Comparing US and Chinese Foreign Aid in the Era of Rising Powers

Research Article

Salvador Santino F. Regilme, Jr & Obert Hodzi


China is emerging as a key state actor in international development – a sector that has been dominated by the United States for decades. US and Chinese foreign aid programs can be compared on the basis of several benchmarks: 1) official state definition and accounting of foreign aid programs; 2) historical foundations and origins; 3) sectoral distribution, particularly in terms of the professed goals and objectives of the aid program; 4) nature of targeted recipient actors; 5) institutional mechanisms for delivery in recipient countries. Notwithstanding particular differences, Chinese and US foreign aid portfolios demonstrate their respective strategic political and economic interests in two ways: they shape the domestic politics of recipient countries in ways that accommodate the donor government’s policy preferences, and they enhance the social reputation and legitimacy of the donor state in the international system.


There has been a spectacular transformation in the global politics of foreign aid as China has, in a few decades, moved from being a recipient of aid to being one of the largest donor states in international development. As the world’s second largest economy, China has strategically positioned itself as the most credible challenger to the dominance of the United States in the international system (Regilme and Parisot Citation2017; De Graaf and Van Apeldoorn Citation2018). Yet, as China emerges as a key actor in international development, do its foreign aid strategies differ dramatically from those of the United States? If so, in what way? This article will compare the foreign aid strategies of the two countries since the start of the new millennium.

US and Chinese foreign aid programs can be compared by assessing the two countries’ quantitative records on official development assistance (ODA) and other official flows (OOF).Footnote1 Based on the College of William and Mary’s AidData (Citation2019) project, which tracks grant programs from 2000 to 2014, China’s total ODA and OOF commitments were valued at USD 2.6 billion in 2000. The commitments then skyrocketed to USD 37.3 billion in 2014. The US, in contrast, recorded a higher total absolute value of official ODA and OOF commitments abroad at USD 13.4 billion in 2000, which increased to USD 29.4 billion in 2014.

This article is part of our broader scholarly undertaking aimed at providing the first systematic comparative framework for understanding foreign aid programs and official finance from China and the US. Particularly, Chinese and American foreign aid can be compared systematically on the basis of several principal benchmarks: their descriptive features, determinants and principal motivations, as well as their material consequences. Thus, focusing on general descriptive features, we compare Chinese and US foreign aid programs based on the following criteria: 1) the official state definition and accounting of foreign aid programs; 2) the historical foundations and origins; 3) sectoral distribution, particularly in terms of the professed goals and objectives of the aid program; 4) the nature of targeted recipient actors; 5) and the various institutional mechanisms for delivery in recipient countries.

Our overarching argument is that, notwithstanding particular differences between the two programs, Chinese and US foreign aid portfolios demonstrate the strategic political and economic interests of the donor government. They do so in two ways: foreign aid programs shape the domestic politics of recipient countries so as to accommodate the donor government’s policy preferences, and they enhance the social reputation and legitimacy of the donor state in the international system. Considering space constraints, we limit our comparative discussion to the general ideational and material properties of Chinese and US foreign aid programs. In doing so, we acknowledge the complexity of foreign aid per se, particularly its humanitarian, military and economic dimensions, which vary from one donor government to another (Lancaster Citation2007). Table 1 provides a framework that compares contemporary US and Chinese foreign aid and official finance activities abroad using several descriptive features.

Table 1. Comparative descriptive framework of US and Chinese foreign aid and official finance abroad

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The next two sections build on the comparative framework presented above and discuss the key objectives and features of contemporary Chinese and US foreign aid programs. Subsequently, we explore how perceived national geostrategic and economic interests shape Chinese and US official finance activities, while demonstrating how such interests impact the social reputation and constructed legitimacy of the two donor states in the international system.

Contemporary Chinese foreign aid

The nature and scope of the rapidly expanding Chinese foreign aid are still largely difficult to decipher. First, until as recently as 2011, Beijing did not publish official foreign aid statistics; they were regarded as somewhat ‘classified material’. Denghua Zhang (Citation2020) notes that Beijing’s twin fears of domestic resentment from millions of Chinese still living in poverty and competition for more aid from recipient countries have kept it from publishing accurate foreign aid statistics. Second, Beijing’s conceptualisation of foreign aid often reflects the country’s latest operationalisation of foreign and domestic policy objectives, making it difficult to distinguish aid from other investment and trade deals. Because of its historical struggles against imperialism and an obsessive need to identify with the Global South, China avoids – for political and diplomatic reasons – labelling its development assistance to other developing countries as foreign aid. Eschewing the donor-recipient language that reinforces hierarchical and unequal power relations, Beijing “prefers to present its activities in terms of two-way exchanges and two-sided cooperation” (He Citation2010, 147). Because concepts like mutually beneficial partnerships and instruments such as joint ventures mask Chinese foreign aid, defining aid becomes an even more complex undertaking.

The historical and strategic roots of contemporary Chinese foreign aid go back to a state visit by Premier Zhou Enlai to the newly independent Ghana in 1964, when he outlined eight principles for China’s economic aid and technical assistance to other countries. At the core of the eight principles was respect for state sovereignty, non-interference in the internal affairs of other states, non-conditionality and a focus on low-cost (but high-yield) development projects that bring equality, mutual benefit and burden alleviation for recipient countries and foster their self-reliance and independent development. The principles included key conditions that remain to this day, that is, the use of Chinese-manufactured equipment and materials, and Chinese technical assistance on all development support projects. As Beijing’s diplomatic recognition tussle with Taiwan intensified, it added the One China Policy as a non-negotiable condition for receiving Chinese foreign aid. Over five decades later, despite a significant change in China’s global position, these eight principles and two principal conditions largely remain unchanged and have underwritten China’s competitive advantage over the United States in developing countries.

The eight principles of Chinese foreign aid reflect the multiple complexities of conceptualising it. Varying from military and technical assistance to low-cost investments and supply of China-made equipment and materials, foreign aid in China goes beyond the definitional confines of ODA. Despite claims made by the Information Office of the State Council in the 2011 White Paper on Foreign Aid that “financial resources provided by China for foreign aid mainly fall into three types: grants (aid gratis), interest-free loans and concessional loans” (The State Council of the People’s Republic of China Citation2011), loans, aid and investments are still lumped together. Since, until 2018, there were at least “30 ministerial-level agencies involved in China’s aid management” (Zhang Citation2020, 8), there is some confusion over the actual amount of Chinese foreign aid spending and what constitutes aid. Nonetheless, in practice, Chinese aid includes “tied aid, loans, export credits and tied export credits, and military aid which are [all] specifically excluded from the Organization of Economic Co-operation and Development’s (OECD) definition of ODA” (Hodzi et alCitation2012, 86). These types of aid can take at least eight forms: “complete projects, goods and materials, technical cooperation, human resource development cooperation, medical teams sent abroad, emergency humanitarian aid, volunteer programs in foreign countries and debt relief” (The State Council of the People’s Republic of China Citation2011).

In sum, while resembling some aspects of ODA, Chinese aid has a broader scope and includes aspects of foreign investment, military assistance and scholarships to international students, making it difficult to define or compare with aid from OECD countries. According to a tweet posted by the Chinese Embassy in Zimbabwe on 19 November 2019 (@ChineseZimbabwe Citation2019), China’s “understanding [of] bilateral development support shall include cash aid (ie. humanitarian emergency assistance for disaster relief), material aid (ie. donation of rice, medical & agricultural equipments) & funds for major bilateral cooperation projects released by stages” [sic]. Although the aid calculations exclude commercial elements, an all-encompassing understanding of bilateral aid/development assistance leads to confusion over amounts disbursed as aid to foreign countries. In 2019, China accused Zimbabwe of understating the value of aid from China because the Zimbabwean government had excluded all elements that do not meet the ODA criteria. In the end, the two governments issued a public statement that they had agreed on a “common accounting system” (Nyabiage Citation2019). The implication is that China is restructuring the aid regime to suit its national interests, and compelling recipient countries to legitimise its understanding of foreign aid.

China’s broad definition of foreign aid ties in with the main motivations for Chinese aid to the Global South. Since the 1950s, they mirror China’s domestic and geostrategic interests, especially geopolitical competition with other major powers for ideological, political, diplomatic and economic influence over the developing world. Considered then the ‘sick man of Asia’, Beijing’s aid in the 1950s and 1960s was ideology-driven, functioning as a tool for internationalising Mao’s version of communism and the peoples’ revolution. The first-known forms of Chinese foreign aid in the 1950s were targeted against US and French influence in Asia. As Cheng Cheng (Citation2019, 1) succinctly puts it:

Facing the pressure of perceived US containment efforts and US foreign aid programs in Asia, China launched its own self-described external assistance programs, which included military and food assistance to North Korea and Vietnam to support their struggles against US and French military forces, respectively.

Later, Beijing’s falling out with the Soviet Union led to the intensification of Chinese aid to national liberation movements and newly independent countries in Africa and Asia as China sought to cement its position as leader of the Third World. With inadequate financial resources to compete with the US or the Soviet Union, China’s focus on high-yield development projects such as the TAZARA railway in East Africa paid off especially in its diplomatic recognition struggle with Taiwan. With leaders who had received material support from China during their fight against colonialism, African countries used their numerical advantage in the UN General Assembly to vote in support of China regaining its UN Security Council seat from the Republic of China (Taiwan) in 1971.

China’s foreign aid shifted as China responded to domestic economic development imperatives and as it reframed its relations with the developed West in pursuit of industrial modernisation from the late 1970s. Having achieved its geopolitical objectives, its foreign policy moved from being blatantly ideology-driven to being pragmatic and economy-driven. In the 1990s, China’s foreign aid policy shifted “toward a more market-based approach with a move away from zero-interest lending, and a greater focus on the economic rationale for aid projects” (Foster et alCitation2009, 5-6).

The subsequent extraordinary economic growth and expansion of its economic interests abroad led to the addition of concessional loans, debt relief, major infrastructure development projects and instruments such as joint ventures to its foreign aid package. The objective was twofold: to respond to demands for new markets and sources of primary commodities to keep the Chinese economy on its extraordinary growth trajectory, and to meet the need in the Global South for alternative sources of financing for major infrastructure development projects. The result was the merging of foreign aid with investment and trade deals, which meant that joint venture investments, export credits and military equipment, as well as technical assistance in investment projects, were framed as foreign aid (Wolf et alCitation2013). The merging of “commercially oriented trade and investment ventures [was] rooted in the idea that since China is (by definition) a developing country, its aid spending should be ‘mutually beneficial’ and serve the recipients’ and China’s economic development goals” (Rudyak Citation2019, 1). With no attached political and economic reform conditions, Beijing continues to use its foreign ‘aid’ to achieve its economic and geopolitical interests.

Chinese foreign aid is focused on recipient states rather than civil society and non-governmental organisations. Because it is meant to be mutually beneficial to the Chinese government and the recipient state, most of the aid is channelled towards agriculture, infrastructure projects, technical cooperation projects, education and human resource training. In 2014, China’s Information Office of the State Council reported that “from 2010 to 2012, China provided assistance to 121 countries, including 30 in Asia, 51 in Africa, nine in Oceania, 19 in Latin America and the Caribbean and 12 in Europe” (The State Council of the People’s Republic of China Citation2014). This mirrors China’s own development trajectory, which focused on the modernisation of agriculture and extensive public spending in large infrastructure development projects. Strategically, linking its foreign aid focus to its own development experience enables China to promote its state-centred economic development model as a rival to the neoliberal economic development agenda advanced by the West in the Global South.

Although Beijing officially dissuades other countries from copying its development model, it has established government scholarships and professional training programs for high-level government officials from the Global South to study its development path at institutions such as the Institute of South-South Cooperation and Development (ISSCD) at Peking University. According to ISSCD, the Institute was established “to review and share the successful experience of China and other developing countries [enabling students to] learn general principles behind a country’s development, and search for development strategies suitable for their own countries” (ISSCD Citation2020). China’s aid model is therefore linked to exportation of its development model as a template for other development countries.

More recently, Beijing has channelled some of its aid for peace and security to the UN and regional organisations such as the African Union and ASEAN. The objective, unlike the aid from OECD countries, is not to enhance public participation in governance, promote human rights, accountability and transparency. Rather, Chinese foreign aid aims to strengthen states’ capacity to achieve economic development while providing China with access to markets and primary commodities. This suggests that China’s distinct conceptualisation of development is state-driven. The emphasis is therefore on trade rather than aid as conceptualised by the OECD. In that respect, China has “succeeded in promoting a new narrative of development cooperation that questions conventional […] conditionality-driven aid approaches” (Quadir Citation2013, 334). Beijing concurs that its “foreign aid has emerged as a model with its own characteristics” (The State Council of the People’s Republic of China Citation2011). Hence, Chinese foreign aid challenges the dominant liberal development agenda of the United States.

Contemporary US foreign aid

US foreign aid recipients include states (civilian agencies and military institutions), private corporations, philanthropic institutions and intergovernmental organisations such as the United Nations (UN). Thus, US foreign aid differs markedly from China’s official finance strategy, which exclusively recognises states as the only legitimate beneficiary. In the case of foreign aid, Washington views socioeconomic development as a multi-stakeholder endeavour achieved through transparency and democratic governance, rather than Beijing’s strong-state development paradigm.

In contrast to China’s official finance, US foreign aid programs are clearly defined, well institutionalised and comprehensive in terms of their substantive policy goals and range of recipients. The US is the world’s largest giver of official foreign assistance, with more than 200 recipient states. In terms of official development assistance (ODA), the US is the largest donor with USD 38 billion in 2018, ahead of Germany, the second largest donor state, with USD 25 billion in the same year (OECD Citation2019). Although the largest in terms of absolute ODA value, the US lags behind when its ODA is seen as a percentage of gross national income (GNI) (according to OECD data for 2018, of 29 ODA donor states, the US ranked 22nd with a mere 0.17 per cent share of GNI, well below Sweden’s 1.04 per cent, ranked highest using this benchmark) as well as the UN target of 0.7 per cent for high-income donor states.

The total value of US foreign aid represented 1.2 per cent of the federal budget in 2016 (McBride Citation2018). The US Agency for International Development (USAID Citation2020) reports around USD 47 billion worth of foreign aid obligations for the latest fiscal year 2019. This amount is divided into two key components: economic aid (USD 33 billion) and military aid (USD 14 billion). Based on USAID (Citation2020) data, Tables 2 and 3 show how US aid obligations for 2019 were distributed among US federal government agencies and the top five recipient countries, respectively. Historically, as the US principal ally, Israel receives the most military assistance, while aid to Iraq and Afghanistan has been primarily economic in nature as part of the American postwar reconstruction effort (Mearsheimer and Walt Citation2008).

Table 2. Breakdown of United States foreign aid obligations for 2019, per federal department

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Table 3. Top 5 recipient countries of United States foreign aid, 2019 obligations

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The 1961 Foreign Assistance Act serves as the legal basis of the US government’s current foreign aid strategy, administration and planning. Accordingly, foreign aid refers to “the unilateral transfers of U.S. resources by the U.S. Government to or for the benefit of foreign entities” (McBride Citation2018, 4). US foreign aid is broadly classified into two categories: 1) economic aid (or non-military aid), which includes humanitarian aid, public infrastructure programs, capacity-building schemes for government officials and technical support; and 2) military aid, which refers to peace and security initiatives concerning support for counter-terror efforts abroad or cooperative schemes with law enforcement agencies of other states in support of counter-narcotics strategies. In most cases, however, this distinction may be blurred, especially during transnational security crises when compelling US geostrategic interests are perceived to be at stake. For instance, economic aid during a security crisis may be redirected to public infrastructure projects serving military purposes.

Almost all foreign military and economic assistance programs have to be authorised by Congress and classified in the official budget items called “foreign operations appropriation”; international food assistance programs, on the other hand, are classified in the “agriculture appropriations” category (Lawson and Morgenstern Citation2019, 2). In practice, USAID is the principal federal government agency mandated to distribute and implement non-military foreign assistance and international development aid. In addition, other federal departments and agencies have forms of aid programs financed from their own institutional budgets. This is the case, among others, of the Environmental Protection Agency, which shares its water management expertise with foreign governments (Lawson and Morgenstern Citation2019).

US and Chinese development assistance programs differ in their legitimisation and justificatory discourses (Regilme and Hartmann Citation2018). As mentioned above, Beijing justifies its official finance programs through discourses of non-conditionality, particularly by not linking aid to the recipient state’s public commitment to democracy, human rights or other political ideologies. It also emphasises the need for fostering South-South development cooperation as an antidote to Western development assistance driven by conditionalities and alleged socio-political engineering in recipient countries through the promotion of market economies and liberal democracy. On the other hand, US aid strategy, while motivated by geostrategic interests, is legitimised through democratic governance, market-led development and civil society empowerment. As Carol Lancaster (Citation2007) notes, US foreign assistance began primarily as a tool of American power in the context of the Cold War, not only by empowering anti-communist allies but also through the invocation of market economies and electoral democracies as superior forms of governance. Later on, foreign aid from liberal democratic governments in the Global North, including the US, justified their aid-giving practices as forms of altruism towards the poor countries of the Global South.

The Global North’s framing of foreign aid as altruism has, however, been undermined by its detrimental political consequences in recipient states (Schoultz Citation1981; Barratt Citation2007; Callaway and Matthews Citation2016; Jadoon Citation2018). After the 9/11 terror attacks, the Bush administration dramatically increased anti-terror-oriented foreign assistance to states cooperating with the US in its global war against non-state terror groups (Regilme Citation2018). This so-called “global war on terror” facilitated the increase in collateral and intended human rights violations in many cooperating countries as they vigorously used US foreign aid to fund increased domestic repression not only against armed rebel groups but also civilian political dissidents and government critics (Regilme Citation2018Citation2020, 16). This was the case in the Philippines under the Arroyo administration (Regilme Citation2020), but also in Mexico and Colombia with their respective US-backed wars on drugs (Regilme Citation2018Citation2020; Paley Citation2015), and in Pakistan, because of US-funded counter-terror operations (Fair Citation2012). During periods of transnational security crises such as the Cold War and the war on terror, foreign aid reinforces the political survival of recipient governments, that is, “the political and economic hegemony of autocratic elites”, which in turn “produces a legacy of deep resentment in resident populations and destroys confidence in the integrity of American assistance efforts” (Root Citation2008, 44).

Faced with China’s rapidly increasing influence in the international development sector, in October 2018, the Trump administration ratified a bill that established the US International Development Finance Corporation (DFC). This new agency has the capacity to disburse annually USD 60 billion worth of loans, insurance and financial guarantees to American companies engaged in commercial activities, mostly infrastructure projects, in the Global South. Trump’s belated commitment to foreign aid as a tool for countering Chinese official finance activities has yet to generate concrete benefits to the US, as the DFC was only formally established in December 2019. Furthermore, the US remains likely to face serious challenges in winning the political support of various potential recipient states for two key reasons. First, China’s official finance activities have a first-mover advantage in providing generous and non-conditional official finance and capital, especially on the African continent, where China’s political footprint has been expanding due to its demand for key natural resources (Hodzi Citation2019). Second, fuelled by the foreign and domestic policy failures of the Trump administration, the US’ decreasing political legitimacy (as a key global governance actor) has not helped to win new strategic partnerships abroad and consolidate existing alliances, particularly in ways that can match the ambition and scope of China’s official finance strategies (Regilme Citation2019). The next two sections demonstrate how perceived geostrategic and economic interests and enhancement of the donor countries’ social reputation in the international system shape both aid programs.

China’s foreign aid: donor’s interests and social reputation

Generally, donor governments tailor foreign aid programs to achieve their strategic domestic and foreign policy preferences. China is no exception (Dreher and Fuchs Citation2012; Bräutigam Citation1998, 10). However, for China, foreign policy so closely relates to its internal affairs that domestic imperatives drive it and its foreign aid programs (Zhou Citation2019, 32). Set and overseen by the Communist Party of China (CPC), several core interests form the bedrock of both domestic and foreign policy and determine Beijing’s policy preferences. These core interests include, but are not limited to, state sovereignty, national security, territorial integrity and national reunification, the political system established by the Constitution, overall social stability and the basic safeguards for ensuring sustainable economic and social development. As a member of the Political Bureau of the Central Committee of the CPC and Director of the Office of the Foreign Affairs Commission of the CPC Central Committee, Yang Jiechi (Citation2017) maintains that these interests constitute “the starting point and basic goal of China’s external work”, meaning China’s foreign aid programs, including peacekeeping missions, initiatives to combat climate change and address major regional hotspot issues, provision of global public goods such as the Belt and Road Initiative (BRI), etc.

The principal objective of these foreign aid programs is to foster favourable external conditions for achieving China’s core interests, especially its two centenary goals:

to finish building a moderately prosperous society in all respects by the centenary of the CPC in 2021 and to turn China into a modern socialist country that is prosperous, strong, democratic, culturally advanced and harmonious by the centenary of the People’s Republic of China in 2049 (Yang Citation2017).

In 2012, President Xi Jinping introduced the ‘China Dream’, which aims to promote the rejuvenation of the Chinese nation, enabling China to “change the global landscape, which was shaped by Western countries over the past two centuries during industrialisation” (China Daily Citation2014). Xi’s China Dream and national rejuvenation ambitions drive both centenary goals. In many respects, the centenary goals are domestic goals, but in reality, their attainment requires alignment of internal and foreign policy preferences. Thus, the CPC needs stable, peaceful and secure domestic and international environments; its foreign aid programs intend to foster those favourable conditions.

China’s extraordinary growth requires foreign sources of primary commodities and markets for its products manufactured abroad. Over the past decade, conflicts and political instability around the world, from Libya and Myanmar to South Sudan, have affected Chinese investments, effectively threatening the social stability and economic development from which the CPC derives its legitimacy to govern. Intent on protecting the rights and interests of Chinese nationals and enterprises abroad, China channels its foreign aid towards militaries in host countries and multilateral peace and security initiatives in global hotspots. For instance, over the past decade, China has become the largest contributor of UN peacekeepers of the five permanent members of the UN Security Council and emerged as the second largest contributor to the UN peacekeeping budget. In 2015, it also pledged USD 100 million to the African Union standby force and USD 1 billion to establish the UN Peace and Development Trust Fund (Perlez Citation2015). In 2018, the People’s Liberation Army (PLA) pledged over USD 100 million in military aid to Cambodia (Thul Citation2018). In 2020, it “sent COVID-19 containment supplies to 12 countries […] among them were South China Sea rim countries Brunei, Indonesia, Malaysia and the Philippines” (Jennings Citation2020). These foreign aid programs aim to foster a peaceful and secure environment for Chinese citizens and investments around the world and bring potential rival states within its sphere of influence. Thus, Beijing is committed to the provision of basic safeguards that ensure the sustainable economic and social development of China, both domestically and internationally.

China’s peace, security and development aid programs via the United Nations and the African Union endeavour to strengthen Beijing’s reputation as a responsible major power that supports multilateralism in resolving global challenges. They portray China as a global power willing to provide public goods neglected by traditional powers such as the United States. Under Donald Trump’s presidency, the US government decreased its contributions to UN peacekeeping missions and remained unwilling to send troops as UN peacekeepers to Africa and other regions of no immediate strategic value to Washington (Gowan Citation2020). In providing military aid to domestic armed forces in global hotspots, China is bolstering its image as a responsible global power committed to providing public goods for no immediate returns – thus enhancing its social reputation.

The Belt and Road Initiative reflects the intersection of China’s domestic and foreign policy, and its foreign aid and trade investments abroad. Described by Xi Jinping as the project of the century, the BRI is criticised for advancing China’s self-serving economic interests. John Bolton, the Trump administration’s former National Security Advisor, described BRI and China’s foreign engagement with developing countries as follows: “such predatory actions are sub-components of broader Chinese strategic initiatives, including ‘One Belt, One Road’ – a plan to develop a series of trade routes leading to and from China with the ultimate goal of advancing Chinese global dominance” (White House Citation2018). Yet, China has linked its aid strategies to Sustainable Development Goals (SDGs) and Africa’s Agenda 2063, thereby providing a China Development Fund package to back its Belt and Road Initiative. The UN Secretary General António Guterres lauded China’s dedication to providing such public goods arguing that

The five pillars of the Belt and Road – policy coordination, facilities connectivity, unimpeded trade, financial integration and people-to-people exchanges – are intrinsically linked to the 17 Sustainable Development Goals […]. United Nations country teams stand ready to support Member States in capacity and governance building, and in achieving a harmonious and sustainable integration of the Belt and Road projects in their own economies (United Nations Citation2019).

The implication is that China’s reputation as a key international development partner and supporter of multilateralism is improving.

To ensure that Chinese foreign aid is designed to achieve these objectives, the Chinese government established the China International Development Cooperation Agency (CIDCA) in 2018. Previously, the management and implementation of foreign aid was under the purview of more than 30 ministry-level agencies in China, which resulted in corruption, poorly managed projects and needless waste of aid finance and other resources. More importantly, apart from coordinating foreign aid planning and management, CIDCA is supposed

to further the effectiveness of aid as a key foreign policy instrument, to improve the strategic planning and overall coordination of aid, to centralize aid management, to reform modes of aid delivery, and to better serve China’s overall diplomacy and the construction of the BRI (Rudyak Citation2019, 5).

CIDCA will facilitate the alignment of China’s foreign aid with its foreign policy objectives, which explains why the agency falls under the Ministry of Foreign Affairs.

Accordingly, China’s foreign aid programs reflect Beijing’s core domestic and foreign policy interests. These programs have a dual purpose, namely to enhance Beijing’s social reputation and legitimacy in Latin America, Asia, the Pacific and Africa – regions where its rhetoric of South-South cooperation, win-win partnerships and non-interference in the internal affairs of other states still resonates. In that respect, Chinese foreign aid is framed as ideology-neutral, disconnected from moral considerations and with no political conditions attached except the One China Principle. Contrasted with demands for economic and political reforms attached to US foreign aid, China’s combined aid and investment programs are becoming the new normal, challenging traditional ODA and offering a new model for development assistance.

US foreign aid: donor’s interests and social reputation

Like Chinese foreign aid, American foreign aid programs have been shaped primarily by domestic political conditions. However, in contrast to Beijing’s ability to configure its foreign aid programs over longer time horizons given its one-party political system, Washington faces considerable political restraints as aid policy agendas are affected by the electoral dynamics that deliver changing strategies in the executive and legislative branches. Every fiscal year, the White House prepares the budget plan for foreign aid programs, which is subject to the approval of Congress. This makes it dependent on the multifaceted political interests of the executive and legislative branches of the US government.

In general, however, a dependable and predictable US foreign aid program usually enjoys bipartisan support in Congress. This is exactly one of the reasons why the Trump administration faced resistance from Democratic and Republican members of Congress alike as it set out to cut US foreign aid budgets to a minimum. Despite initial intentions, however, Trump and his allies eventually caved in to pressure and ended up restructuring and expanding US foreign aid and official finance activities abroad. In fact, in 2018, Trump quietly signed the ‘Better Utilization of Investments Leading to Development’ (BUILD) Act into law, which aims to reinforce US official development funding programs by setting up a new federal agency.

Empowered by the BUILD Act, the DFC represents the US government’s global development bank, which “invests across sectors including energy, healthcare, critical infrastructure, and technology”, and “provides financing for small businesses and women entrepreneurs in order to create jobs in emerging markets” (DFC Citation2020, 1). Whereas Chinese development programs do not explicitly invoke human rights and sustainability as their core justifications, the DFC (Citation2020, 2-3) claims that it commits to “high standards and respect[s] the environment, human rights, and worker rights” as key conditions when dealing with private sector partners from the US and in the Global South. The DFC aims to promote the foreign policy priorities of the US government, while stimulating economic development in recipient countries. Thus, Trump’s BUILD Act reveals enduring bipartisan support from US Congress for continuing to update the US official finance strategy in light of Beijing’s expanding footprint in the international development sector.

Since the end of the Second World War, US foreign aid has always been shaped by the country’s perceived geostrategic and economic interests. In fact, USAID (Citation2017) proudly claims that, of the US’ top 15 trade partners, 11 “were once recipients of US aid, and some of the fastest-growing markets are former aid recipients”. For sustainable bilateral trade to flourish, American military aid has been used to ensure the political survival of politicians and leaders supportive of US economic interests in aid recipient countries (Lee Citation2020). A variety of state and non-state actors receive US foreign aid in targeted countries. According to the Brookings Institution, in 2018, governments received 21 per cent of total ODA, multilateral agencies 34 per cent, non-governmental organisations 20 per cent and ‘others’ the remaining 25 per cent (Ingram Citation2019). In contrast to China’s roster of aid recipients, the wide diversity of US aid recipients reflects Washington’s market-oriented and pluralistic approach to stimulating economic and political development in the Global South, particularly based on the idea that full reliance on states often does not work in advancing public interests.

Thus, US foreign aid is entrenched in the US government’s perceived economic and geostrategic interests at a particular time. Introduced after the Second World War, the Marshall Plan, which amounted to almost USD 12 billion worth of aid, facilitated the dramatic reconstruction of Western European economies. That ambitious US initiative aimed to make Europe a key market for American goods. Supported by US security guarantees primarily through the North Atlantic Treaty Organization (NATO), a stable and peaceful Western Europe proved crucial in projecting American interests in the region while making Western Europe an ally supportive of US interests in various global governance issues. During the Cold War, US foreign assistance and political support aimed to curb the expansion of communist influence abroad. In the case of the Asia-Pacific region, US foreign aid to the Republic of China (Taiwan) and South Korea, together with long-term pro-development initiatives in those countries, stimulated their economic take-off, eventually turning them into global economic powerhouses (Nem Singh and Ovadia Citation2018, 1043). In the 1990s, after the end of the Cold War, US foreign aid was recalibrated to promote market-oriented liberal democracy in the Global South. The US regarded market-oriented liberal democracy as a key condition for regional peace and stability. As already stated, at the beginning of the new millennium, the 9/11 terror attacks in the US motivated the Bush administration to launch the US-led global war on terror, whereby military foreign aid was given to key allies in Africa, Asia and Latin America in order to curb armed non-state terror groups and was used to repress not only armed rebel groups but also civilian and unarmed political dissidents (Regilme Citation2018; Lindsay-Poland Citation2018).

Notably, US foreign aid programs demonstrate the partial convergence of donor and recipient governments’ policy preferences. Using foreign aid, the US seeks to gain geostrategic and economic leverage by providing monetary benefits, while recipient governments use that assistance to consolidate their authority and/or reinforce their political survival. Analysing quantitative data on US aid from 1945 to 2001, Bruce Bueno de Mesquita and Alastair Smith (Citation2007) describe the “strategic process in which donors purchase policy support from recipients who use at least some of the assistance to ensure that they are securely ensconced in power”. In most cases, recipient government leaders “do not inherently support the policies of a prospective donor but are willing to back those policies in exchange for aid sufficient to improve their political and economic welfare relative to survival prospects for the recipient states’ leaders in the absence of aid” (254).

Foreign aid constitutes an important element of the US’ claim for legitimacy as the world’s most dominant state actor in global governance. Notwithstanding China’s emergence as a key donor country, the US government has long been committed to providing foreign assistance to China, in order “to promote human rights, democracy, and the rule of law; counter the spread of pandemic diseases; and support livelihoods, traditional culture, and environmental conservation in Tibetan areas” (Lum Citation2014, 1). The US has been crucial in the provision of global goods through its financial support to key global multilateral and governance institutions such as the UN. In 2017, the US government contributed around USD 10 billion to the UN budget (Hillard et al. Citation2020). Of that, the UN World Food Programme received the largest portion (USD 2.5 billion), while the Department of Peacekeeping Operations received USD 2.2 billion and the UN Office of the High Commissioner for Refugees got USD 1.4 billion.

In exchange, the US seeks to promote its geostrategic and economic interests by garnering favourable global perceptions of its role in the international system. In a study that covered 45 countries and their nationally representative opinion poll surveys during the years 2002 to 2016, Stanford University researchers found that the dramatic and considerable increase in health aid, primarily through the US government’s AIDS and malaria aid programs, correlated very well with the increased favourability ratings of the US within those countries (Jakubowski et alCitation2019) and more positive references to such US programs in the recipient countries’ mainstream media.

Since all post-Cold War era administrations up to that time had relied heavily on the discourses of democracy promotion, human rights and multilateralism in order to legitimise US foreign aid programs and military interventions abroad, Trump’s anti-multilateralism and exclusionary discourses, including his persistent threats to reduce US aid funding, may have contributed to the much lower Pew 25-nation favourability ratings for the US under his administration than under Obama’s (Wike et alCitation2018). While former President Obama actively legitimised his policies through foreign aid and international cooperation, Trump abandoned those legitimisation discourses of American soft power, thereby contributing to the declining global confidence in the US government’s abilities to provide global public goods (Regilme Citation2019). For instance, Trump’s formal notification to the UN in July 2020 of his decision to cancel US membership and financial contributions to the World Health Organisation (WHO) signals the sudden departure from long-standing US commitment to multilateral forms of cooperation in global governance, including global public health.Footnote2 That tragic decision came amidst the Trump administration’s numerous policy failures in handling the COVID-19 pandemic, which claimed approximately 194,000 deaths in the US as of mid-September 2020 (Rogers and Mandavili Citation2020, 16).


Based on the foregoing comparative analysis of US and Chinese aid programs, several observations can be made. First, both China and the US have actively used their foreign aid and official finance activities to advance their perceived geostrategic and economic interests. Foreign aid has been used by both donor states to foster political influence in recipient governments in ways that can eventually benefit their interests. Both the US and China formally started their foreign aid programs during their respective periods of ascent as economic powerhouses, and their market expansion and wealth accumulation initiatives have been facilitated by the foreign aid conditions imposed on recipient countries. Second, while Washington has been transparent and specific in classifying its various aid programs, Beijing has yet to further institutionalise its foreign aid bureaucracy and to organise its taxonomy of official development aid schemes so that they are comparable to those of other OECD donor states. Third, the legitimation discourses of Chinese and US aid programs are different. While Beijing legitimises its aid interventions by highlighting South-South cooperation, non-conditional altruism and a state-centred development model, Washington justifies its interventionist aid by framing market economies, democratic governance and human rights as quintessential principles for development. This marked difference in legitimation discourses is also reflected in the nature of their aid recipients: Beijing considers states its key recipients; Washington provides aid to a wide variety of states and non-state actors. Finally, foreign aid is not only the most visible and concrete form of influence that a powerful state deploys in weaker countries; it is also one of the most enduring features of the international system. No matter how destructive or beneficial foreign aid can be for a recipient country, the United States and China, as status quo and challenger powers respectively, deploy various legitimation discourses in order to galvanise political support in their own domestic constituencies and the people in recipient countries.

Additional information

Notes on contributors

Salvador Santino F. Regilme, Jr

Salvador Santino F. Regilme, Jr. is a tenured University Lecturer of International Relations and Human Rights at the Institute for History of Leiden University, Leiden, The Netherlands.

Obert Hodzi

Obert Hodzi is a Lecturer in Politics at the University of Liverpool, Liverpool, United Kingdom. Email: [email protected] Twitter: @oberthom


1 ODA refers to concessional financial programs that are primarily intended for development and welfare projects, whereby at least 25 per cent of their total value constitutes a grant element. In contrast, other official flows (or OOF) refer to financing instruments that are non-concessional by nature, with less than 25 per cent of their value considered grants, and are primarily intended for commercial objectives.

2 The US contributed nearly USD 553 million to the annual budget of the UN’s global public health agency in 2019.



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