In this article, we look at 20 countries most in debt to China. If you want to skip our detailed analysis, you can go directly to the5 Countries Most in Debt to China.
The Situation of International External Debt
The external debt situation for low and middle-income countries (LMICs) has changed drastically over the last decade and is out-pacing the economic growth of these countries, thereby raising serious concerns. The situation is even worse for poor countries where external debt stocks have risen at the fastest pace as compared to other LMICs. Moreover, the debt vulnerabilities exacerbated in many low-income countries eligible for International Development Association (IDA) resources. The debt accumulation in these countries has increased to the extent that more than 60% of IDA-eligible countries were marked to be at high risk of debt distress in 2023. According to the International Debt Report2023 by the World Bank, the external debt stocks for LMICs decreased marginally by 3.4% from $9.3 trillion in 2021 to $9.0 trillion in 2022. However, it increased by 2.7% for IDA-eligible countries during the same year, reaching an all-time high of $1.1 trillion. To read more about highly indebted regions you can look at20 Countries Most in Debt to IMFand15 Cities with the Highest Debt in the US.
China: The Largest Bilateral Creditor to Low and Middle Income Countries
China has been one of the fastest-growing economies over the past two decades, with its annual average gross national income growth averaging over 13%. China finds itself at an interesting spot in the international external debt landscape. On the one hand, it is characterized as the largest bilateral creditor to LMICs, but on the other hand, it is also the largest borrower amongst the same group. China received approximately 40% of the total net financial inflows to LMICs from 2012 to 2022. The total financial net inflows from external creditors to China during this period amounted to $4 trillion, with 32% of this amount as debt-creating flows and the remaining 68% as equity inflows consisting of portfolio equity and foreign direct investment. To read more about China, you can look at15 Countries with the Highest Exports to China.
On the contrary, China became the largest creditor to LMICs, with the group's combined public and publicly guaranteed external debt to China amounting to $180 billion in 2022. A greater proportion of this debt went to large infrastructure projects and extraction industries in African countries, with the region accounting for 44% of the LMIC's total debt to China. Moreover, in South Asia, the external debt to China went up approximately sevenfold from $6.4 billion in 2012 to $42.9 billion in 2022, with Pakistan alone accounting for two-thirds of the increase. According to the report, China's major lending is directed to three major avenues: oil-producing countries, mineral-rich countries in Sub-Saharan Africa, and neighboring countries associated with China's Belt and Road initiative.
Major Companies Driving Economic Growth in China
BYD Company Limited (OTC:BYDDF), JD.com, Inc (NASDAQ:JD), and NIO Inc. (NYSE:NIO) are some of the major companies leading the economic growth in China.
BYD Company Limited (OTC:BYDDF) is a leading international automotive company based in Hong Kong, China. The company operates in various market segments through its subsidiaries, including mobile headset components, assembly-related products, and the automotive and battery business. On March 22, BYD Company Limited (OTC:BYDDF)announcedthe official debut of its electric cars in the Greek market. BYD Company Limited (OTC:BYDDF), with its dealer partner Sfakianakis Group, started the sales of its cars in Greece, with BYD ATTO 3 (C-SUV) and BYD SEAL (D-Sedan) being the first two models ready for distribution to the market.
JD.com, Inc (NASDAQ:JD) is a leading supply chain technologies company in China. The company operates through an online platform that provides services for third-party merchants, retailers, and marketing services providers. On March 6, JD.com, Inc (NASDAQ:JD) announced earnings for the fiscal fourth quarter of 2023. The company reported earnings per share of $0.74, outperforming expectations by $0.11. The company's revenue for the quarter amounted to $42.52 billion and outperformed market consensus by $914.8 million. Here are some commentsfrom JD.com, Inc's (NASDAQ:JD) earnings call for Q4, 2023:
Service revenues grew by 3% year-on-year in Q4 and 18% on a full year basis, primarily driven by the growth of logistics and other service revenues, which were up 8% and 30% year-on-year for the quarter and full year, respectively. Marketplace and marketing revenues were down 4% year-on-year in Q4 and up 3% on a full year basis. The soft performance in the quarter was primarily due to the decline in commission revenues as a result of our enhanced support for fast-growing new merchants. While advertising revenues also experienced one-off headwinds in Q4, mainly due to the seasonality impact of Chinese New Year Shopping Festival, we believe those were short-term fluctuations and our platform is progressing well on our current strategy with a fast expanding base of active 3P merchants and accelerated growth in both 3P users and 3P order volumes.
NIO Inc. (NYSE:NIO) is a leading smart electric vehicle company in China. The company researches, manufactures, and sells flagship electric cars and other battery products. NIO Inc. (NYSE:NIO) has an operational presence in China, Hong Kong, Netherlands, Germany, Norway, and the United States. On February 26, NIO Inc. (NYSE:NIO)reportedentering into a technology license agreement with Forseven Limited through its wholly-owned subsidiary NIO Technology (Anhui) Co., Ltd. As a result of this agreement, NIO Inc. (NYSE:NIO) will give a non-exclusive and non-transferable worldwide license to Forseven Limited, allowing it to access certain technology, technical information, technical solutions, and intellectual property rights of the company.
China is one of the fastest growing economies in Asia and is also one of the top creditors to low and middle income regions. With this context, let's look at the 20 countries most in debt to China.
Photo by David Veksler on Unsplash
Our Methodology
To compile the list of 20 countries most in debt to China, we relied on the World Bank'sDatabank. Within the Databank, we used the International Debt Statistics data to get the total external debt stock values (DOD, current US$) each country owes to China. External debt stocks refer to the total external debt of a country to its counterpart, which for this article is China. The latest available data was for 2022. The list is ranked in ascending order of countries' total external debt as of 2022.
20 Countries Most in Debt to China
20. Argentina
Total External Debt to China (2022): $2.86 billion
Argentina is a South American country that ranks as the 20th country most in debt to China. The total external debt of Argentina to China in 2022 amounted to approximately $2.86 billion.
19. Mongolia
Total External Debt to China (2022): $3.02 billion
Mongolia is an East Asian country that borders itself with China and Russia. It ranks 19th on our list of 20 countries most in debt to China. The country's total external debt to China in 2022 amounted to $3.02 billion.
18. Brazil
Total External Debt to China (2022): $3.38 billion
Brazil, another South American country, owed approximately $3.38 billion to China as external debt in 2022. The country ranks 18th on our list.
17. Republic of the Congo
Total External Debt to China (2022): $3.42 billion
The Republic of the Congo, also known as the Congo (Brazzaville), is an African country ranked as the 17th country most in debt to China. The total external debt of Congo to China was $3.42 billion in 2022.
16. South Africa
Total External Debt to China (2022): $3.43 billion
South Africa owed $3.43 billion to China as external debt in 2022, making it the 16th country most in debt to China.
15. Cameroon
Total External Debt to China (2022): $3.78 billion
Cameroon is a Central African country ranking 15th on our list of 20 countries most in debt to China. The country owed China approximately $3.78 billion as total external debt in 2022.
14. Côte d'Ivoire
Total External Debt to China (2022): $3.85 billion
Côte d'Ivoire is a West African country characterized by its beach resorts and rainforests. The country ranks 14th on our list, and its total external debt to China in 2022 amounted to $3.85 billion.
13. Belarus
Total External Debt to China (2022): $3.92 billion
Belarus ranks as the 13th country most in debt to China. It is a landlocked country situated in Eastern Europe. The total external debt of Belarus to China amounted to $3.92 billion in 2022.
12. Cambodia
Total External Debt to China (2022): $4.01 billion
Cambodia is a Southeast Asian country with an important geographical location providing river trade routes linking China to India and the rest of Southeast Asia. It ranks as the 12th country most in debt to China, with its total external debt amounting to $4.01 billion in 2022.
11. Ecuador
Total External Debt to China (2022): $4.14 billion
Ranking 11th on our list is Ecuador, another South American country known for its environmental diversity. Ecuador's total external debt to China amounted to $4.14 billion in 2022.
10. Nigeria
Total External Debt to China (2022): $4.29 billion
Nigeria is a West African country with a total external debt of $4.29 billion to China in 2022. It ranks among the top 10 countries most in debt to China.
9. Egypt
Total External Debt to China (2022): $5.21 billion
Egypt ranks 9th on our list of countries most in debt to China. It is at an important geographical position linking Northeast Africa to the Middle East. The country owed China $5.21 billion as total external debt in 2022.
8. Lao People's Democratic Republic
Total External Debt to China (2022): $5.25 billion
Lao People's Democratic Republic is a Southeast Asian country ranking 8th on our list. Laos had a total external debt of $5.25 billion to China in 2022.
7. Bangladesh
Total External Debt to China (2022): $6.05 billion
Bangladesh, another South Asian country, ranks as the 7th country most in debt to China. It owed China approximately $6.05 billion as total external debt in 2022.
6. Zambia
Total External Debt to China (2022): $6.08 billion
Zambia is a landlocked country situated in the African region. The country stands as the 6th country most in debt to China on our list, with a total external debt of $6.08 in 2022.
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Disclosure: None.20 Countries Most in Debt to Chinais originally published on Insider Monkey.
