The Global South stands at the center of a rapidly evolving strategic competition between the United States and the People’s Republic of China (PRC). The current conflict paradigm between the U.S. and the PRC is multidimensional, waged across economic, industrial, diplomatic, informational, and military domains. Over the previous two decades, the PRC has pursued its objectives using asymmetric, indirect, and non-kinetic means of conflict against the United States in the Indo-Pacific, Latin America, and Africa. The role of foreign aid is often overlooked in discussions regarding U.S.-China rivalry. This report argues that foreign aid is a key domain of competition between the U.S. and China for influence in the Global South.

The PRC has long portrayed itself as the unofficial leader and primus inter pares of the Global South, but the twenty-first century has seen Beijing match the rhetoric of Third Worldism with unprecedented levels of investment and rapid construction of South-South projects and partnerships. These developments should alarm the United States, as they represent a deliberate attempt to limit America’s power projection potential, disrupt America’s integrated network of alliances and bilateral partnerships, and undermine the rules-based international order. Increased strategic investment in the Global South is not only a humanitarian imperative but a geopolitical necessity for the United States.

China's Strategy in the Global South

The PRC is actively pursuing four strategic objectives in the Global South:

1. Securing access to strategic resources, markets, and trade routes;

2. Building political capital and influence within key Global South countries;

3. Supporting an alternative model of global development and governance that conforms to the PRC’s interests;

4. Challenging American influence.

The PRC’s foreign aid program is a core component of these broader strategic ambitions. What began as an ideological project aimed at cultivating solidarity with the Third World has evolved into an effective geopolitical instrument designed to expand China’s global reach and shift the global balance of power in its favor. Chinese foreign assistance programs are coordinated by the China International Development Cooperation Agency (CIDCA), whose policies are overwhelmingly guided by Chinese foreign policy and national security concerns, rather than purely economic or humanitarian incentives. 

The Evolution of Chinese Foreign Aid

China’s foreign aid program has undergone a dramatic transformation since the founding of the People’s Republic in 1949. During the Mao era (1949–1976), foreign aid focused on supporting revolutionary governments and developing cadre networks across what was then known as the “Third World,” reflecting Mao’s own “Three Worlds Theory” of international relations. China’s approach was rooted in revolutionary solidarity and its struggle to compete with both the United States and the Soviet Union for influence among non-aligned and developing nations.

As the Chinese system evolved during the 1980s under the leadership of Deng Xiaoping and Hua Guofeng, the PRC abandoned doctrinaire notions of radical self-reliance and imperialist encirclement. Internal economic reforms were reflected in changes to the PRC’s foreign policy, as Beijing adopted a more pragmatic and commercially oriented approach to foreign assistance. The post Mao era of Chinese foreign policy has also been characterized by its formulation of an alternative model of development for the Global South – sometimes referred to as the “Beijing Consensus" or “China Model” – which stands in opposition to the open, market-oriented policies promoted by American-based institutions such as the IMF, MCC, World Bank, and the U.S. Treasury.

Since 2000, China has invested hundreds of billions of dollars in foreign assistance projects throughout the Global South, funding transportation infrastructure, telecommunications, heavy industry, water, and resource extraction. The launch of the Belt and Road Initiative (BRI) in 2013 marked a turning point in the history of Chinese foreign aid. The BRI aimed to construct overland trade corridors across Eurasia and secure maritime trade routes connecting China with Africa, the Middle East, and Latin America. As of 2025, the BRI counts over 150 countries as members, representing 75 per cent of the world's population and over 50 per cent of global GDP. Projects such as the BRI have deepened China’s economic interdependence with key regional powers and expanded Beijing’s political leverage in key multilateral institutions. Today, China is the leading provider of bilateral development financing in the Global South. Its foreign assistance strategy has had tangible effects on the global balance of power, especially in regions where U.S. engagement has diminished in recent years.

Chinese foreign aid in Africa is the key instrument of its growing influence over the continent. The relationship between China and Africa dates back to the 1950s. African countries were among the first states to receive Chinese foreign aid after the founding of the People’s Republic in 1949. Today, Africa is the primary destination for Chinese development aid. China views Africa as a geopolitical “pivot area” within its growing global economic and security architecture, due to Africa’s vast resources and geographic position as a gateway linking Europe, the Middle East, and Asia through the BRI. Since 2000, the Forum on China-Africa Cooperation (FOCAC) has been the official institution responsible for Chinese foreign assistance and development coordination with Africa. FOCAC sets the overall agenda and priorities for China-Africa engagement, including development assistance, trade, infrastructure, and government capacity building. 

At the most recent FOCAC summit in September 2024, Chinese President Xi Jinping announced a $50 billion increase in foreign aid to Africa. This expanded aid package includes a mix of grants, infrastructure investment, education programs, and humanitarian initiatives. It also reflects an emerging trend: China is leveraging its growing financial might to target regions where the United States has disengaged—particularly in Africa and Latin America. The PRC’s investment in foreign assistance isn’t a purely economic consideration; it is a deliberate attempt to build political capital in the Global South and promote an alternative vision of global governance and development. 

A Strategic Opportunity for the United States

The United States can counter China’s expansion in the Global South through greater levels of direct investment and development assistance. U.S. foreign aid targeted at the Global South must at least match the scale of China’s but also exceed it in terms of quality, transparency, and long-term results. The U.S. would benefit from expanding its engagement with the Global South through multilateral institutions and forums such as the International Monetary Fund (IMF), World Bank, and regional development banks. These institutions prioritize the transparency and responsible governance mechanisms that distinguish U.S. foreign assistance from opaque and predatory Chinese deals. American policymakers should draw upon experience gathered from successful U.S.-Africa foreign aid initiatives, such the African Growth and Opportunity Act (AGOA), the Electrify Africa Act, and PEPFAR. The U.S. must also invest locally, cultivating autonomous networks from indigenous structures that already exist in situ. 

The United States must continue prioritizing foreign assistance that advances democratic governance, economic growth, and global health. However, achieving these goals requires fresh thinking about the geopolitical role of foreign aid. Although foreign aid accounts for less than one percent of the U.S. budget, it remains a contentious issue in public discourse. America's foreign aid policies must be able to withstand scrutiny by aligning American principles with evolving strategic imperatives. This includes building sustainable partnerships across the Global South based on mutual benefit, not dependency. Going forward, existing institutions such as the Development Finance Corporation (DFC) and the Millennium Challenge Corporation (MCC) can play a leading role in the implementation of America’s strategic foreign assistance agenda—one designed to advance American interests through development financing, securing energy flows and supply chains, building critical infrastructure, and expanding trade in critical regions throughout the Global South where China is actively seeking to expand its influence. U.S. foreign assistance should be deployed with clear performance metrics tied to recipients’ openness to U.S. investment and alignment with U.S. national security priorities. This approach ensures that foreign aid recipients are genuine partners with shared strategic priorities. 

Conclusion

As China continues to expand its influence across the Global South through foreign aid and development financing, the United States faces a historic challenge and a geostrategic opportunity. By reinvigorating its foreign assistance programs and reaffirming its commitment to sustainable global development, the U.S. can reestablish its role as the preeminent global superpower, counter the PRC’s authoritarian model, and reinforce the rules-based international order. In this new era of multidimensional strategic competition, foreign assistance is not merely charity—it is a powerful tool of statecraft and a key front in the battle against China’s expansion.