China’s position as a leading source of financing for developing countries has sharply shifted over the past decade, with new lending falling while debt repayments continue to climb, according to a new analysis released by ONE Data.
The report shows that many low- and middle-income countries — particularly across Africa — are now sending more money to China in debt servicing than they receive in fresh loans, marking a significant reversal from China’s earlier role as a major development financier.
The inaugural report from the ONE Data initiative found that declining Chinese loan issuance, combined with rising repayments on past borrowing, has turned net financial flows negative for many poorer economies.
“The fact that there’s less lending coming in, but that previous lending from China still needs to be serviced — that’s the source of the outflows,” said David McNair, executive director at ONE Data, explaining the shift.
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Between 2020 and 2024 — the most recent period covered — Africa experienced the sharpest change. An inflow of $30 billion during 2015–2019 flipped to a net outflow of $22 billion as debt repayments overtook new financing.
As Chinese bilateral lending has slowed, multilateral institutions have emerged as the primary source of development finance once debt service is accounted for.
According to the analysis, multilateral lenders increased net financing by 124% over the past decade and now account for 56% of all net flows. That represents $379 billion in financing between 2020 and 2024.
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The shift underscores a broader transformation in development finance, as governments increasingly rely on institutions such as the World Bank and regional development banks rather than individual creditor nations.
The report does not include data from 2025, a year that analysts say is likely to reveal even steeper declines in external support.
The closure of the U.S. Agency for International Development last year, alongside reduced allocations from other developed economies, has already weighed heavily on developing countries, particularly in Africa.
Once 2025 data becomes available, it is likely to show “a large drop” in Official Development Assistance flows, McNair said.
McNair described the trend as “a net negative” for African nations, many of which face growing challenges funding public services and infrastructure investment as external financing shrinks.
At the same time, he said reduced reliance on foreign funding could strengthen domestic accountability, forcing governments to depend more on local revenue sources and policy reforms.
The report also pointed to a wider decline in bilateral finance and private external debt flows — trends that are expected to intensify as aid cuts take effect beyond 2025.