There are two types of Belt and Road loans: Infrastructure loans and Rescue loans.

Infrastructure loans are lent out for infrastructure projects, and are mostly in USD.

The reason is that by around 2013, China realized that accumulating US dollars through their huge trade surplus is the equivalent of collecting junk papers. The US doesn’t allow China (or any other country) to purchase critical assets and industries, so the surplus earnings are recycled back into US Treasuries to buy US debt (think of the Treasuries as a sink to absorb all the excess dollars America has spent overseas). China realized that instead of buying US bonds, they can lend out those dollars to other developing countries to build infrastructure, accumulate good will and utilize those dollars in a productive manner. However, in terms of de-dollarization, the outcome is the same: now it is the Belt and Road recipient countries that owe Chinese creditors in dollars, meaning that they have to earn dollars (by selling stuff to Americans or dollar-paying customers) to pay back their Chinese creditors. As long as China does not offer bailouts or debt cancellation, it makes no difference whether those dollars are kept in US Treasuries or circulated outside as infrastructure loans.

On the other hand, the Emergency Rescue loans are given out for countries in financial distress and can no longer pay back their debt in dollar, and are mostly in Chinese yuan. The prime example here is Argentina, whose dollar debt is so heavy that there is no way they can make their timely payments. So what China has been doing is to give out these Rescue loans in yuan (also sometimes using the IMF Special Drawing Rights) to rollover the dollar debt and keep refinancing and praying that something miraculous will happen by itself. It’s essentially the same as kicking the can down the road and trying to avoid the inevitable for as long as possible.

The exact proportion of Belt and Road loans in dollars is not made public, although I have seen from both English and Chinese sources (independent parties who did the calculations) that it’s about 70% USD.

On one hand, you can understand why China does this: unlike IMF or any America controlled institutions which the US can “print” an infinite amount of dollars and lend them out at any amount at will, the dollars held by the Chinese creditors came from the hard work of Chinese labor and resources and selling these goods and services to dollar-paying customers ($300 billion trade surplus from America every year), so it is understandable that China is not willing to give away their labor and resources for free.

On the other, China also needs to understand that there is no way these dollar debt can ever be repaid by the Global South countries. All these lending is only going to make the Belt and Road countries becoming ever more dependent on the US, who can create the dollars out of thin air, unlike China who has to earn them by making products for American consumers. The only way out is debt cancellation - cut your heavy losses and radically shift your position, and forget about being an exporter to the American economy. China is still unwilling to turn away from the US who has been their main source of wealth and prosperity over the years, and this is what gives the US such a strong hold over them.