“Debt-Trap Diplomacy” – Which Developed Countries Are The Most Indebted To China?

According to the IMF, the most indebted poor countries in the world all have taken big loans from China.

Critics refer to this as “debt-trap diplomacy,” in which China deliberately provides loans to countries it knows are unable to pay, with the hope of gaining political leverage.

Visual Capitalist’s Marcus Lu and Bruno Venditti use data from the US-China Economic and Security Review Commission to show in the graphic below, the most heavily indebted countries by their total loans from China.

China’s Massive Belt and Road Initiative

Much of China’s loans are part of the country’s wider investments in global infrastructure: the Belt and Road Initiative (BRI).

Launched in 2013 and also referred to as the New Silk Road, the BRI stands as one of the most ambitious infrastructure projects ever conceived. Its goal is to create a vast network of railways, energy pipelines, highways, and streamlined border crossings.

In the process, Chinese state-owned creditors rapidly scaled up the provision of foreign currency-denominated loans to resource-rich countries, specially in Africa.

Among the heavily indebted countries, 14 of 15 are African nations, many of the poorest in the world, like Sudan, Niger, Mozambique, Chad, and the Democratic Republic of Congo. The sole non-African country on the list, Bolivia, is also one of the poorest nations in South America.

According to the US-China Economic and Security Review Commission, 60% of China’s debtor nations were in financial distress in 2022, up from 5% in 2010.

In addition to gaining preferential infrastructure accesses, China is gaining political allies. Many countries on this list, like the Republic of the Congo, have publicly supported China’s positions in Hong Kong and in the South China Sea.