With the United States significantly downsizing its provision of international aid, a key question that has emerged from the Global South and traditional donor community is whether China will exploit the opportunity and fill the void. A careful examination of the nature, size, type, and motivation of China’s aid reveals the improbability of China replacing the U.S. Agency for International Development (USAID) in the foreign assistance space.
There is a significant gap in the size of aid
First, China’s foreign aid has consistently been a fraction of America’s. It is a common misperception that China’s Belt and Road Initiative (BRI) is aid. In reality, the overwhelming majority of BRI financing is loans, including $327 billion disbursed by the Export-Import Bank of China by the end of 2022, and investments, including $300 billion invested by Chinese commercial entities by the end of 2023. Fudan University put China’s cumulative BRI engagement between 2013 and 2023 at $1.053 trillion: about $634 billion in construction contracts and $419 billion in non-financial investments. The BRI essentially consists of commercial activities with a tint of development finance. That’s why they are often referred to as “BRI engagement,” and never as foreign aid.
According to U.S. government data, in the 2023 fiscal year, USAID’s budget was about $42 billion, including approximately $17 billion for governance, $9.4 billion for humanitarian assistance, $7 billion for health and population, $3.5 billion for administrative costs, $1.3 billion for agriculture, $1.1 billion for education, $740 million for infrastructure, $720 million for economic development. USAID has not been the only government implementing agency for foreign assistance. The State Department also had a nearly $19 billion budget for foreign assistance, along with the Department of Treasury (about $2 billion), the Department of Agriculture (about $450 million), etc.
In comparison, Chinese foreign aid is significantly smaller. According to the 2021 version of China’s foreign aid white paper “China’s International Development Cooperation in the New Era,” between 2013 and 2018, China’s total foreign aid reached 270.2 billion RMB (around $42 billion based on the average exchange rate during the same period). That means China spent an average of $7 billion on foreign aid annually during this time period. But during the same period, the United States spent $286 billion on foreign aid,1 or $47.7 billion per year. Thus, from 2013 to 2018, Chinese aid only amounted to 14.6% of what America spent.
China has not published its aid data since 2018. But a 2024 Ministry of Commerce (MOFCOM) report put the annual average amount of Chinese aid at 20.5 billion RMB from 2013 to 2022 (approximately $3.13 billion at the average exchange rate during this period). The discrepancy between this data and the above data is most likely due to the multilateral aid China provides to international organizations, which goes through the Ministry of Finance rather than MOFCOM. But COVID-19 and China’s travel restrictions and economic slowdown also contributed to the decrease in Chinese aid since 2020. MOFCOM’s foreign aid budget dropped 20% from 19.7 billion RMB (approximately $3 billion) in 2018 to 16.8 billion RMB (approximately $2.6 billion) in 2021.
The current size of Chinese bilateral foreign aid can be deducted from the budgets of China’s two primary aid agencies: the Ministry of Commerce and the China International Development Cooperation Agency (CIDCA). By its mandate, MOFCOM is “responsible for foreign aid, design and implement foreign aid policy and plans, promote foreign aid reforms, compile foreign aid plans, decide on foreign aid projects and organize their implementation, and manage the use of government funding under the category of foreign aid.” In comparison, CIDCA’s responsibility is more on the management side: foreign aid strategy, the overall size of foreign aid, priorities of Chinese aid, feasibility studies, policy coordination with recipient countries, as well as the monitoring and evaluation of foreign aid projects.
MOFCOM’s foreign aid budget for 2024 is 20.48 billion RMB, roughly $2.82 billion. CIDCA’s foreign aid is much smaller: 54 million RMB for foreign aid and 131.2 million RMB for international development cooperation, bringing us to a total of 186.2 million RMB, approximately $25.62 million. The total foreign aid budget of the two institutions is $2.85 billion for 2024. This number aligns with the overall trend of China’s economic slowdown and reduced engagement since COVID-19. But it also means the volume of Chinese aid is only a fraction of U.S. foreign aid.
Different motives and purposes
The United States and China also use aid very differently. According to China’s official documents, Chinese foreign aid is divided into three categories: grants, zero-interest loans, and concessional loans. Grants are the traditional foreign aid projects in the Western definition, including welfare projects, capacity building, technical assistance, humanitarian assistance, material support, and South-South cooperation aid. Zero-interest loans are used to develop public facilities and social projects. Historically, zero-interest loans are usually forgiven eventually. And concessional loans are used to develop large infrastructure projects and production projects in developing countries, including equipment, machines, and technical support among others.
Concessional loans are the most misunderstood category. The principal of Chinese concessional loans is raised on the market by the Export-Import Bank of China, but the loans’ lower interest rates are subsidized by China’s foreign aid budget, meaning that Chinese foreign aid is used to offset the differences between the concessional loan interest rates and commercial loan interest rates.
If we look at the historical distribution of China’s foreign aid budget, we get the data below:
A striking takeaway from the data is the significant increase in foreign aid spending on concessional loans since 2009, which aligns with China’s push for hard infrastructure since 2010 and under BRI. It is well known that China’s concessional loans are aimed at promoting the export of Chinese contract services and products, often using recipient countries’ natural resources as collateral. Since Xi Jinping took over in 2013, the weight assigned to grants has increased, which coincides with China’s push for soft power influence, but it’s still smaller than concessional loans.
The data also shows that China’s spending on what USAID traditionally focuses on—“grants,” such as capacity building and humanitarian assistance—is less than 50% of its total foreign aid budget, at $3.29 billion during 2013-2018, and potentially around $1.5 billion a year in the 2024 budget if the same distribution remains.
Does China intend to step in?
Given China’s sluggish economy and the uncertainty associated with the Trump administration, China does not see foreign aid as a priority in the immediate future. The withdrawal of U.S. foreign assistance will leave China with bigger weight in a smaller space, but it doesn’t mean China can step in to fill the void. Given the selfish motives that guide China’s aid program, USAID’s portfolio of traditional humanitarian work does not overlap with China’s aid work.
China has its own capacity-building programs, such as the training of political elites, government officials, and subject-matter experts from Africa and Southeast Asia. Those programs have a strong component of promoting China’s governance model and exporting China’s political ideology. China is unlikely to augment those programs simply because the United States is no longer as engaged in aid for governance or democratic institutions. However, left uncontested after the withdrawal of USAID programming, the influence of Chinese political capacity-building projects could grow in recipient countries in the long run.
China’s tradition of bilaterally negotiating aid also means that the demand for more Chinese foreign assistance from less developed countries will be decided on a case-by-case basis. China’s ambassador to Syria recently met with the country’s new president, Ahmad Al-Sharaa. But any discussion of Chinese aid to Syria’s post-conflict reconstruction will start with the Chinese question of Uyghur militants serving in the Syrian army, just like China has conditioned more aid as well as diplomatic recognition of the Afghan Taliban regime upon the deportation of Uyghur militants living in Afghanistan. Similarly, in the post-conflict reconstruction of Ukraine and Gaza, China is unlikely to altruistically disburse free aid, but will instead seek political, diplomatic, and economic returns for its assistance. For example, China’s contribution toward Gaza’s reconstruction will likely be associated with service contracts funded by Gulf states for Chinese contractors; its contribution to the reconstruction of Ukraine will potentially be linked to future economic projects in the country. In both cases, China will try to use its contribution to consolidate ties with the Muslim world and Europe, respectively.
For global nontraditional security threats such as food security, climate change, health, and disease control, China is more likely to resort to acting through multilateral organizations. This is in line with China’s historical behavior. The world really has not seen China unilaterally taking the lead on any global challenges. This doesn’t mean China will not increase its contribution to multilateral organizations to address these issues, but such increases can neither be assumed nor guaranteed. Most likely, China will operate under the umbrella of a U.N.-led effort rather than assume responsibility for addressing any of these challenges on its own or as leader of a consortium of countries.
Even with its limited assistance levels, China will nevertheless seek to exploit the opportunity of American withdrawal to portray the United States as the irresponsible great power, even if U.S. foreign assistance levels after the cut continue to exceed Chinese foreign aid. With the dramatic nature of how the U.S. foreign aid reform is unfolding, the Chinese message will be loud and particularly resonating in the Global South.
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Footnotes
- The United States spent $46 billion in 2013, $44 billion in 2014, $50 billion in 2015, $50 billion in 2016, $48 billion in 2017, $48 billion in 2018.
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Commentary
Can China fill the void in foreign aid?
March 11, 2025