World’s largest debt collector: Over 25% of global debt owed to China

China emerges as the leading debt collector globally, with countries owing over 25% of their bilateral external debt to China.

Over 25% of the world’s bilateral external debt was owed to China by the end of 2023, making the country the leading debt collector. Two decades ago, the country rarely lent money; Japan lent the highest amount, followed by Germany, France, the United States and the United Kingdom.

Further, over the last two decades, when China’s external lending increased massively, the amount of bilateral external debt owed by countries surged exponentially too. In other words, China is majorly responsible for the rapid rise in external debt in many countries in the last 20 years.

Bilateral external debt is a country’s debt to foreign governments. In this analysis, only bilateral debt is considered and not debt owed to agencies such as the International Monetary Fund and bondholders.

Chart 1 shows the bilateral external debt stocks owed to all countries and to China specifically over time. It also shows (in %) China’s share in the total bilateral external debt stock owed. External debt stock is the debt owed by a country to non-residents repayable in currency, goods, or services. It is the sum of all public, publicly guaranteed, and private non-guaranteed long-term debt and short-term debt.

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The external debt stock owed to all countries increased from $49.5 billion to $741.4 billion between 1973 and 2023. The external debt stock owed to China increased from $1 billion to $193.1 billion in the same period. In percentage terms, the share of debt owed to China remained around the 1% mark until 2003, surged to 16.6% by 2013, and to 26% by 2023.

Chart 2 shows the share of external debt stock owed to top lenders in the 1973 to 2023 period. By the end of 1973 and 1983, the U.S. was the top lender. The U.S. was later surpassed by Japan, which remained the top lender by the end of 1993, 2003, and 2013.