China’s role as a major financier to developing countries has shifted significantly over the past decade, with new lending to poorer nations dropping sharply while debt repayments continue to climb, according to a new analysis by ONE Data.
The inaugural ONE Data report found that many low- and middle-income countries — particularly in Africa — are now paying more to China in debt servicing than they are receiving in fresh loans. This reversal reflects a slowdown in new Chinese lending even as older debts remain due.
“The fact that there’s less lending coming in, but that previous lending from China still needs to be serviced — that’s the source of the outflows,” said David McNair, executive director at ONE Data.
As China’s net financing declines, multilateral institutions have stepped in as the main source of development finance. Net financing from multilateral lenders rose by 124% over the past decade and now accounts for 56% of net flows — equivalent to $379 billion between 2020 and 2024.
Africa has been hit hardest by the shift. The continent moved from a $30 billion net inflow from China in 2015–2019 to a $22 billion net outflow in 2020–2024.
The report does not yet include the effects of aid cuts that began in 2025. However, the closure of the U.S. Agency for International Development and reduced allocations from other developed countries have already strained developing economies, especially in Africa. McNair said once 2025 data becomes available, it is likely to show a steep drop in Official Development Assistance.
While the trend is “a net negative” for African nations struggling to fund public services and investment, McNair noted it could also encourage greater domestic accountability as governments rely less on external financing.
The report also highlighted a broader decline in bilateral finance and private external debt flows — trends expected to worsen as aid cuts deepen from 2025 onward.
