With Donald Trump and Elon Musk targeting USAID and the UK pledging just 0.3% of GNI for aid, China stands at a crossroads. This article examines the shifting dynamics of aid, power, and relations among the three nations
The United States’ decision to shutter the US Agency for International Development (USAID) and the United Kingdom’s commitment to reduce foreign aid to 0.3% of gross national income (GNI) represent a significant retreat from their historic roles as global development leaders. For China, a nation that has transitioned from aid recipient to global powerhouse, these moves carry far-reaching consequences and have the potential to reshape the landscape of international assistance, influence and diplomacy, affecting not just Beijing but also Washington and London.
In the past, USAID played a notable role in China, particularly during the 1980s and 1990s when the country was opening its economy under Deng Xiaoping’s reforms. The US saw an opportunity to foster development and build bridges, directing funds toward agriculture, environmental protection, and public health. Annual allocations in the late 1990s and early 2000s typically ranged between $10 million and $20 million – modest sums compared to USAID’s global budget but significant in their focus. Projects included rural development in provinces like Yunnan and Guizhou, where training in modern farming techniques and water management aimed to alleviate poverty. Another key effort was the US-China Partnership for Environmental Law, active until around 2014, which trained legal professionals to address pollution amid China’s industrial boom. The Peace Corps, partly USAID-funded, also sent volunteers to teach English in Chinese universities until its exit in 2020, driven by rising US-China tensions.
The rationale of these initiatives was clear: influence and stability. USAID sought to promote democratic ideals while ensuring China’s growth aligned with US interests, especially during the tail end of the Cold War. But as China’s economy surged – its GDP overtaking Japan’s in 2010 to become the world’s second-largest – its reliance on foreign aid waned. By 2011, USAID had largely wound down direct assistance, reflecting China’s ability to fund its own development. Although USAID’s work in China has ceased, its regional efforts, like disaster relief in Asia, have indirectly supported stability on China’s doorstep.
The UK’s aid story differs but converges on a similar theme of retreat. Once a global leader with a commitment to spend 0.7% of GNI on aid – enshrined in law in 2015 – the UK slashed this to 0.5% in 2021 amid economic pressures and political shifts. Now, in 2025, it has pledged just 0.3%, a move driven by domestic priorities and a post-Brexit focus on self-reliance. Unlike the US, which is dismantling USAID entirely, the UK retains its aid framework but at a reduced scale. Historically, UK aid to China was smaller than USAID’s and phased out earlier, focusing on poverty reduction and education in the 1990s before ending direct bilateral aid in 2011. Today, its contributions are channelled through multilateral bodies such as the World Bank, with little direct impact on China.
The USAID shutdown and the UK’s cut to 0.3% of GNI don’t hit China with an immediate funding loss – Beijing hasn’t depended on either for years. Instead, they create a broader global shift that China could exploit. The US move slashes a $42 billion annual budget (2023 figures), while the UK’s reduction trims its aid from £14 billion in 2020 to roughly £5 billion based on current GNI estimates. This retreat leaves gaps that China, through its Belt and Road Initiative (BRI), is well-positioned to fill. The BRI, launched in 2013, has poured billions into infrastructure across Asia, Africa, and beyond. A Brookings report notes, “China’s spending on what USAID traditionally focuses on – ‘grants’, such as capacity building and humanitarian assistance – is less than 50% of its total foreign aid budget, at $3.29 billion (£2.55 billion) during 2013-2018,” highlighting its preference for strategic loans over handouts. As Western aid recedes, nations once reliant on USAID or UK support may turn to Beijing, boosting China’s hard power – its ability to shape outcomes through economic leverage.
Soft power, however, is less certain. USAID’s cultural legacy – English lessons, health clinics – carried a warmth that China’s state-driven projects often lack. The UK, too, wielded influence through education and governance schemes. With both countries stepping back, China might expand initiatives like Confucius Institutes to bridge this gap, though their top-down nature struggles to match the grassroots appeal of Western aid. Trade could also shift, with Chinese firms gaining contracts in regions like Southeast Asia, where BRI projects already outpace Western investment. This could mean more jobs for Chinese workers, while the US and UK lose aid-related roles. USAID’s 10,000 staff face redundancy and British NGOs are bracing for cuts, shrinking opportunities at home.
Diplomatically, the stakes are high. The US risks ceding ground to China, a fear voiced by US officials quoted in a recent Newsweek article: “[The USAID shutdown] has created vacuums of need all around the world, ceding influence and permitting China and Russia to seize those opportunities left behind.” The UK, aligning with this trend, may weaken its Commonwealth ties as poorer members seek Chinese loans. Ghana’s President, John Mahama, speaking at the Munich Security Conference in February 2025, said that the country had had to cut spending by $156 million because of Trump’s aid freeze, underscoring the ripple effects. For China, this is a chance to lead, but it must deliver without being seen as exploitative – a delicate balance given BRI’s mixed reputation.
The bigger picture is one of recalibration. The US, through the USAID shutdown, signals a focus on domestic challenges, potentially at the cost of its global moral clout. The UK’s 0.3% pledge reflects a similar inward turn, diluting its influence. China, meanwhile, gains economic sway but faces pressure to soften its image through cultural outreach. Jobs, trade, and diplomacy will evolve as Beijing fills gaps, yet the West’s retreat could leave it scrambling to reclaim lost leverage through other means – perhaps military ties or trade deals. For all three, the USAID shutdown and UK cuts mark a pivot point, reshaping a world where aid once bridged divides. How they adapt will define their roles for decades to come.
