On May 27, 2025, the Lowy Institute published "Peak Repayment: China's Global Lending," a landmark report on the global debt owed to China. The study reveals that 75 countries will pay Beijing 22 billion USD this year, an all-time record. The PRC has shifted from the role of global lender to that of debt collector, redefining its place in the global geoeconomy. Beyond the figures, the issue is one of power through debt: how indebtedness now structures relations of influence and dependence.

From the outset, the report sheds light on the critical situation of states whose inability to honor their debts has already led to transfers of the right of use of strategic infrastructure to Chinese actors, notably in South Asia. The case of Sri Lanka is emblematic: its massive indebtedness, recalled by several analyses, has led to a loss of control over certain key assets and illustrates how debt can become a decisive lever of influence. These situations highlight from the start the central issue: how indebtedness today shapes the relations of dependence and influence between China and its partners.

The Greek example illustrates the global scope of the phenomenon strikingly. Unable to face part of its public debt at the height of the financial crisis, Athens ceded the majority of the Port of Piraeus to the Chinese group COSCO in 2016, in the form of a long-term lease. This acquisition allowed Beijing to take operational control of one of the most strategic maritime hubs in the Mediterranean. The Greek case shows that China's ability to convert a debt situation into geoeconomic influence is not limited to the Global South: it now extends to Europe itself. From the outset, this observation underscores the scale of the issue and reminds us that financial dependency can translate into structural concessions even within the European Union.

The 2025 Lowy Report: an X-ray of a global financial shift

This study, conducted by an Australian institute, more precisely the Lowy Institute Indo-Pacific Development Centre, draws on data from the World Bank Debtor Reporting System and the IMF. Its objective is to measure the transition of China's role: from global lender to net creditor of developing countries. This report sheds light on the flows of financial dependence and zones of strategic vulnerability.

In 2025, the 75 poorest and most vulnerable countries will have to repay around 22 billion dollars in debt to China. This represents the largest annual amount ever paid to Beijing. In other words, a significant share of the national budgets of these countries is now devoted to paying interest and principal owed to China. Moreover, net financial flows between China and the developing world have become negative: in 2024, China collected approximately 34 billion USD more than it lent. This is a historic reversal compared with the 2010-2016 period, when its loans far exceeded repayments. The report indicates that Chinese loans peaked in 2016, at more than 50 billion USD. Since then, the dynamic has collapsed: in 2023, only 7 billion USD in new loans were recorded, a drop of more than 85%.

The report introduces the concept of "peak repayment," a tipping point at which debt becomes an instrument of control. In reality, Beijing is no longer an expansive lender but an actor managing risk and recovery, which alters the balance of power. The challenge for China is to preserve its financial interests while avoiding the image of "predatory lender." Nevertheless, the stakes are quite different for indebted states: they must manage the contradiction between financial dependency and economic sovereignty.

Debt as an instrument of influence and vulnerability

The Lowy report shows that repayments to China exceed those owed to the Paris Club in 54 countries. As a reminder, the Paris Club includes Germany, Australia, Austria, Belgium, Brazil, Canada, Korea, Denmark, Spain, the United States, the Russian Federation, Finland, France, Ireland, Israel, Italy, Japan, Norway, the Netherlands, the United Kingdom, Sweden, and Switzerland. In the poorest economies, payments to China account for 25% of total debt servicing.

Debt to China is therefore becoming a lever of political negotiation, notably through targeted restructurings. Moreover, in many countries, more public funds are absorbed by debt service than by essential social spending such as health and education. The countries concerned are experiencing an erosion of their strategic autonomy, involving, among other things, financial dependency, diplomatic concessions, and loss of assets. Sri Lanka, Zambia, and Laos are textbook cases: these countries are caught between debt and the maintenance of the political link with Beijing.

China's shift into the role of dominant creditor reshapes information and power flows. Debt serves as a tool of discreet influence, a form of financial soft power: pressure without direct interference. The Lowy Institute's report mentions that China continues to grant new loans to certain strategic countries despite the general decline in global financing for the project. These include border countries (Pakistan, Laos, Kazakhstan) or countries rich in critical minerals (Democratic Republic of the Congo, Indonesia, Brazil). New challenges in global governance are then entering the international stage. Among them are transparency, traceability of loans, and coordination with the IMF.

Africa at the heart of the model: dependency, resilience, and reconfiguration

Africa is a textbook case. More than half of African countries rank among the 30 countries most indebted to China. Africa concentrates a major share of loans under the BRI for transport, energy, and telecommunications infrastructure. The continent's dependency is explained by weak local capital markets and post-colonial infrastructure needs.

Several African cases attest to how China can obtain access to or operational control of strategic infrastructure in exchange for massive financing. In East Africa, the management of ports modernized with Chinese capital, as in Djibouti or Tanzania, is often accompanied by long-term concessions granted to Chinese state-owned enterprises. The Addis Ababa to Djibouti railway, built under the BRI, is also operated by Chinese operators in its first years of operation. These arrangements, covering infrastructure vital to regional trade, show that China does not merely finance: it sets itself up for the long term by controlling the use of key logistical nodes, thereby consolidating its political and economic influence across the continent.

Furthermore, repayments to China weigh heavily on African national budgets and aggravate the social tensions already very present on the continent. Governments oscillate between strategic cooperation and concern about the loss of economic sovereignty. That is why some countries seek to diversify their partners, notably with Turkey, India, and other multilateral institutions such as the IMF, the World Bank, and the African Development Bank.

Africa thus illustrates the dual nature of the Chinese model: a driver of development and a vector of dependency. Beijing is establishing itself as a central player in African logistics and digital networks, strengthening its political influence. For actors on the continent, this is a strategic issue, as it is necessary to identify the vulnerabilities linked to debt and critical infrastructure.

Toward a reconfiguration of the global debt system

The year 2025 marks a turning point: China becomes the leading bilateral creditor of 53 countries. The Lowy Institute report highlights a dual global financial system: on one side, IMF/Paris Club governance; on the other, the Sino-centric model. The latter is altering the balance of the global financial system. As a result, Western institutions are sidelined in restructuring negotiations.

This shift in balance carries systemic risks such as the rising cost of debt, the slowdown of global growth, and a potential credit crisis for emerging countries. Among the issues are also the opacity of Chinese contracts (confidentiality clauses, lack of full reporting), which creates a gray zone in global governance. Without international coordination, the fragmentation of sovereign debt threatens global financial stability.

Beijing faces a dilemma: collecting its debts without losing its image as a partner of the South. For debtor countries, the challenge is different: they must build a strategy of resilience (transparency, diversification, risk monitoring). Monitoring Sino-centric financial flows is becoming an economic security issue.

Thus, the Australian institute's report confirms a profound geoeconomic shift: China is no longer a driver of global financing but finds itself at the center of a repayment system, which transforms relations of dependence and levers of influence: debt is becoming an instrument of global power. The analysis of debt flows must now be integrated as an indicator of power and vulnerability. In this new era of "peak repayment," understanding financial interdependencies amounts to reading the new frontiers of global power.


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