JOHANNESBURG, Jan 27 (Reuters) – China’s role as a major financier of developing countries has shifted over the past decade, with new loans to poorer countries falling sharply and debt repayments continuing to rise, according to an analysis published by ONE Data.
The first report from the ONE Data initiative has found that many low- and middle-income countries – particularly in Africa – are now transferring more debt repayments to China than they are receiving in new financing from the world’s second-largest economy.
This fluctuation has coincided with a surge in net financing from multilateral institutions, which have become the main source of development finance once debt service outflows are taken into account.
The analysis found that 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.
“The fact is that fewer loans are coming in, but the previous loans from China still need to be repaid – that’s where the outflow comes from,” said David McNair, executive director of ONE Data.
In 2020-24 (the latest period for which data are available), Africa was most affected, with inflows of $30 billion and outflows of $22 billion in 2015-19.
The data does not include cuts that take effect in 2025. Last year’s closure of USAID and a decline in funding from other developed countries have hit developing economies, especially Africa.
McNair said ODA flows were likely to fall significantly once data for 2025 became available.
He said the trend would be a “net negative” for African countries, as many governments face difficulties in funding public services and investment, but would also promote domestic accountability as governments rely less on external financing.
The report also highlights broader declines in bilateral financial flows and private external debt – trends that are likely to be exacerbated by aid cuts from 2025.
(Reporting by Colleen Goko; Editing by Karin Strohecker and Kevin Liffey)
