lending by China and its state-owned banks to developing countries. As you can see, lending takes off around 2010, dries up around 2019, and in the last few years turns into repayments.
 

This companion figure shows total “official” debt of developing countries–that is, not debt to private banks or companies. The red line showing “debt to China” exceeds total debt to the IMF by around 2007 and has been roughly equal to total debt to the World Bank since about 2016.
 

A recent report by Mengdi Yue, Diego Morro, Nicolo Capirone, and Yiyuan Qi, published by the Global China Initiative at Boston University, focuses on Chinese loan commitments to Africa (“Selective Engagement and Strategic Retooling: The Chinese Loans to Africa Database, 2000–2024, January 2026).
 

As the United States learned back in the 1980s and 1990s, it’s easy to be popular during the opening act of international lending. But when the loans aren’t getting repaid in time, the lender can become unpopular pretty quickly.

When countries are having a hard time repaying debt, the standard policy response is to get all the lenders together in a room, and have them all agree that they will refinance the loan and take less money. (This is essentially the “Paris Club” shown in the figure above.) The logic is that no single lender will agree to take less if everyone else is being repaid in full. However, if everyone insists on getting repaid in full, and the result is an economic collapse in the borrowing country, then the lenders could end up with very little indeed. Thus, better to agree on taking a moderate loss now, rather than risking a much larger loss later. However, China’s lenders have been largely refusing to participate in these arrangements, instead holding the position that everyone else should take the losses instead.

It will take a few years to sort out the legacy of China’s foreign lending and the Belt and Road Initiative from about 2010 to 2019. Some of the infrastructure plans work out just fine; others looked better on the drawing board than in reality. Some countries have closer ties to China as a result; others are now looking at Chinese influence and money with a wary and even hostile eye. How the debts to China’s lenders are ultimately resolved, for better or worse, will be the climax of the story.

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