China's shift towards curtailing lending while becoming the largest debt collector from the world's poorest nations has raised concerns over its impact on global poverty reduction. A report from Australia's Lowy Institute emphasizes this change, noting a strategic transition in China's lending practices influenced by both domestic policies and international factors. Critics suggest this reflects a debt-trap strategy, while experts like Deborah Brautigam contend that China's evolving approach prioritizes commercial interests and lessons learned from previous oversights. As developing countries grapple with substantial debts to China, the future financial stability of these nations hangs in the balance.
As of 2023, more than a quarter of the external debt in developing countries was owed to China, highlighting its significant financial presence in these nations.
Deborah Brautigam from Johns Hopkins notes that China's approach to lending is evolving, focusing more on commercial viability rather than political influence as they learn from past mistakes.
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