China, The World's Largest Debt Collector and Its Debt Relief Strategies

CHINA IS LARGEST DEBT COLLECTOR

Over 25% of the world's bilateral external debt was owed to China by the end of 2023, making the country the leading debt collector. Further , over the last two decades, when China's external lending increased massively, the amount of bilateral external debt owed by countries surged exponentially too. It also shows the external debt owed by all countries to China in absolute terms and percentage terms.

LEFT SEVERAL COUNTRIES SADDLED

China's Belt and Road Initiative (BRI) has left scores of lower- and middle-income countries (LMIC) saddled with "hidden debts" totalling USD 385 billion, according to new research. But the country is learning hard lessons as the borrowing countries are facing foreign exchange crises and cannot pay back the Chinese debts. The selection of risky key debtors — including Pakistan, Venezuela, Russia, Angola, Ecuador, Argentina, Sri Lanka, Zambia and Iran — is another design shortcoming.

WHAT IS CHINA DOING TO CLEAR ITS DEBTS

China unveiled a 10 trillion yuan ($1.4 trillion) for its local governments to deal with their immense hidden debt. . By advancing a structured framework rather than short-term adjustments, the program underscores a gradual transition toward a sustainable debt management strategy.