After USAID and the DFC: What’s Next for the U.S. Counter to China’s BRI?
The Trump Administration’s cuts to the United States Agency for International Development (USAID) placed nearly all its employees on leave on Sunday February 24, 2025,[1] and froze US$1.5 billion worth of foreign aid, including 90 percent of USAID grants and contracts.[2] With President Trump’s strategic retreat from international development and aid, the United States International Development Finance Corporation (DFC) might confront strong headwind and curtail its financial support. The previous CEO of the DFC, Scott Nathan, resigned in January after Trump took office, leaving the CEO position vacant without an interim CEO in charge. Today, discussions are not revolving on building a better world or focusing on global development but rather seeking hegemony of global impact. Many of U.S. initiatives, such as the Partnership for Global Infrastructure and Investment (PGII), which were intended to counter China’s Belt and Road Initiative (BRI), have faded from prominence. The reality is that the U.S. is no longer the dominant player in the Global South. The potential breakdown of the DFC might be the last straw that breaks the camel’s back (U.S. dominance position in Global South).
Established in 2019 through the passage of the BUILD Act, the DFC is the U.S.’ development finance institution.[3] As the successor to the Overseas Private Investment Corporation (OPIC) and the Development Credit Authority (DCA) of USAID,[4] the DFC was created to advance U.S. foreign policy by mobilizing private capital to address critical development challenges around the world. The agency provides financing, political risk insurance, equity investments, and technical assistance to support projects that promote economic growth, reduce poverty, and strengthen global stability. The DFC focuses on sectors such as infrastructure, technology, healthcare, energy, and climate resilience, with an emphasis on projects that improve lives and create opportunities in low- and lower-middle income countries.
Many U.S. politicians have high hopes on the impact of the DFC. For example, during a House Foreign Affairs Committee Hearing in 2024, Congressman Gabe Amo (RI-01) emphasized the DFC’s efforts to support African countries in reducing reliance on China’s BRI loans.[5] In this same meeting, the former DFC CEO emphasized the DFC’s ability to offer a high-impact, cost-effective strategy to counter China’s BRI by leveraging early equity investments to proactively enhance the U.S.’ influence and manage risks of invested projects.[6]
Despite ambitious efforts, the harsh reality remains, matching the scale and achievements of the BRI is a formidable challenge. A report produced by the Center for Strategy and International Studies (CSIS)’s shows that the BRI, which is the cornerstone of Chinese President Xi Jinping’s foreign policy, impacted 151 countries with a combined GDP of US$41 trillion and 5.1 billion people as of October 2023 through a mix of infrastructure and cultural initiatives.[7] Furthermore, another report from Griffin Asia Institute revealed that in 2024 alone, the BRI achieved record engagement with US$70.7 billion in construction contracts and approximately US$51 billion in investments, marking the highest annual figures since its 2013 inception.[8]
Regarding the BRI’s investments in green energy and infrastructure, engagements reached US$11.8 billion, up 60 percent from 2023.[9] Despite a continued focus on coal, metal, and mining investments hit nearly US$22 billion while investments in technology and manufacturing, particularly in batteries, solar PV, and hydrogen, broke records at nearly US$30 billion.[10] Some notable projects are the US$7.3 billion Jakarta-Bandung high-speed railway and the expansive China-Pakistan Economic Corridor.[11] Looking ahead to 2025, China’s BRI is expected to stabilize with a specific focus on renewable energy, mining, and supply chain resilience, maintaining momentum in controlling manufacturing, infrastructure, and strategic projects.
While the DFC has made notable strides with a US$50 billion portfolio impacting 200 million people across 114 countries in its first five years,[12] the agency’s scale remains limited compared to China’s BRI. The DFC’s focus on smaller, targeted projects, such as the US$553 million Lobito Railroad upgrade and the US$412 million power plant in Sierra Leone, contrasts with the BRI’s ability to execute massive infrastructure undertakings like the Jakarta-Bandung high-speed railway.
Compared to other foreign aid entities, the BRI is highly preferred due to its prioritization of profit over influencing government structures, culture, or ideology, making it appealing to authoritarian countries that resist external scrutiny. According to the 2024 Economist Democracy Index, 35.9 percent of countries representing 39.2 percent of populations lives under authoritarian regimes. This number is even larger when only considering the emerging market.[13] 45 out of these 60 authoritarian regimes are collaborating with the BRI. In contrast, U.S. investments often come with expectations of moral integrity, transparency, and adherence to humanitarian standards, which can slow progress in emerging markets where such conditions are less welcomed. President Trump even recognized the lack of competitiveness between these agencies and China’s BRI, hence his attempts to change U.S. involvement and influence in global affairs, but these efforts are driven by a profit driven calculus. The current approach involves leveraging foreign negotiations and using threats, such as levying tariffs or warning with potential military intervention, to secure local resources, investments, and other advantages. Examples include pressuring Panama to withdraw from the BRI, pushing Canada and Mexico to strengthen border patrols, and seeking a firm hold on Ukraine’s rare earth resources. This shift represents a departure from traditional diplomatic practices, favoring a more pragmatic and business-oriented strategy in shaping the global order.
Looking ahead, the question remains: Will Trump 2.0 continue to use tariff-based coercion to extract benefits and resources from foreign entities? Will these measures make traditional U.S. allies receive better results than the impact made by U.S. international aid agencies? While it will take time to evaluate whether Trump’s approach is more effective than traditional foreign aid agencies, the rash decisions and inherent uncertainties will continue to stimulate global turbulence and miscalculated diplomatic engagements.
[1] https://www.economist.com/in-brief/2025/02/24/elon-musks-email-to-federal-staff-causes-disarray
[2] https://www.economist.com/in-brief/2025/02/27/donald-trumps-court-battle-over-foreign-aid
[3] https://www.dfc.gov/who-we-are/overview
[4] https://www.dfc.gov/media/press-releases/us-international-development-finance-corporation-begins-operations
[5] https://amo.house.gov/press-release/amo-urges-using-economic-tools-to-counter-china-s-belt-and-road-initiative
[6] https://foreignaffairs.house.gov/press-release/chairman-mccaul-questions-dfc-ceo-at-hearing-on-countering-belt-and-road-initiative/
[7] https://chinapower.csis.org/china-belt-and-road-initiative/
[8] https://www.griffith.edu.au/__data/assets/pdf_file/0028/2086093/GAI-Annual-Report-2024.pdf
[9] https://www.griffith.edu.au/__data/assets/pdf_file/0028/2086093/GAI-Annual-Report-2024.pdf
[10] https://www.griffith.edu.au/__data/assets/pdf_file/0028/2086093/GAI-Annual-Report-2024.pdf
[11] https://chinapower.csis.org/china-belt-and-road-initiative/
[12] https://www.dfc.gov/media/press-releases/dfc-celebrates-nearly-50-billion-invested-over-five-years-advance-development
