• Developing nations set to repay a record $22 billion to China by 2025.
• China has shifted from net lender to major debt collector under the Belt and Road Initiative.
• Debt repayments threaten funding for health and education in the poorest countries.
• China's lending is on the decline, with geopolitical implications for developing nations.
• Pressure from both Chinese loans and international creditors exacerbates financial strain.

The world's poorest nations are facing a looming "tidal wave of debt" with repayments to China projected to reach a record high of $22 billion in 2025, according to a report by the Lowy Institute. This financial strain emerges from China's Belt and Road Initiative (BRI), which funded infrastructure projects across various continents, but where new lending is now drying up, leaving developing countries overwhelmed by their repayment obligations, warns researcher Riley Duke at the Lowy Institute according to Indiatimes, Bangkok Post, and Channel News Asia.

In addition to the anticipated $22 billion in repayments from the poorest 75 countries, the total debt owed to China by developing countries will reach around $35 billion in 2025, as discovered by the Lowy Institute's report. This escalating debt burden is particularly concerning as it could undermine essential government spending on hospitals and schools, thus jeopardizing public welfare and climate initiatives. Political implications arise from these financial dynamics, as Beijing could leverage these debts for geopolitical advantages, especially following reduced U.S. foreign aid, according to The Jakarta Post and Al Jazeera.

The Chinese government has responded to criticisms of its lending practices, stating that it follows international conventions and suggesting that accusations of creating debt traps are unfounded. The shifting lending landscape sees China transforming from a generous financier into a primary debt collector, affecting 46 least developed countries, whose public expenditures are increasingly allocated towards servicing these debts, thus limiting their ability to invest in crucial areas like education and healthcare. Current data reveals that more than a quarter of the external debt owed by these nations is now to China, which emphasizes this trend, as highlighted by reports from NPR and Channel News Asia.

Despite a decline in new lending, certain nations, particularly those rich in critical minerals, such as the Democratic Republic of Congo, continue to attract Chinese investment. However, the fiscal implications for heavily indebted states remain severe, as seen in countries like Kenya and Sri Lanka, where mismanaged debt has led to financial instability. The correlation between these debt pressures and domestic political outcomes is significant, with public sentiment increasingly influenced by dissatisfaction with foreign debt responsibilities, according to The Jakarta Post and Al Jazeera.