What the US Aid Freeze Means for China

One of the first acts of U.S. President Donald Trump upon returning to office was to freeze foreign aid. The freeze remains in place over a month later, with the United States Agency for International Development (USAID) effectively shuttered. Many analysts have pointed out the potential benefits for China. Simply by continuing its current levels of aid funding, Beijing will look good in comparison; if it increases aid by even a modest amount to fill in the gaps left by the United States, China will gain even more goodwill.

Plus, China stands to benefit by supercharging its efforts to shape global norms. The projects it chooses to fund will look very different from those supported by the United States; Beijing is not about to provide aid to civil society groups holding their governments to account over rights abuses or independent media outlets working to reveal corruption. Those are not values the Chinese government endorses.

These geopolitical benefits are all real, but this framing misses another important point: the impact of the halt in U.S. aid on China itself – or, more accurately, on people in China.

As unlikely as it may sound, given the heated rhetoric surrounding China-U.S. relations, the U.S. government was still providing development assistance to China as of 2024. According to U.S. government data, such funding amounted to $12.8 million in 2023, the last year for which there is complete data. Three-fourths of that ($9.6 million) came from USAID specifically. Over half the aid ($7.5 million) went to projects related to “governance,” while one-third ($4.3 million) sought to improve “economic growth.”

What exactly was this money being spent on?

USAID projects in China primarily focused on providing assistance to Tibetan communities. The agency described its work in Tibet as “employment creation; improved management of natural resource-based livelihoods, such as yak herding; and preservation of their cultural heritage.”

Health was another key area, with USAID funding projects “preventing the spread of HIV/AIDS and emerging infectious diseases, such as drug-resistant tuberculosis, malaria and influenza viruses of animal origin.” It also worked on environmental issues, fighting against wildlife trafficking and “encouraging infrastructure investment that minimizes negative impacts to the Lower Mekong countries” (in other words, opposing dam-building on the river).

USAID’s now-defunct webpage, as archived on the “Wayback Machine” website, stressed that “No USAID assistance is provided to or through the PRC government or Chinese Communist Party.” That said, it’s hard to imagine that U.S. funding to Tibet – an area of extreme sensitivity for Beijing – wasn’t heavily scrutinized and diverted to projects with the CCP’s stamp of approval.

Beyond USAID, a U.S. Government Accountability Office (GAO) report published in April 2023 found that “[f]rom 2017-2021, the U.S. provided at least $48 million to research institutions, companies, and other recipients located in China.” The funds went to entities like the Chinese Center for Disease Control and Prevention (the single largest recipient at $11 million) and a range of Chinese universities.

There were also a number of charities on the list, like Partners in Hope (which provides medical care and education for orphans), Beijing Huizeren Volunteering Development Center (which promotes civil society and volunteerism in China), and Beijing Huanzhu Law Firm (which focuses on environmental legal cases). Each of these received relatively small amounts ($25,000 or less).

Some of that $48 million, however, was not aid at all. A sizable chunk of the money went toward the purchase of “goods and services for U.S. government operations in China.” That includes things like paying for internet services at the U.S. embassy and consulates in China and booking hotel rooms for U.S. officials and diplomatic staff during travel in China.

Over the period the GAO was examining – effectively the first Trump administration – the balance between grants (i.e. aid) and contracts (i.e. buying goods and services) shifted dramatically, from an 80/20 split in favor of grants in 2017 to a 60/40 split in favor of contracts by 2021. That shift may have been driven by Trump’s personal distaste for development funding, but it also fits into a longer-term trend: U.S. aid to China has been dwindling since 2014.

From 2007 to 2014, U.S. foreign assistance to China stayed consistently above $60 million annually, reaching much higher peaks in some years ($99.6 million in 2008 and $97.8 million in 2013). This aid largely went toward support for governance reforms and strengthening civil society; building up China’s energy (especially clean energy) infrastructure; and pursuing health programs, such as HIV/AIDS prevention and treatment.

After years of ups-and-downs, however, starting in 2014, aid began trending in one direction: downward. That’s no coincidence; it was a few year earlier that the Obama administration started to recognize China as a major competitor to the United States, rolling out its “pivot to Asia” policy in response. Also around that time, U.S. politicians began pushing back against China’s self-identification as a “developing country,” arguing that the world’s second-largest economy shouldn’t merit the sort of special treatment (including aid) meted out to the developing world.

Meanwhile, China was undergoing its own changes. Beijing has always been paranoid about the possibility of Washington fomenting a “color revolution” through development projects. This sensitivity only grew after Xi Jinping came to power in 2012, thanks to both Xi’s security-centric worldview and the increasingly strident China-U.S. competition. Taking U.S. funding became a liability for Chinese groups, and fewer aid organizations were willing to take the risk of accepting the cash.

Given these trends, the U.S. aid freeze today will have a limited impact on groups within China proper. However, it could decimate diaspora organizations based outside China that nevertheless work to promote democratic values, transparency, and human rights in the country.

As Bethany Allen wrote in an article for the Australian Strategic Policy Institute’s blog, The Strategist:

When the Trump administration froze foreign funding and USAID programs… dozens of scrappy nonprofits in Hong Kong, Taiwan, and the United States were immediately affected. Staff are losing their jobs; some organizations face imminent closure due to lack of funding; others are paring back their programming.

In many cases, these organizations provide our last window into what is actually happening in China. They do the painstaking and often personally risky work of tracking Chinese media censorship, tallying local protests, uncovering human rights violations, documenting the Uyghur genocide, and supporting what remains of civil society in China. They provide platforms for Chinese people to speak freely; they help keep the dream of democracy in China alive.

The impact is getting even worse as other sources of U.S. government funding dry up. For example, the National Endowment for Democracy (NED) is a key source of funding for many China-focused nonprofits. While an independent nonprofit itself, the NED receives almost all of its funding from the U.S. government – funding that was frozen on February 11.

Technically, the NED should be exempt from the foreign aid freeze, since the grants to the endowment are considered “internal” (meaning they are issued from the U.S. government to a U.S. recipient). But, as sources in the NED told The Wire, disbursements from the Treasury had been halted with no explanation and “no clarity on how long this might last… While not technically suspended, the NED has exhausted funds for grantmaking on hand, and we do not know when we will have access to additional funds.”

In 2023 (the last year for which there is complete data), the NED funded 55 projects focused on China, to the tune of just under $10 million. That’s a relatively small amount, as government funding goes, but for the groups receiving the money it’s a life-or-death sum. According to its own summary, the NED funds organizations promoting Tibetan and Uyghur rights; “supports independent civil society, activists, and human rights defenders;” and funds projects to help circumvent China’s digital censorship.

Its grantees include the Uyghur Transitional Justice Database, which collects testimony from Uyghurs detained in “re-education” camps and their family members; China Labor Watch, which tracks labor abuses in China; and China Digital Times, which publishes China’s censorship orders and translates commentaries from diverse voices within China. All three organizations now face an uncertain future, along with many others doing similar work.

The CCP, which has long looked skeptically as U.S. aid – especially to diaspora groups – will be celebrating the end of these funding streams. But for those who support basic human rights and government transparency for China’s people, it’s a dark development.