The Experimental Turn of China’s Overseas Development Finance

The past two decades have witnessed China emerging as a key global player of development financiers. From 2008-2024, China’s two main development finance institutions (DFIs) committed $472 billion in public and publicly guaranteed (PPG) finance across 1,304 loans and credit lines over $25 million in size. At its mid-2010s peak, Chinese lending overtook other official multilateral and bilateral lenders, with mega-loans financing railways, power plants, and industrial zones.

Nevertheless, since 2020, China’s overseas development finance has shrunk to around $6 billion a year – less than a fifth of its peak – and the once common billion-dollar loans have virtually disappeared. This decline in volume signals a transition away from state-to-state mega-loans. Meanwhile, new financing pathways have emerged, including national and regional development banks, commercial creditors, foreign direct investment (FDI), public-private partnerships, equity stakes, and bonds. 

Though not yet consolidated into a clear trend, these policy experiments reflect external pressures – rising debt distress and global scrutiny of China’s engagement – as well as internal learning by Chinese financiers, firms, and policymakers adapting to shifting global conditions.

From Record Lending to Selective Credit

The trajectory of China’s lending reveals the scale of change. Between 2008 and 2019, China Development Bank (CDB) and Exim Bank issued over 1,000 overseas loans worth $441.4 billion to 100 countries. In 2018, China surpassed the World Bank as the largest bilateral official development financier. China’s lending in these early years was driven by larger loans, particularly those larger than $1 billion, in infrastructure sectors such as energy, transportation, and telecommunications – sectors historically underinvested by multilateral development banks like the World Bank and International Monetary Fund since the early 2000s.

Yet in the last decade, Chinese sovereign lending flows have slowed. Since peaking in 2016, Chinese sovereign lending has been on a downward trajectory, as visible in the figure below. A recent report by Boston University suggests that between 2020 and 2024 China committed just $30.6 billion across 101 loans – averaging about $6.1 billion per year – a fraction of its previous heights, with mega-loans over $1 billion nearly gone entirely.