The US President’s restrictions on foreign aid and the elimination of a key agency that finances programs worldwide may give China an opportunity to expand its influence globally.
Since the dissolution of the US Agency for International Development (USAID), Trump’s “America First” agenda has raised concerns among some US politicians and experts that the US is ceding ground to its rivals, particularly at a time when Washington is worried about China’s growing influence at the expense of American interests.
Foreign aid has been a source of “soft power” for the US, enabling it to forge alliances and confront adversaries to strengthen national security without the need for troops, weapons, or other coercive measures.
“Forthcoming, the second Trump administration will achieve China’s goal of exercising more global influence” said Feng Zhang, a visiting scholar at the Paul Tsai China Center of the Yale Law School, at a debate in Washington. Dennis Wilder, a senior fellow at the Initiative for U.S.-China Dialogue on Global Issues at Georgetown University, argues that the US’s global influence extends beyond foreign aid, as the US commands the world’s most powerful military and its dollar dominates the financial system.
The two nations, the world’s most significant actors in global development, use foreign aid differently. The majority of Chinese funds are disbursed as loans, typically for energy and infrastructure projects.
In contrast, most US funds were disbursed as grants or low-interest loans, often for public health and humanitarian assistance, according to AidData, a research laboratory for international development at the Global Research Institute of William & Mary University.
In Peru, Chinese funds were used to build the 1.3 billion-dollar Chancay megaport, which was inaugurated in November 2024 during a visit by Chinese President Xi Jinping. The US foreign aid in Peru, on the other hand, was used to finance coffee and cacao as alternatives to cocaine production.
While it is unlikely that China would fill the gap if the US were to withdraw, Beijing would still benefit, as foreign aid is about building relationships and goodwill, according to Samantha Custer, director of policy analysis at AidData. This would support Beijing’s image as a responsible partner and global leader, while sowing doubts about the US, she said.
The general impact of the US aid freeze is a return to militarized diplomacy, where soft power is pushed aside in favor of hard power, Custer said.
National Security Adviser Mike Waltz denied the notion that the US was giving China and Russia the opportunity to expand their influence, saying that “these missions and programs . all too often do not align with the strategic interests of the US, such as pushing back against China.