China’s global lending empire reaches deep into Western economies, new report reveals

The international development research lab AidData has recently published the first report of such scope and depth on China’s overseas financial portfolio, systematically tracing Beijing’s loans and grants since the start of this century. The collected data dismantles several long-standing assumptions about China’s lending practices, offering unprecedented insight into the true scale and structure of its vast global financial network.

China's overseas financial portfolio: bigger, broader, and transformed

The report reveals that China’s overseas financial portfolio is several times larger than previously estimated, amounting to $2.2 trillion in loans and grants and spanning 179 out of 217 countries. Lending constitutes the overwhelming majority of this sum, as China’s official development assistance (ODA) has sharply declined, from 22% of its portfolio in 2000 to just 1% in 2023. This makes Beijing the world’s largest official creditor, yet a relatively minor foreign aid provider.  

One of the report’s most striking findings concerns the current composition of China’s overseas financial portfolio, which challenges many prevailing assumptions in the West. Contrary to common belief, Beijing’s lending is no longer concentrated in low- and middle-income countries. Instead, upper-middle- and high-income economies now account for 76% of its lending—up from just 12% in 2000. This is likely related to a sharp fall in infrastructure lending, including the Belt and Road Initiative, which once dominated China’s portfolio but now make up only less than a quarter.

Even more unexpected is that the United States has emerged as the single largest recipient of Chinese credit, receiving over $200 billion from state-owned lenders between 2000 and 2023. As the authors note, this result appears „counterintuitive,” particularly given the backdrop of intense geopolitical rivalry, US efforts to counter Chinese influence, and Washington’s repeated warnings about its „debt-trap diplomacy.” Moreover, the US is joined by other Western allies—including Australia, the UK, Switzerland, and Germany—which together have obtained an additional $250 billion in Chinese credit.

A significant share of this financing in Western countries is directed toward the construction of critical infrastructure and the acquisition of strategic technologies from local firms. The report underscores the growing importance of China’s secretive international acquisition lending program, which targets sensitive high-tech sectors such as semiconductors, quantum, robotics, defense, and biotechnology. The share of these sectors in China’s cross-border acquisition lending portfolio has nearly doubled since 2015.

Russia stands out in the report as the second-largest recipient of Chinese lending, receiving over $170 billion in total and ranking third worldwide in annual lending growth from 2018 to 2023. These findings illustrate Beijing’s expanding financial footprint in Russia, which has likely deepened further since the invasion of Ukraine and is poised to grow even more amid Russia’s deteriorating economic outlook.

New lending regime

The report thus sheds much new light on Beijing’s lending strategy, which is primarily driven by geopolitical and commercial objectives. By financing large foreign corporations, critical infrastructure projects, and security-sensitive sectors, China seeks to expand its leverage abroad, creating channels for hidden influence and information access. Meanwhile, many loans remain profit-oriented, rooted in the efforts of state-owned enterprises and funds to capitalize on excess foreign currency reserves generated by persistent trade surpluses.

This „go-it-alone” approach, as the authors describe it, is revolutionizing the global lending regime. Once dominated by Western principles of concessionality, progressivity, and conditionality—which prioritized countries most in need, offered loans on terms more favorable than the market, and often tied support to policy reforms—this system is now being reshaped by China, the new global pace-setter. Beijing focuses primarily on its strategic and commercial interests, extending loans and grants on a largely non-concessional basis to whichever partners best serve its goals, and typically requiring that projects privilege Chinese contractors and suppliers. 

The authors observe that Western countries are rapidly adapting to this new reality, seeking to counter China’s growing financial influence by emulating its methods and gradually abandoning traditional aid paradigms. The dismantling of USAID, the reduction of European aid budgets, and new initiatives such as Washington’s plans for a sovereign investment fund, the G7’s Partnership for Global Infrastructure and Investment (PGII), and the EU’s Global Gateway all illustrate how elements of Chinese-style thinking are taking root in the West. In this way, geoeconomic lenses increasingly shape how lending is perceived in Western capitals, prioritizing loans and grants that advance geopolitical influence rather than promote political or social reforms in recipient countries. 

Global "cat-and-mouse" game

Western countries are also responding to their growing exposure to Chinese financial influence—an observation that is hardly new. China’s financial omnipresence has triggered the global spread of investment screening mechanisms (ISMs), particularly among its geopolitical competitors. These measures, designed to limit Chinese lending and acquisitions in sensitive sectors and critical infrastructure, have substantially reduced Beijing’s annual loan commitments across Western economies. 

However, these Western countermeasures have triggered what the authors describe as a global „cat-and-mouse” game, in which ever more advanced screening mechanisms are met with increasingly sophisticated Chinese tactics to penetrate Western financial markets. As a result, the report notes that China’s overseas lending portfolio is „going dark”, relying predominantly on non-standard credit instruments that obscure key information. Moreover, nearly one-third of China’s overseas lending now originates outside the mainland, channelled through offshore shell companies and international bank syndicates to further conceal its true origins.

The report’s findings should serve as a call for greater scrutiny of Western exposure to Chinese financial influence, which may in fact be even larger than revealed due to Beijing’s masking efforts. They also underscore the need to continuously strengthen regulatory and monitoring frameworks based on enhanced collaboration and recent experiences. This could be achieved through closer information-sharing among Western allies on both China’s evolving financial techniques and the best practices for countering them.