Earlier this month, President Joe Biden signed an executive order curtailing U.S. high-tech investment in China, reflecting a bipartisan consensus that U.S. investment should not be helping the Chinese Communist Party (CCP) in these highly strategic industries. Such efforts are welcome, but to be truly effective, must be part of a broader strategy to push back on Beijing’s pursuit of global domination.
Military strength is obviously necessary for the free world to prevail in this new great power contest—however, it is not sufficient. The CCP uses economic leverage and elite capture to exert political influence, deploying information operations and exporting its authoritarian governance model to create the conditions for Beijing to advance its local and global interests. The more successful China is in eroding democracy around the world, the better placed it will be to undermine American interests and supplant the United States as the global superpower.
We need a strategy that combines the serious commitment of hard power resources and economic statecraft with a robust campaign to counter China by strengthening democratic resilience around the world. The United States has deployed foreign assistance to advance its geopolitical interests since the end of World War II, when the Marshall Plan was used to rebuild Europe and Japan’s social and economic foundations to prevent a Soviet takeover. Throughout the Cold War, the United States used foreign aid as part of its strategy of containment, providing valuable lessons for advancing U.S. interests in a new age of competition. This includes the establishment of the United States Agency for International Development (USAID) in 1961 and the founding of the congressionally funded National Endowment for Democracy in 1983 at President Ronald Reagan’s instigation.
Research shows that U.S. foreign aid has improved the political and economic well-being of recipient countries and advanced core U.S. interests. Foreign aid advances America’s economic interests by creating new markets for American businesses and trade. Indeed, it’s no coincidence that eleven of the United States’ top fifteen trade partners are previous recipients of foreign aid. Foreign aid also helps strengthen democracies around the world—creating more stable and reliable partners and allies. A study of U.S. foreign assistance focused on democracy promotion programs conducted between 1990 and 2003 found that these initiatives had “clear and consistent impacts” on their overall democratization. And despite a global democratic downturn from 2012 to 2022, eight countries that were turning toward autocracy were able to reverse course and regain their democratic momentum thanks in large part to international democracy support.
Foreign aid can also help improve citizens’ and governments’ views of the United States, often at the expense of its adversaries. China’s foreign assistance programs tend to favor physical projects that are often popular in the short term. However, over time the high costs of accepting aid from China—including shoddy construction work, loss of sovereignty, and increased authoritarian influence—make the prospects of an enduring partnership far less appealing. In contrast, U.S. foreign assistance spending is designed to reduce opportunities for misappropriation and corruption, and favors working with local partners to better serve the interests of beneficiaries.
The United States can take pride in these achievements—but that can only take us so far. In order to harness the full potential of foreign assistance as a means of pushing back on China’s global ambitions, we need an approach that is clearly coordinated around America’s core strategic objectives.
We should begin by realigning spending to focus on allies and countries strategically important to competition with China and Russia. Our current approach to allocating foreign aid does not enable the United States to use funds in ways that directly advance U.S. interests. It forces the United States to center spending in many aid sectors on predominantly low-income countries and disincentivizes spending on higher-income countries that may be of significant strategic importance. The Trump administration explored realigning how the United States uses foreign assistance of all stripes—from economic aid to health assistance—to make competing with China a primary objective. This approach is worth revisiting.
We also need closer coordination of assistance with our foreign policy objectives. History demonstrates the value of such an approach in promoting long-term alignment with U.S. interests. Consider our successes in Western Europe, Colombia, South Korea, and Chile: In each case, America’s assistance approach combined security guarantees with cooperation and reform programs; economic-development packages that paired investment with revitalization of key industries; and incentives for local governments to improve their responsiveness to constituent needs.
The George W. Bush administration attempted to address the challenge of aligning assistance and foreign policy priorities by bringing development under the purview of a new Office of Foreign Assistance Resources at the Department of State. Despite this change, the United States continues to struggle with harnessing all elements of U.S. foreign assistance toward a common end. The secretary of state should empower the Office of Foreign Assistance Resources to truly lead this effort by deputizing its director to ensure aid is harnessed to support America’s foreign policy priorities.
Congress also has a vital role to play in ensuring the United States maximizes the impact of American foreign aid. For example, Congress could pass legislation requiring the executive to deliver plans for select priority countries, outlining how it intends to use all aspects of U.S. power and resources to compete with China. Such a law could be modeled on the 2019 Global Fragility Act, which requires the executive to deliver a strategy for promoting global stability and ten-year plans for achieving these aims in priority countries.
Finally, the United States should make strengthening democracies a core goal of its development policy. Strong democratic institutions are the most dependable defense against authoritarian subversion. The United States must respond to China’s global influence campaign by using foreign assistance in ways that empower individuals and institutions to fight back in countries where democracy is vulnerable, backsliding, or nonexistent. This includes supporting independent media, civil society, legislative training, governance best practices, and the development of democratic political parties and opposition movements.
Competition with China is playing out not only in the sea lanes of the Indo-Pacific but also in the parliaments, board rooms, and even local councils of developing nations. The record of success for U.S. foreign assistance proves that strategically targeted aid is a key tool in advancing U.S. interests. If the U.S. government is serious about countering the People’s Republic of China and creating a safer, more democratic world, it must act urgently to align foreign assistance with American grand strategy.
Patrick Quirk, Ph.D., is vice president for strategy, innovation, and impact at the International Republican Institute (IRI) and a nonresident senior fellow in the Atlantic Council’s Scowcroft Center for Strategy and Security.
Caitlin Dearing Scott is the director for countering foreign authoritarian influence at IRI.
Quirk and Dearing Scott are authors of the Atlantic Council Report Maximizing US Foreign Aid for Strategic Competition.