{"id":60094040,"date":"2025-08-13T14:38:08","date_gmt":"2025-08-13T13:38:08","guid":{"rendered":"https:\/\/dialogue.earth\/?post_type=opinion&p=60094040"},"modified":"2025-08-13T14:38:17","modified_gmt":"2025-08-13T13:38:17","slug":"chinas-lending-to-the-global-south-has-been-growing-more-commercial","status":"publish","type":"opinion","link":"https:\/\/dialogue.earth\/en\/climate\/chinas-lending-to-the-global-south-has-been-growing-more-commercial\/","title":{"rendered":"China’s lending to the Global South has been growing more commercial"},"content":{"rendered":"\n

Development finance has been embattled of late.<\/p>\n\n\n\n

Aid cutbacks have raised alarm over financing for climate and development goals. The most notable example is the egregious dismantling of the US Agency for International Development. But there have also been falling commitments to overseas development from European donors.<\/p>\n\n\n\n

The recent fourth Finance for Development (FFD4) summit in Seville saw a new emphasis<\/a> on domestic-resource mobilisation and an acknowledgement of the inadequacy of financial mobilisation for climate action and other sustainable development goals.<\/p>\n\n\n\n

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Recommended<\/span><\/span><\/div><\/a>\n\n\n\n

As the largest bilateral creditor in the developing world, China\u2019s role in financing development and climate-related projects in the last two decades has been huge. It has also been controversial, generating criticism over its contributions to debt-repayment<\/a> burdens and the environmental impacts<\/a> of Belt and Road Initiative (BRI) projects.<\/p>\n\n\n\n

The Belt and Road Initiative<\/span>
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First announced by Xi Jinping in 2013, the Belt and Road Initiative (BRI) is a global infrastructure development strategy designed to boost trade and economic growth. \u201cBelt\u201d refers to the Silk Road Economic Belt \u2013 a series of overland routes linking China to Europe via Central Asia and the Middle East; \u201cRoad\u201d acknowledges the 21st-century maritime Silk Road \u2013 a sea route connecting China\u2019s southern coast to the Mediterranean via East Africa. A vast range of projects, including motorways, ports, power plants and factories, have been called a part of the BRI. You can read our BRI reporting here<\/a>.<\/p>\n<\/div><\/div><\/div>\n\n\n\n

But China doesn\u2019t lend like it used to. Its overall financing and overseas lending has been in a phase of decline, beginning prior to Covid. Much has been made of the new narrative of \u201csmall and beautiful<\/a>\u201d projects and the \u201cgreen BRI\u201d. There has also been a fundamental shift in how <\/em>Chinese financial institutions are lending.<\/p>\n\n\n\n

Commercial co-financing in China\u2019s overseas loans<\/h2>\n\n\n\n

Over the last decade, China\u2019s overseas financing has been growing more commercial in nature. China\u2019s commercial creditors, such as ICBC and the Bank of China, rather than state-owned \u201cpolicy banks\u201d, are playing a bigger role<\/a> in Africa and the Global South, as well as internationalising via global financial markets. The nature of the financing itself is also changing. Our recent report<\/a> from ODI Global shows how the BRI model is evolving, with \u201cco-financing\u201d \u2013 lending in partnership with other financiers \u2013 becoming more prominent over the last decade. This trend is likely to continue.<\/p>\n\n\n\n

In large part this has been driven by the use of syndicated loans \u2013 a form of co-financing where multiple banks come together in a single transaction or project. We estimate over USD 180 billion in syndicated loans were issued between 2013-2021. By 2021, the volume of these loans matched the much-reduced volume of sole-bilateral financed loans from China\u2019s official policy banks, China Exim Bank and China Development Bank.<\/p>\n\n\n\n