A Lowy Institute report reveals that 75 of the world’s poorest countries face a substantial increase in debt repayments to China, totaling $22 billion in 2025, a significant portion of the overall $35 billion owed. This surge in debt, largely stemming from China’s Belt and Road Initiative, strains already limited funds for essential services like healthcare and education, coinciding with a decrease in Western aid. The report suggests this debt could be used for political leverage, particularly as China’s lending has decreased despite increased global economic pressure. While China denies creating “debt traps,” the situation creates a dilemma for Beijing, balancing diplomatic pressure for debt restructuring with domestic economic concerns.
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Panama has formally withdrawn from China’s Belt and Road Initiative, with President José Raúl Mulino citing a lack of demonstrable benefits to the country from the 2017 agreement. The decision, announced at a press conference, follows concerns regarding Chinese investment in the Panama Canal. Mulino stated that he instructed Panamanian diplomats in Beijing to provide the required notification. This action comes amidst speculation of US influence.
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President Trump threatened “powerful” US action against Panama, vowing to “take back” the Panama Canal due to concerns over China’s influence. Following a meeting between Secretary of State Rubio and Panamanian President Mulino, Panama pledged to end its participation in China’s Belt and Road Initiative and audit a Chinese-linked port company. While Panama affirmed its sovereignty over the canal, Rubio raised concerns about China’s presence, referencing a treaty allowing US intervention in case of operational disruptions. Panama also proposed expanding a US-funded migrant repatriation program.
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China’s newly opened Chancay megaport in Peru, a $3.5 billion project, significantly enhances Chinese trade access to Latin America, potentially bypassing North America. This development, lauded by both China and Peru, facilitates faster and more efficient shipping routes for goods between Latin America and Asia, impacting economies throughout the region. However, the port’s dual-use capabilities raise US concerns about potential Chinese military presence, highlighting growing geopolitical tensions in the region. The situation underscores a perceived US decline in influence in Latin America, as China actively cultivates relationships through initiatives like the Belt and Road Initiative.
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John Q. Hosedrinker