China’s transformation from a prolific lender to a net extractor of capital from many low- and middle-income countries has created a stark “great reversal” in development finance flows, with borrower nations—especially in Africa—now repaying more in debt than they receive in new loans, according to the inaugural report from the ONE Data initiative, released January 27, 2026.
This shift, dubbed “The Great Reversal,” highlights a decade-long trend where declining fresh financing from Beijing coincides with ongoing servicing of past debts, straining budgets and limiting investments in public services across the Global South.
The ONE Data report, produced by the anti-poverty organization ONE Campaign’s new Development Finance Observatory—a $4 million project backed by Google.org and The Rockefeller Foundation—integrates data from sources like the World Bank, OECD, and AidData to track inflows and outflows transparently.
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It reveals that China, once transferring $48 billion in net flows to low- and lower-middle-income countries a decade ago, now sees a $24 billion net outflow from these nations in recent years.
Africa bears the brunt: From receiving $30 billion in net Chinese financing between 2015 and 2019, the continent shifted to a $22 billion net outflow between 2020 and 2024—a dramatic $52 billion reversal.
David McNair, executive director at ONE Data, explained the mechanics, saying: “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.”
He characterized the overall impact as “a net negative” for African nations, where governments grapple with funding essential services amid fiscal constraints, though he noted a potential silver lining in fostering greater domestic accountability as reliance on external aid diminishes.
This trend aligns with China’s more cautious lending posture since the late 2010s, with new commitments to Africa dropping from annual peaks of $28-41 billion to roughly $2 billion in 2024, per complementary data from Boston University and AidData.
Much of the existing debt stems from infrastructure projects under the Belt and Road Initiative, which matured into repayment phases without equivalent new inflows.
While Beijing has historically offered renegotiations, deferrals, or refinancing for distressed loans, the current net outflows reflect a portfolio maturation and risk aversion. Multilateral institutions have stepped in to mitigate the gap, increasing net financing by 124% over the past decade to become the dominant source, providing 56% of net flows—equivalent to $379 billion between 2020 and 2024.
Lenders like the World Bank and regional development banks now serve as the primary positive net contributors once debt repayments are accounted for.
The analysis excludes 2025 data, but McNair anticipates further declines, driven by the closure of the U.S. Agency for International Development (USAID) and reduced allocations from other developed countries, which have already impacted Official Development Assistance (ODA) to Africa.
Broader bilateral finance and private external debt flows have also waned, trends likely intensified by these 2025 cuts.
Complementary insights from the World Bank’s related 2024 report, “The Great Reversal: Prospects, Risks, and Policies in International Development Association (IDA) Countries,” echo these challenges for the 75 most vulnerable economies eligible for IDA support.
It notes that over 2020-2024, per capita incomes in half of IDA countries grew more slowly than in wealthy economies—the largest such share since the start of the century—marking a “historic reversal” in convergence.
One in three IDA countries is poorer today than pre-pandemic, with food insecurity affecting 651 million people in 2023—nearly double the 2019 figure. These pressures exacerbate vulnerabilities in fragile, conflict-affected states, where reducing extreme poverty requires addressing drivers of instability, per World Bank analyses.
Debt burdens also strain health financing, as noted in related discussions linking fiscal constraints to reduced global health investments.
As the Development Finance Observatory expands, it promises enhanced transparency to guide debt restructurings and aid strategies. But it also underlines a striking reality: China’s evolving role signals a recalibration in global finance, where past lending legacies weigh heavily on developing economies navigating tighter resources and heightened accountability demands.