Developing countries face ‘tidal wave of debt repayments’ to China, report shows • FRANCE 24

Developing countries face ‘tidal wave of debt repayments’ to China, report shows • FRANCE 24

It’s time now for the day’s business. We say hello to Yuker. Hi, Frana. Uh, in these times of uh trade tensions and talk about bond yields, China has switched from being a lead lender to a lead debt collector. Yeah. For and from developing countries in particular. Australian think tank Loi Institute has published a report titled Teague Repayment saying that China is set to collect a record amount of money from the world’s poorest countries this year. According to its findings, debt repayment by developing countries totals $ 35 billion for 2025, 22 billion of which is owed by the world’s 75 poorest nations. China is the largest single largest source of bilateral lending for those countries, accounting for 30% of all their debt service payments combined. This stems from China’s lending spree a decade ago. In 2013, President Xiinping launched his signature belt and road initiative, providing credit for poor nations to build bridges, roads, and ports. Beijing effectively became a banker for lowincome and often politically unstable nations that had limited access to international private capital, particularly in Africa. At their peak in 2016, new Chinese state bank loans totaled over $50 billion, more than the combined lending of all Western creditors in that year. As of 2023, it held more than half of external bilateral debt in the world’s poorest and most vulnerable economies. Loans from the early 2010s have begun to mature and their grace periods started expiring leading to this new peak of debt service which is higher because of interest. Now the report’s author says that developing countries are grappling with a tidal wave of debt repayments and interest costs to China and that now and for the rest of this decade China will be more credit more debt collector than banker to the developing world. China though refuted the report’s findings. Let’s take a listen. China’s investment and financing cooperation with developing countries abides by international conventions, market rules, and the principles of debt sustainability. A few countries spread the so-called China debt trap narrative while ignoring the fact that multilateral financial institutions and commercial creditors from developed countries are the main source of debt pressure for developing countries. Yeah, critics of Beijing have long said that China uh is not so much in the uh uh humanitarian aid giving business but more in the loan business. Yeah. Lending money and that amount has sharply declined since its peak in 2016. Since COVID, Beijing has been grappling with its own economic problems with weak domestic spending uh and faces mounting domestic pressure to recover outstanding debt. The level of new lending now is about a quarter of its peak. But according to the report, it now prioritizes certain groups of countries of strategic importance. One is its immediate neighbors like Laos and Pakistan. The second is those that export critical minerals and battery metals. And the third group is countries that have aligned themselves with Beijing’s one China policy like Honduras and Solomon Islands that received massive loans after switching diplomatic recognition from Taiwan to China. Now the report further raises questions about whether China might try to turn uh to use the debt as political leverage especially after Donald Trump slashed foreign aid and Europe is having to focus on bolstering its own defense. All right. here in France. Uh the it’s not the wagons that are circling, but the taxis. We saw them on Monday around the major airports here. Yeah. Well, it’s been over a week uh since they began their protest. Well, taxi strikes uh have been blocking main roads in Paris and other French cities. Drivers are protesting a budget reform that would hit subsidized transport to and from hospitals. Negotiations between taxi unions and the government are underway. Caroline Bournem has more. Traffic was brought to a standstill Tuesday morning in Paris as hundreds of taxis protested to put pressure on the government. The union’s go slow protest was in full force on this day of negotiations. One of the drivers main grievances, a lack of regulation around drivers for apps such as Uber. After a meeting Tuesday morning, the French transport minister announced a commitment to put in place stricter measures against drivers from these platforms who illegally solicit customers around train stations and airports. An announcement welcomed by union leaders. This is the first time we’ve had a minister who’s prepared to make a commitment to truly distinguish between taxis and drivers from ride hailing apps, in particular in how they solicit customers physically and electronically. But the drivers are also waiting for compromise on the issue that sparked the latest protests. A proposal by the government to cut costs on social security funded transport of patients to and from hospitals. 85% of taxis in France engage in medical transport and many say their income would be impacted by the new pricing system. But the French prime minister stood behind the reform on Tuesday. Can we respond to patients demands without wasting public money? I say we can. I think that we can even see more savings than expected, but we will establish those savings with the taxi drivers. Taxi drivers across the country say they are prepared to continue their protests if the government refuses to take their demands into account. You could tell us about the markets this Tuesday. Well, investors and traders are breathing a sigh of relief after Donald Trump walked back from his threat of imposing higher tariffs on EU imports. Stocks though diverged in Europe with Germany stacks building on Monday’s strong rally. Paris ending flat and London ending up 7/10en of a percentage point after a bank holiday. Wall Street is in a broad rally at the start of a new trading week following a holiday Monday. The Dow Jones are advancing more than 600 points. The NASDAQ rising two and a quarter% and that’s it from the businesses desk. All right, many thanks.

China is set to receive a record amount of debt repayment from developing countries this year, a majority of which is owed by the world’s 75 poorest nations. New research by Australian think tank Lowy Institute says with new loans drying up and more loans maturing, China has now switched from being a leading lender for low-income nations to a major debt collector. Plus, a days-long taxi drivers’ strike continues across France even as their main unions are negotiating with the government. 
#China #Debt #Belt and Road

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