The USAID shutdown could make China more powerful. Beijing is already pouring billions into countries around the world.

Yahoo

07-02-2025

The end of USAID could mean more space for China to expand its global influence.
The agency "assists US commercial interests," the nonpartisan Congressional Research Service said last month.
Most of China's global investments come through the Belt and Road Initiative, not through aid.
The abrupt shuttering of the US Agency for International Development — a process the White House put into motion this week — is likely to benefit China on the world stage.
"The chaotic end of USAID will undoubtedly rebound to China's benefit, even if it is unlikely to change Beijing's international development strategy in the short term," Jeremy Chan, a senior analyst on the China and Northeast Asia team at risk consultancy Eurasia Group, told Business Insider.
If USAID is shuttered, "there may be opportunities for other aid givers like China to exert soft power influence through dispensing aid," said Tai Wei Lim, a professor specializing in the political economy of Northeast Asia at Japan's Soka University.
USAID spent $32.5 billion in fiscal year 2024. Exact figures for China's foreign aid spending aren't fully public, but estimates from Japanese academics put the country's 2022 spend as high as $7.9 billion.
While China is far from the US's clout in terms of aid, the East Asian giant has been trying to expand its influence — politically and economically — beyond its shores, namely through its Belt and Road Initiative, as its economy remains in a long downturn.
Concerns about America's positioning without USAID come amid intensifying geopolitical rivalry between the world's two largest economies.
On Tuesday, US President Donald Trump's administration slapped a 10% tariff on all Chinese goods — on top of prevailing levies. In response, China announced retaliatory tariffs on targeted US goods, including crude oil and machinery.
President Donald Trump and Elon Musk have called USAID wasteful and unaligned with American values. Nearly all USAID staff will be put on administrative leave starting Friday at midnight.
Founded at the Cold War's height, USAID has never operated as a purely altruistic agency.
USAID works with "strategically important countries" and "assists US commercial interests" by helping countries develop economically, per a report from the nonpartisan Congressional Research Service last month.
Some US politicians have argued that USAID — or a similar aid program — is essential to matching China's foreign aid and investment efforts.
About half of USAID's 2024 spending went to humanitarian purposes or health and population purposes, such as funding HIV programs.
USAID has long garnered bipartisan support. In 2022, then-Sen. Marco Rubio — now the Secretary of State — asked then-President Joe Biden to use his coming budget requests for USAID and other government agencies to counter China's "expanding global influence."
Now, politicians from both parties are highlighting the agency's role amid its uncertain future. All US foreign aid accounts for about 1% of the federal budget.
"Our assistance abroad helps fight disease and stop starvation and famine, but it's also a tool to stave off the expansionist reach of authoritarian leaders in China, Russia, and Iran," Democratic New Jersey Sen. Andy Kim told Bloomberg earlier this week.
"I have felt for a long time that USAID is our way to combat the Belt and Road Initiative, which is China's effort to really gain influence around the world, including Africa and South America in the Western Hemisphere," Republican Mississippi Sen. Roger Wicker told reporters on Tuesday.
For more than a decade, China has championed its flagship Belt and Road Initiative infrastructure project, through which Beijing has spent more than $1 trillion on gas pipelines, trains, and other trade and infrastructure projects globally. Much of the financing has been in the form of loans to the countries involved.
China has said BRI programs come with no political strings attached. However, critics say China is trying to ensnare developing countries into debt traps — thus boosting Beijing's political leverage over debtor countries.
The China-based Green Finance & Development Center estimates that between 145 and 149 countries — around three-quarters of the world's total nations — are directly involved in BRI projects or have indicated interest in cooperating.
An analysis of 2023 data, the most recent year available, from the Green Finance & Development Center based at China's Fudan University showed how aid was geographically disbursed.
At the country level in 2023, China invested most heavily through BRI in Indonesia at $7.3 billion, followed by Hungary at $4.5 billion and Peru at $2.9 billion.
In Africa — where nearly every country has received Chinese investments — new roads, railways, and ports have been constructed over the last 10 years, while billions have been invested in energy infrastructure projects to give more residents electricity.
China overtook the US as Africa's largest trading partner in 2009. Africa typically imports electronics, machinery, and manufactured goods from China and exports fuel and metals.
In Asia, China has invested in new ports in Sri Lanka, high-speed rail in Indonesia and Saudi Arabia, and infrastructure projects in Uzbekistan.
In September, Chinese leader Xi Jinping said China would commit over $50 billion to Africa in financial aid. This was intended to strengthen Beijing's relationships with developing countries amid tensions with the US and other Western nations.
To be sure, China's aid efforts are likely not able to match the gargantuan hole left by USAID in the short term. Beijing has also moved its BRI focus from mega infrastructure deals to what it calls "small and beautiful" projects, analysts told BI.
But Beijing could shift its emphasis increasingly eastward, particularly to Africa and Southeast Asia, said Eurasia Group's Chan.
China is already winning some clout from the abrupt potential shutdown of USAID.
"China looks like the good guy on the international stage simply by doing nothing," Chan told BI.
"While Beijing's calls for stronger multilateral cooperation, more free trade, and improved global governance at the UN and Davos will do little to actually further multilateral solutions to pressing global issues — such as the conflicts in Gaza and Ukraine, supply chain resilience, or AI governance — China will win points at the US's expense by at least keeping up appearances of being a responsible global stakeholder," he said.
Read the original article on Business Insider