China becomes net creditor: global South repays more than receives

Developing nations are entering a new and worrying phase in their relationship with China. A new report from Boston University finds that, in 2022 and 2023, these countries paid more in debt service to China than they received in new Chinese loans.

The shift is starting to reverse what was once a net flow of capital to the Global South, and the stakes are high.

The study, Reviving Chinese Development Finance in the Global South, shows that net debt transfers, defined as the amount of new lending minus repayments of principal and interest, turned negative during those two years. In total, developing countries repaid approximately $3.9 billion more per year than China disbursed anew. Reuters

Between 2008 and 2024, China’s policy banks, the China Development Bank and the Export-Import Bank, committed more than $472 billion across more than 900 infrastructure projects in transport, energy, water, ICT and more. Those investments once helped build public assets and spur growth in many parts of the Global South. Reuters

But lending patterns are changing. New project financing has shrunk, and China is increasingly routing funds through intermediate development banks rather than direct project lending.

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