Over the past decade, China development finance to low- and middle-income countries has changed dramatically. Fresh loans from China have dropped sharply. Meanwhile, debt repayments from these nations keep rising.
As a result, many developing countries now send more money to China than they receive in new financing. This is especially true in Africa.
The trend marks a big shift from the 2010s. Back then, China was a top funder of infrastructure across the Global South. Today, that flow has reversed.
In Africa, the change is striking. Between 2015 and 2019, the continent received $30 billion in Chinese loans. But from 2020 to 2024, it paid out $22 billion in repayments. That’s a net swing of $52 billion.
David McNair, Executive Director at ONE Data, explains why: “There’s less lending coming in. But previous loans from China still need to be repaid. That’s what’s driving the outflows.”
At the same time, multilateral institutions have stepped up. These include the World Bank and regional development banks. Their net financing to developing nations rose by 124% over the past decade.
Between 2020 and 2024, they provided 56% of all net development flows—$379 billion in total. Once debt payments are factored in, these institutions are now the main source of development finance.
This shift brings both challenges and opportunities. On one hand, governments struggle to fund public services and infrastructure. On the other, they may improve domestic accountability.
McNair notes that with less foreign funding, countries might strengthen tax systems and budget transparency. “They can’t rely as much on outside money,” he said.
Adding to the pressure, Western aid is also shrinking. The U.S. Agency for International Development closed in 2025. Other developed nations have cut funding too.
These changes have already hurt developing economies—especially in Africa. When full 2025 data arrives, experts expect a sharp drop in Official Development Assistance worldwide.
The report also shows a broader decline in bilateral finance and private external debt. These trends will likely worsen in the coming years.
All in all, the era of booming China development finance is fading. For many developing nations, this means tighter budgets, higher debt burdens, and fewer lifelines—just as global uncertainty grows.
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