Fri Dec 20 05:08:00 UTC 2024: ## China’s Rise as the World’s Top Creditor Fuels Global Debt Crisis

**NEW DELHI, INDIA – December 20, 2024** – China’s emergence as the world’s leading creditor over the past two decades has dramatically increased global bilateral external debt, according to a new analysis published in *The Hindu*. The country’s external lending has surged, resulting in over 25% of the world’s bilateral external debt being owed to China by the end of 2023. This is a stark contrast to two decades ago, when Japan held the top spot, followed by Germany, France, the U.S., and the U.K.

The analysis reveals that China’s share of global bilateral debt rose from near zero in the early 2000s to a staggering 26% by 2023. This exponential growth mirrors a parallel increase in global external debt, with the total debt owed to all countries increasing from $49.5 billion in 1973 to $741.4 billion in 2023. During the same period, China’s share of this debt rose from a negligible $1 billion to a massive $193.1 billion.

The data highlights the significant impact of Chinese lending on several nations. Pakistan, for example, owes nearly 60% of its bilateral debt to China, while Laos and Angola owe over 75% and 58% respectively. Sixteen sub-Saharan African nations owe more than half their external debt to Beijing. The Democratic Republic of Congo, with Chinese firms owning or financing 15 of its 19 cobalt mines, owes a staggering 88% of its bilateral debt to China. Sri Lanka’s debt burden led to the handover of the Hambantota port to China in 2017.

Many countries receiving Chinese loans were already in, or subsequently fell into, financial crises, exacerbating their economic struggles. The report notes that several countries experiencing high inflation, currency depreciation and slow growth coincided with increased borrowing from China.

This analysis underscores China’s growing influence on the global financial landscape and raises concerns about the sustainability of debt levels in several nations, many of which are already facing economic hardships. The report concludes that China’s lending practices have played a major role in the rapid rise of global external debt in the past two decades.

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