Asia debt shifts from China to multilateral lenders

The arithmetic underscores how the Belt and Road Initiative has matured from expansion to repayment. Loans signed during the mid-2010s are moving through their grace periods, and the number of countries for which China is a net drain has climbed to 60 from 18 in 2012. At the same time, multilateral creditors are filling part of the gap: the World Bank’s net flows to low- and middle-income countries hit a record $36 billion in 2024, while multilateral lenders supplied nearly half of all long-term net financing and bilateral flows fell to just $4.5 billion, the weakest since the global financial crisis.

For investors, that means the creditor mix is changing even if the debt burden is not. Fresh money from the World Bank and Asian Development Bank is often cheaper, more transparent and tied to reform, but it also comes with policy conditions and preferred-creditor status, making it largely off-limits in future restructurings. As multilateral lending rises, a larger share of sovereign debt becomes non-negotiable, which can leave private and bilateral lenders carrying more of the pain in any crisis.

The new hierarchy is already visible in Pakistan, Sri Lanka and Laos. Pakistan paid $1.3 billion on Chinese commercial loans used for CPEC projects in July 2026 and is seeking faster refinancing, with about $12 billion in rollovers needed this fiscal year from China and Saudi Arabia. Yet the World Bank has also lined up a 10-year partnership worth about $20 billion over 2026-35, while the long-delayed Karachi-to-Peshawar Main Line-1 railway is now slated to begin with proposed ADB financing of $1.1 billion.

Sri Lanka, after restructuring about $4.2 billion owed to China’s Export-Import Bank, has become heavily dependent on multilateral liquidity, with the IMF and ADB accounting for nearly 80% of the roughly $1.48 billion in foreign development financing disbursed in 2025. Laos shows the other end of the spectrum: Beijing has deferred $3.23 billion in repayments since 2020, equal to about 19% of GDP, while the World Bank says debt service will still consume 13% of GDP in 2026, squeezing health, education and social spending.

The economic logic is straightforward. Multilateral loans earmarked for railways, social protection or disaster recovery can free up domestic revenue and foreign reserves to service older Chinese debts, effectively acting as a bridge between the BRI era and the next funding model. That may buy time, but it can also create a new dependency if countries use concessional finance mainly to avoid default rather than to expand growth capacity.

The Borrowers’ Platform, which held its first governing council in Bangkok, is an early attempt to give debtor nations more collective muscle in that environment. Its most practical value may be technical rather than confrontational: sharing creditor-by-creditor flow data, sequencing refinancings and adopting debt pause clauses for climate disasters and other shocks.

For markets, the message is that the next phase of Asian sovereign stress will be less about headline BRI pledges and more about how governments manage net flows, rollover risk and the shrinking pool of truly restructurable debt. The winners are borrowers that can secure cheaper multilateral money without crowding out fiscal space; the losers are countries that end up swapping one creditor dependence for another just as their repayment calendars tighten.