Foreign aid cuts by the US, UK, and others present an opportunity for China. Increased Chinese foreign assistance should be expected, as evidence on VoxDev shows that it makes sense for the country’s domestic and foreign goals.
This is the second in a two-part blog series on the evidence on aid featured on VoxDev. The first blog on the consequences of aid withdrawal can be found here.
At a time when Western donors are pulling back, China has been stepping forward—in a big way. In just a decade, China has become one of the largest players in global development finance transforming the landscape of development infrastructure across Asia and Africa. But Chinese aid isn’t just about bridges and roads. Research featured on VoxDev reveals how China’s approach to development finance is reshaping recipient economies, shifting public opinion, and altering the rules of global influence. From infrastructure-led growth to political favouritism and rising soft power, in this article, I explore what makes Chinese aid different—and why it matters for the future of development.
Spending on foreign aid is a win-win for China and unlikely to ramp down any time soon
Following the announcement of its Belt and Road Initiative in 2013, China’s development finance programme expanded dramatically. Between 2013 and 2017, China spent over $85 billion annually on development finance, outspending the US by more than two-to-one (Malik et al. 2021). Most of this aid has come in the form of loans to finance infrastructure projects in strategic recipient nations, making China one of the world’s largest providers of development finance with an estimated US$1.34 trillion disbursed to date (AidData n.d.).
China has been particularly keen to invest in resource-rich, sanctioned adversaries of the US. Russia and Venezuela are the highest known recipients of China’s development finance, receiving a combined total of $282 billion in loans (AidData n.d.). China is also the largest importer of crude oil in these countries (Horton and Palumbo 2023, Fleck 2025, Aizhu 2025). The return on these investments is crucial to securing China’s economic and geopolitical future, providing the necessary inputs for sustained growth.
The involvement of Chinese firms in state-financed aid projects also helps secures domestic political stability within China (Mueller 2023). For instance, when Chinese workers go on strike, the central government allocates more contracts to firms in those areas, raising employment and wages. Although these actions are driven by domestic political needs, evidence suggests that these gains do trickle down to recipient countries, especially those who happen to work closely with beneficiary firms in China (Mueller 2023).
On average, a recipient country’s GDP per capita rises by 2.5% three years after a large-scale infrastructure aid project, which translates to a similar increase in household consumption (Mueller 2023). Chinese development finance is a win-win for China in this sense, appeasing both individuals and private enterprise at home and abroad.
Chinese aid improves public sentiment for the Chinese government in recipient countries
As Western aid disappears, low- and middle-income countries looking for assistance are likely to turn to China, undermining decades of US foreign policy efforts to win ‘hearts and minds’ in developing countries. Evidence suggests that these impacts are nontrivial: the completion of Chinese development projects increases public approval of the Chinese government in recipient countries by around three percentage points in the short-term (Wellner et al. 2023).
This implies that, for every additional Chinese development project completed, public approval increases by 0.2 percentage points. To put this into context, if Cambodia had received 61 fewer projects, China would have suffered a 13-percentage point loss in public support in the country. This is noteworthy as Chinese development finance has been successful in targeting strategically important countries, including African nations, ‘swing states’, and countries with higher baseline support for the Chinese government (Wellner et al. 2023).
In Pakistan, for example, there has been a significant increase in positive reporting on China in local newspapers in the last decade (Ahmed et al. 2021), following approximately $65 billion in Chinese investment.
Chinese aid is influenced by the regional favouritism of leaders
Economic development tends to be concentrated in the birthplaces of the countries’ political leaders (Raschky and Hodler 2014). Aid also tends to flow to richer parts of recipient countries, which may indirectly promote regional favouritism. Research suggests this is due to the difficulty overseeing implementation in poorer, rural, and/or remote parts of developing countries (Briggs 2021).
Critics of foreign aid frequently highlight its potential to foster corruption in developing countries. Evidence suggests that Chinese development finance may exacerbate this issue more than its Western counterparts. For example, one study finds that the birth regions of African leaders receive nearly four times more financial support from China during their tenure in office (Dreher et al. 2015).
Although aid from the US and Europe is not immune to this politically motivated targeting, research finds that Western donors try avoid channelling aid to regions where political motivates are obvious, whereas China does not (Bomprezzi et al. 2024). This raises concern as aid allocated based on political motive, as opposed to need, is less effective in improving development outcomes.
What does this mean for the future of foreign aid?
Significant reductions in Western aid may very well accelerate the pace of Chinese assistance around the world. China is already stepping in to fund education and health programmes previously backed by the US, but only with a fraction of the resources (Kenny 2025). The inability to fill these critical gaps means losing these hard-won gains and putting millions of lives in immediate danger, effectively enabling China to purchase soft power at a discount. China may be providing aid today, but given the country’s track record, it is likely to revert to its loan-based model, making development finance potentially inaccessible altogether.
References
AidData (n.d.), "Global Chinese Development Finance".
Aizhu, C (2025), “Traders rebrand Venezuelan oil for China as Brazilian, sources and tanker trackers say”, Reuters.
Ahmed, Z S, A Hanif, and B He (2021), “China’s soft power in Pakistan: The representation of the China–Pakistan Economic Corridor in local newspapers”, East Asian Policy, 13(4): 5–18.
Bomprezzi, P, A Dreher, A Fuchs, T Hailer, L Kaplan, S Marchesi, T Masi, C Robert, and K Unfried (2024), “Leader spouses and informal influence in foreign aid”, VoxDev.
Briggs, R (2021), “Why does aid not target the poorest?”, VoxDev.
Dreher, A, A Fuchs, R Hodler, B Parks, P Raschky, and M Tierney (2015), “African leaders’ misuse of Chinese development finance: The price of country ownership”, VoxDev.
Fleck, A (2025), “Russia diverts oil exports to India and China”, Statista.
Horton, J and D Palumbo (2023), “Russia sanctions: What impact have they had on its oil and gas exports?”, BBC.
Kenny, C (2025), “Chinese assistance won’t replace USAID. That’s the problem”, Center for Global Development (CGD).
Malik, A, B Parks, B Russell, J Lin, K Walsh, K Solomon, S Zhang, T Elston, and S Goodman (2021), "Banking on the Belt and Road: Insights from a new global dataset of 13,427 Chinese development projects", AidData at William & Mary, Williamsburg, VA.
Malik, A A (2022), "Global insights with national implications: AidData’s policy engagements on the China-Pakistan Economic Corridor", AidData at William & Mary, Williamsburg, VA.
Mueller, J (2023), “Chinese foreign aid: Can self-interest benefit recipients?”, VoxDev.
Raschky, P A and R Hodler (2014), “Regional favouritism across the world”, VoxEU.
Wellner, L, A Dreher, A Fuchs, B Parks, and A Strange (2023), “Chinese development finance and public opinion”, VoxDev.