Rising Debt to China Raises Concerns for Borrowing Countries

• •Pakistan owes the most to China at $22.38 billion, raising debt sustainability concerns.
• •Chinese loans to Africa have doubled in interest rates from 2020 to 2024.
• •The China-Pakistan Economic Corridor exemplifies deep economic ties through infrastructure projects.

Countries like Pakistan, Angola, and Sri Lanka owe significant debts to Chinese creditors, raising concerns about financial sustainability. Pakistan leads with $22.38 billion owed, followed by Angola at $14.4 billion and Sri Lanka at $8.69 billion. The increase in debt has been fueled by Chinese investments in infrastructure projects across Asia and Africa. However, the average interest rate on Chinese loans to African nations has risen sharply, from 2.5% in 2020 to 5.7% in 2024, partly due to US dollar-denominated loans and a shift towards commercial lending. This financial strain has led to questions about the ability of these countries to repay their debts. The China-Pakistan Economic Corridor (CPEC) exemplifies the deep economic ties, with major energy and transport projects financed by Chinese loans. Concerns over debt sustainability have emerged, particularly for countries like the Republic of the Congo, which owes a significant portion of its GDP to China.