For two decades of Chinese trillions, dollars have lent nations, build cities and transform the geopolitical landscape. The highway cuts the mountains, the ports of the buzzed shop and the railways promised economic miracles – until they were repaid. Now that the debts spiral gets out of control, and the nations that are wagging on the edge of the collapse, the Hardik Joshi risk analyst on the worrying question: What happens when China suddenly turns off a financial tap?
“Over the past two decades, China has been one of the largest creditors in global financing, but that could change,” writes Joshi, pointing to the Chinese ambitious initiative for belts and roads (BRI), which drew over $ 1 trillion into the developing nations for infrastructure. However, the reality is now sharp: many countries can no longer repay these massive loans.
Sri Lanka did not fulfill Chinese debt in 2022, which triggered the economic crisis that has still felt to this day. Pakistan floats on the brink of financial ruins under the huge loans of loans, while African nations like Zambia and Kenya find billions of debts without clear ways to repay. Joshi warns that this spiral could escalate dramatically: “If China stops lending, these nations may be funded for critical infrastructure projects, which would lead to economic slowing or even collapse.”
He further emphasizes that if the Chinese stand lending, his geopolitical influence could disrupt quickly. Countries that borrow from China often coincide with Beijing on global forums and grant exclusive operating rights to Chinese companies. “If China reduces its loans, its influence on global policy and weaken trade,” Joshi says, creating space for forces such as the US, the EU and India to expand their global track.
But there is more than politics. Joshi emphasizes the wider economic fallout: “Chinese loans are not just about politics – they promote global growth.” Asian and African economies strongly depend on the projects of Chinese. If financing had dried up, the economies could stop, causing loss of employment and slower growth. China's own banks could experience the voltage of mass default settings, which would risk financial infections reminiscent of the global crisis in 2008.
Joshi also sees the consequences for global currencies. Chinese loans, often provided in Yuan, focused on reducing relying on the US dollar. Without continuing Chinese lending, however, the fighting nations can turn to Western institutions such as the IMF and the World Bank, strengthen the dominance of the dollar and the transformation of the financial force back to the West.
Joshi predicts three potential results: China slows down, but does not completely stop lending; Extensive default values are caused by wider financial crises; And the US and India are increasing to replace Chinese financial influence. His urgent question remains: “If China stops lending money to the world, are we heading towards a global financial crisis?”
