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Have you ever heard of China’s “Debt traps”? China’s influence on the world is increasing, and one way it is doing this is by lending struggling or poorer countries money to help them build infrastructure and trade. These loans are part of China’s Belt and Road Initiative to help increase trade with China.
The trouble with these loans is that many countries that owe the most debt to China are on the brink of collapse due to the large repayment plans they owe, and the Chinese government is not budgeting on taking a loss. If these already struggling nations default on their loans, what will become of their citizens?
Here are 14 countries that currently owe the most debt to China. In this article, we’ll also explore why these countries took out the money.
Belarus
Belarus is a landlocked country in the middle of Europe, and it has trade sanctions due to many claims of human rights abuses and repression. This means it can be difficult for the country to have the capital to start new infrastructure and economic projects.
That is why Belarus is now in debt with China for $3,92 billion, which will help stimulate the economy and build new infrastructure.
Djibouti
Djibouti is located on the east side of Africa in the Horn of Africa region, which means it is a prime location for trade. Still, due to factors such as the population’s illiteracy, childhood malnutrition, and high unemployment, it struggles to use its location to build its economy.
China lent $4,4 billion to Djibouti to help build new infrastructure projects focusing on its trade location, such as port and railway projects. This involvement shows that the PRC is interested in trade in the area.
Nigeria
Nigeria is an oil-rich country on the west coast of Africa, meaning its oil fields attract international interest. However, unlike many oil countries in the Middle East, Nigeria does not have the capital to grow its economy through its oil deposits.
This is why they have taken a $4.29 billion loan from China. The hope is that these loans will kickstart the necessary infrastructure to bolster additional economic development projects.
Pakistan
As of writing this article, Pakistan has the most significant debt to China, totaling $26,60 billion. This debt is a massive financial burden for Pakistan, and according to Bloomberg, it wants to reprofile its debts to China in hopes of relieving the strain it is putting on the whole country.
This debt reprofile is intended to give the Pakistani government some breathing space and prevent the people’s monthly electrical bills from increasing.
Angola
Angola has the most sizable debt to China on the African continent, with a whopping $20.98 billion loan. These debts are linked to infrastructure projects and even oil loans so that Angola’s people and businesses can use vehicles to transport goods.
Due to a recent debt restructuring, Reuters reported that Angola will pay $200 million less monthly toward these debts, giving the country some breathing room.
Ethiopia
Ethiopia has taken on a debt of $13.73 billion from China to fund major infrastructure projects to help the economy grow. These include projects such as railway construction and new industrial parks.
However, in January 2024, Ethiopia defaulted on paying foreign debts due to war and other major issues. This led the International Monetary Fund, IMF, and the World Bank to restructure Ethiopia’s foreign debt, including the debt to China.
Kenya
Kenya took out loans from China to help with the logistical and infrastructure projects it desperately needs to grow its economy. However, these loans put Kenya in debt with China for $9.8 billion.
The Kenyan government plans to increase domestic taxes to help pay these loans, which led to deadly protests in the country.
Zambia
Zambia is currently grappling with its debt to foreign lenders such as China. It owes China $6,6 billion, which is causing significant debt distress. Zambia is calling for foreign relief and debt restructuring to help it pay these loans.
Africa News reported that South Africa is on a quest to help Zambia, so the three countries have been in talks to restructure the loan payment that Zambia owes to China.
Sri Lanka
The $5,8 billion debt hanging over Sri Lanka from China has sparked debate on whether the Sri Lankan government’s decision to take the loans was viable to start with. Sri Lanka has a total foreign debt of $46,9 billion, 52% of which is owed to China.
Due to a debt restructuring to help Sri Lanka, the amount owed is only now $5,8 billion, with a new export-import agreement with China.
Laos
Laos is a border country to China, so it makes sense that these two countries will work together. This can be seen with the construction of the new railway between Laos and China, the Boten-Vientiane railway.
However, this project and the other infrastructure have put Laos in debt to China at an amount of $5,5 billion, which many finance critics feel that Laos is drowning in debt.
Maldives
The Maldives is known for being a tourist hotspot due to its beautiful beaches in South Asia and the Indian Ocean. However, due to the size of the islands, the country doesn’t have any major industries and relies heavily on tourism.
Many are concerned about the large amount of loans the Maldives has taken from China, as the $5,3 billion sum is significant for the country’s size. These loans are to help improve tourism and infrastructure development on the islands.
Ecuador
Ecuador has taken a loan from China for $4,14 billion. This money will help Ecuador build new infrastructure projects, such as new railway lines and power plants, and help the country’s economy grow.
This loan from China to Ecuador is part of China’s economic goal of creating trade in many South American countries, such as Brazil, which is a major trade partner of China through BRICS.
Cambodia
Cambodia is a Southeast Asian country that trades up to 98% of its annual exports to China and allows up to 90% of Chinese imports to be free of tariffs or import fees.
China has offered infrastructural support to Cambodia through the Belt and Road Initiative to help create new roads that will enhance Cambodia’s logistical capacity. This BRI support comes with a $4,01 billion debt to China.
Côte d’Ivoire
Côte d’Ivoire, otherwise known as the Ivory Coast, currently owes China $3,85 billion. These loans from China have funded the country’s infrastructure and energy/electricity production.
The loans are a vital component of the Belt and Road Initiative, or BRI, a global development strategy adopted by the Chinese government. The BRI, which initially focused on the east side of Africa, is now expanding to the rest of the continent, shaping the economic landscape of the region.
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