Which Countries Owe China the Most Money?

China has emerged as a significant source of international lending. Many nations now owe substantial amounts to China, primarily through state-backed loans and investments to sovereign governments or state-owned entities. This has made China a prominent global creditor.

Mechanisms of Chinese Lending

China extends loans to other countries through several mechanisms. Direct government-to-government agreements, or bilateral loans, are a fundamental channel. These loans are negotiated between China and the borrowing nation, often for specific projects or budgetary support.

A significant portion of China’s overseas lending is channeled through its state-owned policy banks, primarily the China Development Bank (CDB) and the Export-Import Bank of China (China Exim Bank). China Exim Bank supports foreign trade, overseas construction contracts, and investment projects, including concessional loans. The China Development Bank also provides substantial overseas development finance, with lending volumes comparable to the World Bank.

The Belt and Road Initiative (BRI) is another major avenue for Chinese financing, involving extensive loans for infrastructure development. Since its inception in 2013, the BRI has committed over $1 trillion in funding to developing countries for large-scale projects like ports, railways, and energy facilities. While policy banks have historically led BRI lending, commercial banks like the Industrial and Commercial Bank of China (ICBC) and Bank of China are increasingly playing a larger role through co-financing and syndicated loans. These commercial bank loans support Chinese companies’ “going global” strategies.

Chinese lending also includes structured finance arrangements, such as loans collateralized by future commodity export receipts or project revenues. These mechanisms often involve foreign currency revenues deposited in bank accounts controlled by Chinese lenders, giving them high control over borrower revenue streams. China has also utilized debt-for-equity swaps, which can be a tool in debt restructuring.

Countries with Significant Debt to China

Many countries hold substantial financial obligations to China. Nations across Africa, Asia, and Latin America feature prominently among China’s largest debtors. These debts typically stem from large-scale infrastructure projects, energy initiatives, or general development financing.

According to 2022 data, Pakistan has one of the largest external debts to China, approximately $26.6 billion. China’s investments in Pakistan have focused on energy, transportation, and storage, particularly within the China-Pakistan Economic Corridor (CPEC). Angola is another significant debtor, with its debt to China reaching around $21 billion by 2022, largely from loans for infrastructure rebuilding after its civil war.

Other nations with considerable debt to China include Sri Lanka, Ethiopia, and Kenya. Sri Lanka’s debt was approximately $8.9 billion in 2022, with its external debt crisis partly attributed to repayments owed to Chinese lenders. Ethiopia and Kenya also hold significant debts, around $6.8 billion and $6.7 billion respectively by 2022, primarily for infrastructure and energy projects. Countries like Laos and Djibouti have also taken on Chinese loans for railway systems and other large-scale developments.

Beyond these, Russia and Venezuela have received substantial Chinese funding. Russia received nearly $170 billion in development loans between 2000 and 2021, primarily for its industry, mining, and construction sectors. Venezuela has also been a major recipient, with Chinese funding often linked to its oil resources. Other notable debtors include Bangladesh, Zambia, Laos, Egypt, and Nigeria. These loans often support various sectors, from resource extraction to general budget support.

Data Collection and Transparency in Chinese Lending

Quantifying global debt owed to China presents challenges due to opacity in China’s lending practices. China does not consistently release comprehensive data on its overseas lending activities. This lack of reporting makes it difficult for international bodies and researchers to obtain precise figures.

A primary reason for this data scarcity is that China is not a member of key creditor organizations like the Paris Club, which requires members to disclose official lending. Many Chinese loan agreements contain confidentiality clauses, barring borrowers from revealing terms or even the debt’s existence. This means a significant portion of China’s overseas loans can be considered “hidden debt,” complicating debt sustainability analyses and macroeconomic surveillance for recipient countries.

Despite these challenges, various organizations and research initiatives track and estimate China’s global lending footprint. Institutions like the World Bank and the International Monetary Fund (IMF) collect some data, but their figures may not capture the full extent of Chinese lending due to this opacity. Academic research labs, such as AidData at William & Mary and the Boston University Global Development Policy Center, compile comprehensive datasets on Chinese loans and grants.

These research groups employ diverse methodologies, including analyzing publicly available documents, country-specific debt reports, and media accounts, to piece together the lending landscape. Different methodologies and data sources can lead to variations in reported figures, meaning estimates are frequently used. Greater transparency in China’s lending is important as it impacts global financial stability and countries’ ability to manage their debt burdens.