Over the last few years, China has gradually positioned itself as one of the global superpowers. Since it started competing with economically developed countries, China has strategically invested and loaned to various countries worldwide. Through the Belt and Road Initiative (BRI), China has invested over $1 trillion in developing countries.
We researched multiple online forums and used the International Debt Statistics from Data Bank to create a list of countries that have the highest Total External Debt Stock (DOD, current US$) value owing to China, as of 2022.
Pakistan – ~$26.6 billion
Being a country crippled with debt, Pakistan has a significant amount of total external debt stock internationally. However, they owe the most debt to China. In fact, from July ‘21 to March ‘22, Pakistan paid back more than 80% of its bilateral loans to China. It is also interesting to note that China and its commercial banks currently hold almost 30% of Pakistan’s total external debt.
Angola – ~$21 billion
Despite high oil export prices driving the economy, Angola has seen a multi-year recession reduce its economy by 10% from 2016 to 2022. Yet, the resource-rich African nation has sought China for heavy loans to boost its infrastructure. As the country continues to fight against recession, it will be interesting to see how they manage the debt they owe to China.
Sri Lanka – ~$8.9 billion
The economic conditions in Sri Lanka have long been unstable. In 2023, they saw the poverty rate rising for the fourth year in succession. The COVID-19 pandemic, along with terrorist attacks and questionable economic policies led to the country facing its worst financial crisis in 2022, when inflation rose to 50% a year. Thus, it is no wonder that Sri Lanka looked to China and other countries for a high amount of loans.
Ethiopia – ~$6.8 billion
As one of the poorest nations in Africa, with only $1,020 worth of per capita gross national income, Ethiopia often relies on foreign loans. COVID-19 and years of civil war have wrecked the African nation financially. China has helped Ethiopia with heavy loans and even allowed Ethiopia to suspend the loan payments until July 7, 2024.
Kenya – ~$6.7 billion
Despite being the most developed economy in Eastern Africa, Kenya struggles with extreme poverty. Currently, almost 8 million Kenyans are living in extreme poverty. The citizens have been struggling with growing inflation rates and a lack of income growth. That being said, the government took out heavy loans from China, which alone constitutes 17% of Kenya’s total external debt.
Bangladesh – ~$6.1 billion
Between the early 1990s to mid-2010s, Bangladesh focused heavily on reducing poverty. It gave them positive results, as poverty dropped from 43.5% in 1991 to 14.3% in 2016. Yet, income inequality grew, and the government had to rely on foreign funds to build a better infrastructure for the people. As a result, they approached China, which approved loans worth billions of dollars.
Zambia – ~$6.1 billion
About 50% of the Zambian population earns a daily wage of less than $2. With a country as crippled in poverty as Zambia, financial reforms have not been enough to strengthen the economy. Although the copper-producing country has seen an improvement recently following years of inflation, they currently owe Chinese banks a heavy debt. They have also held talks with Chinese officials to restructure the debt repayment.
Laos – ~$5.3 billion
The recent years have not been kind to the tiny country of Laos, whose economy has taken a nosedive. While the pandemic did affect, the Russia-Ukraine war also caused the country’s debt to almost double. The government faced a debt, which amounted to 110% of GDP in 2022, from a meager 60% of GDP in 2018. A significant amount of their loans come from China, and unless there is a debt reduction, Laos is presumed to fall deeper into the crisis.
Egypt – ~$5.2 billion
Much like the other African nations, the economic condition in Egypt is dire. Decades of poor financial planning and export policies have caused Egypt to go through economic crises every year. Their Chinese debt is in line with President Abdel Fattah al-Sisi’s reliance on foreign funds. The Israel-Hamas war has also severely affected the tourism department of Egypt.
Nigeria – ~$4.3 billion
Nigeria suffers from a unique poverty problem. On the one hand, almost half of their citizens live in extreme poverty. On the other hand, they have a minor unemployment rate of 5%. While their poverty reduction methods have been ineffective, the lack of funds has merged the country in debt. The Chinese debt is one of many they owe worldwide. At the end of 2023 Q1, Nigeria’s total public debt stood at N49.85 trillion.
Ecuador – ~$4.1 billion
Persistent financial problems have led the South American country to borrow heavily from foreign governments. Ecuador faces the adverse effects of recession, as the economy grew negatively in 2023. Due to the heavy debt that they owe to China, the government wants to sell crude oil, which will help them reduce waste, with billions of dollars freshening up the economy.
Cambodia – ~$4 billion
While Cambodia faces a slowdown in its economy, the future of the country lies uncertain, with heavy debts owed to China and other countries. The Asian superpower has loaned Cambodia billions to invest in infrastructure and real estate. Most recently, China loaned Cambodia $4 billion to invest in a high-speed railway line that will boost the Cambodian economy.