The US aid freeze has left a funding gap. What if China steps in?

As the United States retreats — at the behest of U.S. President Donald Trump and his “America First” agenda — from its role as the world’s largest foreign aid donor, organizations and governments are considering options to plug the gap. Experts tell Devex that China could take on a significant portion of the mantle the U.S. has largely dropped — but worry that its increased involvement could jeopardize efforts to improve human rights and democracy. “It's not theoretical. We know it's happening,” said Melissa Conley Tyler, executive director of the Asia-Pacific Development, Diplomacy & Defence Dialogue. Within days of the U.S. State Department’s announcement of a 90-day funding freeze and assessment of all programs, she was told of instances in the Pacific where China had offered to replace lost USAID funding. The Cambodian government also quickly turned to China for a grant to continue its work in demining its land. Development assistance is seen as a form of soft power and a way to build relationships with other countries, said Conley Tyler — and somebody has to step in “if we don't want a complete collapse of the sector.” China already ranks as the sixth biggest development donor, according to the Organisation for Economic Co-operation and Development’s 2019 data. In 2024, Chinese President Xi Jinping pledged $50 billion over three years to develop systems and employment opportunities in Africa. The government is already the second largest bilateral donor to countries in the Pacific region, focusing mainly on infrastructure such as roads, and is increasingly pivoting its development contributions back to its doorstep in Southeast Asia following the COVID-19 pandemic. “Given the pull-out of the U.S. to development assistance, I would expect that China's influence will be increasing and they might fill in the void left in some of the countries and further expand its influence in the [Asia] region,” said Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations and an expert on China’s role in global health policy. “Some countries might welcome this development, but scholars are concerned that the pull-out of support for the rule of law, civil society, and governance could have implications on democratic consolidation.” This, in a region where democracy and human rights are amid significant backsliding as government repression increases. China’s differing attitude from Western nations to human rights, the rule of law, and democracy could mean rollbacks in these areas. As it stands, U.N. Sustainable Development Goal 16 on promoting peaceful and inclusive societies — which includes targets on promoting the rule of law and strengthening governance — is already “dangerously off track,” according to a U.N. report. “Given that those things perhaps look rather different in China, I think you would be surprised if high degrees of Chinese influence had a positive effect on those metrics,” Conley Tyler said. “They're not trying to create liberal democracies across the planet, are they?” According to an annual index published by Freedom House, China scores only nine out of 100 for freedom of its people — lacking fair elections, the right to convene political parties or a free press. Amnesty International has also flagged the persecution of human rights defenders, minority groups such as Uyghurs and the LGBTQ+ community, and the lack of workers’ rights in the country. It’s unlikely that China would step in to fund previously USAID-backed programs on human rights and democracy, said James Gomez, regional director at the Asia Centre, a civil society research institute. “[China] traditionally never funded those things and I don't expect it to fund those things,” he said. Instead, China’s focus would more probably remain on infrastructure, said Ravi Madasamy, a Singaporean former human rights lawyer and activist. Earlier this month, China granted the Cook Islands $4 million to channel into programs from education to mining. That could mean programs on human rights and democracy may just lose funding, but there is the risk that China’s involvement overseas could worsen these areas, Conley Tyler said. Unlike other donors, China tends not to attach human rights conditions to its aid while it has also been accused of using its economic leverage to pressure countries into aligning with its views. A soft power play In Africa, where the majority of Chinese aid has been channeled in the past, several countries, such as Burundi, Gabon, and Guinea, already have precarious democratic systems and questionable adherence to human rights while in Asia, where countries such as Cambodia, Vietnam, and Laos are of particular focus for China as a result of its ongoing infrastructure projects under the Belt and Road Initiative, freedom of expression and safety of human rights defenders is deteriorating in line with a rise of authoritarian regimes. By withdrawing from these countries in the form of retreating development assistance, Conley Tyler wonders whether the U.S. has properly considered that it is paving the way for China to have more of an influence. Yet over the past several years, the U.S. has invested in opening embassies in the Pacific to stave off Chinese influence. “It seems strange when something like Project 2025 did talk about the importance of foreign aid as part of the global competition with China so at least the people who wrote that were very clear that this is an important tool of statecraft,” she said. “But somewhere between Project 2025 and the executive order [on reevaluating USAID], it actually got much more extreme.” USAID has historically been what Conley Tyler called “a vital vector for U.S. soft power” and costing only around 1% of the U.S. budget, even “the hardest-headed of foreign policy people” should see that “it gives bang for your buck,” she said. “It changes the trajectories of countries’ development. It makes them more receptive to the U.S. It builds links and connections. … I also think it's inexpensive if you compare it to other tools of statecraft.” The alternatives While the U.S. State Department conducts its review and decides what programs it will resume its support for, Huang said China can afford to take its time deciding which program areas and countries it would like to prioritize supporting. But rather than simply waiting, Conley Tyler believes other countries should be pushed into making up the funding deficit. In a move contrary to this, the U.K. government last week announced its intention to decrease rather than increase its international development allocation. “This is just dead wrong … and I would be saying other countries should not be following this load,” Conley Tyler said. This follows a series of aid budget cuts in 2024 from the likes of Belgium, France, and Germany. Following aid cuts across traditional European donors, experts cited Japan, Russia, and Australia as potential countries that could step in, especially to influence recipient nations in Asia. For example, when Trump withdrew the U.S. from the Trans-Pacific Partnership Trade Agreement in 2017 during his first term, Japan stepped up. Recently, South Korea increased its overseas development budget. “We should be talking about not just the fear that China will come into the vacuum, but [how] this is time for boldness, for a country like Australia, and for others … to embark on an initiative to preserve development programs in the region,” Conley Tyler said.