The Future of U.S. and Chinese Aid Programs in the Global South
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Hello, and welcome to another edition of the China Global South podcast, a proud member of the Sinica podcast network. I’m Eric Olander, and as always, I’m joined by CGSP’s managing editor, Kobus van Staden, from beautiful Cape Town, South Africa. A very good afternoon to you, Kobus.
Good afternoon. Kobus, we are going to have a fascinating discussion today. I just know it because it’s so timely. We’re going to talk about the aid industry in particular, but also about what the U.S. and Chinese are doing. No longer doing. It’s evolving, particularly for places like Africa and here in Southeast Asia. It has been a very interesting week in this space because a lot of ideas are coming out. We’ve just had a couple of weeks ago the meetings of the IMF and the World Bank in Washington. Now, this week, the African Development Bank convened as well for their annual meeting, and some news broke right before the annual meeting of the African Development Bank.
It appears that the United States is going to withdraw its funding from the AFDB, according to a report in the Africa Report news site. $155 million will be withdrawn. They are the third largest bilateral donor to the AFDB. Total shares account for about 6% of the bank’s $8.9 billion raise that they did back in 2022. They are third behind Germany at $670 million and France at $611 million.
This really shouldn’t come as a huge surprise, given the Trump administration’s America First priorities and what they’ve been doing across the rest of the aid industry as well. But again, I think it’s a shock. The African Development Bank may not have been prepared for it. There’s not a lot of reaction that’s come out of it. But at the same time, we’re starting to get some new ideas coming out of Washington. Our friend, Zainab Usman, who’s the Africa Program Director at the Carnegie Endowment for International Peace, she wrote a fascinating column in the latest edition of Foreign Affairs, “The End of the Global Aid Industry: USAID’s Demise is an Opportunity to Prioritize Industrialization Over Charity.”
Now, we’re going to have Zainab to come on the show, but I wanted to play a little bit of sound for you from her article. And so what I did is I took a big chunk of her text, put it into an AI voice generator, and I want to play an extract for you so you can listen to the key messages that she’s saying, because I think it’s going to be very germane for our discussion today.
Proponents of global development now face a choice. They can wait for attitudes in donor countries to shift back toward support for foreign aid at some point in the distant future, or they can reimagine the entire concept of global development, detaching it from aid and rooting it instead in industrial transformation, helping countries shift from subsistence farming, informal employment, and primary commodity production toward manufacturing and services. If proponents of global development embrace industrial transformation as their lodestar, they can help lift people out of destitution while avoiding political blowback. If poor countries industrialize, the entire world will benefit.
Zainab went on to say that really the model of Western-led aid initiatives, specifically the United States’ efforts, really weren’t that effective at curtailing poverty, particularly in places like Africa. And so a new model, based and rooted in industrialization, as you pointed out, Kobus, is needed. What was funny is as I was reading this article, and I’d love to get your take, struck me that that’s kind of what the Chinese have been saying for decades now, that build a road and you will then build life. And I mean, not to kind of toot the horn of the Chinese, but it does feel a little bit like what Zainab is saying is consistent with the idea of infrastructure and development focused around power, water, energy, roads.
That will then lead to industrialization. Industrialization leads to jobs. Jobs lead to prosperity. That seems to be, to me, what I heard Zainab saying. Of course, she didn’t say that in her article, but I’d be interested to hear your take, Kobus. That kind of echoed some of what I thought too. I thought, obviously, that is what China has been focusing on. It not only focused on developing more broadly but on industrialization-led development specifically. So this is interesting.
I mean, it still obviously also assumes a certain kind of level of international trade and with the idea that richer countries would be importing some of these products, potentially, which, of course, a lot of those logics are being questioned now, left and right. But I guess the one difference I might point out between what she’s saying and what China’s been doing is that, you know, the Chinese approach has obviously been very demand-led and so very dependent on countries having industrialization policies and plans already in place. In this case, there may be some scope, kind of in her vision, which is, again, I’m reading between the lines, but in her vision, there may be some scope for a more proactive cooperation with these countries to help expand and refine these plans and kind of close gaps between them.
Because I think in the case of the Chinese projects, it was very project-focused and very demand-focused. So if there were gaps in these plans, those gaps end up remaining, you know, and sometimes hitting the long-term economic sustainability of the project as well. Well, this idea of talking about U.S. and Chinese approaches to development, again, couldn’t be more timely given all that’s going on right now. Also, the fact that a report came out recently by the Asia Society Policy Institute, “Development as a Strategy: The U.S., China, and the Global South.”
I mean, you couldn’t find a better topic for this program. It’s done by our old friends, Danny Russell, who’s the vice president of international security and diplomacy at the Asia Society Policy Institute, and Blake Berger, who’s now a consultant with ASPI, joining us this evening from Singapore. Good morning, Danny, and thank you for staying up. Blake, it’s great to have you back on the program again.
Hey, thanks, Eric, and thank you, Kobus, for having us. Well, thanks very much, Eric. Happy to be here with Blake and Kobus. It’s great to have you guys. Congratulations. I’m not sure if your report is extremely timely and relevant, or is it completely out of date because of everything that’s happened, and we’re going to dive right into that. Let’s kind of go to the genesis of the report. We’re going to get into the findings, and of course, we’re going to talk about the demise of a lot of the U.S. aid industrial complex, but let’s first talk about the genesis.
I remember, Danny, I stopped by your office a couple of years ago in New York, and you just started kind of hashing out this idea that you wanted to get Chinese, U.S., and stakeholders from the Global South to get together to talk about aid and development. Of course, that was a totally different time than we are today, but let’s start our conversation there. What inspired you to try and think about bringing these three disparate groups of stakeholders together to have these conversations?
Eric, the answer is in my own background as a diplomat, and I learned very early on that the most important faculty, certainly for diplomats, but possibly for human beings, is hearing, the ability to listen. And it was clear to me from my own experience just how dangerous and damaging it is when, in this case, two sides, two major powers, the U.S. and China, and more broadly, U.S., China, and the countries that are very directly affected by our programs, aren’t talking to each other, are instead relying on telepathy and imagination and fever dreams to sort of capture the motives behind what they see the other side doing. This is a recipe for absolute worst-case paranoiac thinking. It’s a downward spiral. And it was very frustrating to me, even in the Biden administration, that there was effectively no dialogue whatsoever, no official dialogue, certainly between the U.S. and China, on almost anything, but importantly, on development-related issues.
And that struck me, development, as a whole lot less intrinsically controversial in the U.S.-China context than, say, trade or nuclear weapons or the South China Sea. Now, Blake and I had done a lot of research prior to that on China’s Belt and Road Initiative. We had written “Navigating the Belt and Road” that looked at how recipient countries were trying to steer Chinese infrastructure investments towards local priorities. We wrote a report, “Weaponizing the Belt and Road,” that looked at some of the port projects that could have dual use or even coercive strategic purposes. We did “Stacking the Deck,” which analyzed the way that Chinese SOEs shaped the field in technology and so on.
And then we had done what we called the BRI Toolkit, which was a handheld, user-friendly, kind of practical digital guide for stakeholders in Southeast Asia and their own languages, helping them understand the mechanics of how Chinese development projects worked and what their rights are and how they could safeguard their own interests and so on. So, you know, we wanted to get, in the first instance, Americans who would be listened to, Americans who are respected in the field of development, access to Chinese people with real knowledge about Chinese development strategy and programs to pick their brains to get a more accurate assessment of what China is doing, why, how does it work, et cetera.
And vice versa, to expose American thinking and strategies candidly to Chinese influential development experts who themselves could then seed into their own systems more accurate information, clearer picture of what the other party was doing, and then expand that conversation to include the actual affected stakeholders themselves, let them speak in their own voices. And because of the asymmetry between the U.S. and the Chinese system, we chose former American officials on the U.S. side, and whereas on the Chinese side, we went to the handful of very influential scholars who are close to the government and the party in developing policies. So this was a track two, I kind of joke, it’s a track three, actually, off the record, that gave people a chance to ask hard questions of each other and get honest and credible answers.
Blake, I was wondering, in bringing together stakeholders from Africa and Southeast Asia to discuss this, what kind of overlaps and differences did you see between those two regions? I mean, there are significant differences and overlaps, right? But critically is that China is playing a key role in both of those locations and that the U.S. is pulling back from both of the locations. So the issues that Southeast Asia confronts are obviously much different than what Africa confronts, right? Southeast Asia, for the most part, especially when it comes to maritime Southeast Asia, is a little more along the road in terms of development, in terms of industrial development, in terms of regional integration.
You know, ASEAN has been around for close to over 50 years now, and so there’s the ASEAN Free Trade Agreement. They are far more along the road in terms of infrastructure development, which was really pioneered by the Japanese in the ADB years ago, where you see Africa is beginning to take those steps to become a more regionally organized continent through the AU, through CAFTA and other forms. But really, it’s kind of the common linking factor is the role that China is now playing in both regions in terms of the amount of development assistance.
Now, I won’t call it development aid, and we can touch upon that shortly, but in terms of development economic engagement, China is now playing a key role in both and is having a profound influence in shaping both of their futures. Danny, very quickly, you said you brought together these groups, particularly of U.S. and Chinese stakeholders, scholars and ex-diplomats and whatnot, people who I think if you had dinner with separately would say that they knew a lot about the other and felt very competent in their understanding of the other. But I’m curious that when you finally brought them together and had these conversations, and as you rightly point out, there are very few points of contact now between the U.S. and China.
Danny, you and I are old enough to remember the Cold War, and there were, you know, any contact between the Soviets and the Americans was considered to be something very significant. I feel like we’re going back into that type of space where official contacts between the U.S. and Chinese are very limited. But I’m curious that when you brought them together, what did they learn from each other that maybe they didn’t know before you convened these sessions with them? Well, I mean, I think what I’d start with, Eric, is the fact that because it was a closed-door environment, because we had budgeted a considerable amount of time, because we held it away from people’s offices, they really were able to dig down and get to know each other, develop a lot of candor, a lot of openness. And I will say that on the Chinese side, there was enough trust among the Chinese themselves that they were willing to be clear and outspoken without worrying about somebody dialing the inspection and discipline committee on them.
I think that one of the things that was surprising was the extent to which the Chinese system is now undertaking approaches that the United States has in the past tried and in many cases has moved on from. And so it was, I think, really informative to both sides when the Americans were able to say, “We used to do that. Here’s what our experience was. Here’s why we changed, how we changed, what it has netted us.” Certainly, the United States has at least the benefit of much longer experience in the overseas development field.
I think that the extent to which the big projects like the Belt and Road fall well outside any reasonable definition of international assistance, of foreign aid, even though intellectually many of the Americans probably had some general understanding. I think that came as a surprise, that there is such a distinct differentiation in the Chinese system between economic assistance, economic cooperation, which includes BRI and so many projects that are really driven by the policy banks or by state-owned enterprises, and foreign assistance, which represents just a tiny slice.
The Americans knew virtually nothing about the infrastructure and bureaucracy of China’s aid and economic development system. The SIDCA, the organization, how that related or didn’t with, say, the Commerce Ministry, MOFCOM, or the Foreign Ministry. The plethora of acronyms associated with the NDRC or the Development Research Council and so on. And the Chinese side took us through the complicated org charts, so to speak, which don’t officially exist, but that they helped us to visualize their system.
They talked us through some of the politics, some of the financial dimensions, where the money comes from, how the public feels, frankly, about pouring their hard-earned tax dollars down foreign rat holes.
Okay, can I ask you about that? I mean, in broad terms, it’s not violating any of the confidentiality, but how do the Chinese public feel about that? Because we have a sense of how the American public feels, which is they don’t really like foreign aid, and they haven’t liked foreign aid for a long time. Large swaths of the American population, not everybody. What did they say about the Chinese population and foreign aid?
Well, turn to Blake in a second, but I think that one thing that came across to me, at least, is that people are people everywhere, and that the state of the economy is a factor in whether people are feeling generous and magnanimous towards their neighbors and distant countries, or whether they are much more focused on their families and their immediate communities.
And right now, the Chinese economic situation is strained. And so clearly, there is greater demand for accountability, for domestic focus, for prioritization from the public towards the government in China. And we’re seeing that translated into things like small is beautiful. I think that the era of the Chinese treasury as a bottomless artesian well for development programs around the world is probably over.
But Blake, what did you see?
Yeah, I would just double down on what Danny was saying. And that’s why you’re seeing technology, especially by the digital Silk Road, so to speak, really emerge as a key sector within China’s development engagement. Small is beautiful. It also translates to you don’t need to put 3,000 Chinese laborers on the ground to build something.
And so it’s both a response to not only the Chinese populations’ unhappiness with money going out of the state where it’s vitally needed at home, but it’s also in response to the perceptions of recipient countries in terms of the bill will that’s been fostered in certain circumstances over having such an influx of Chinese laborers come into the country where jobs were supposedly never ever given to local communities and local laborers.
And therefore, the kind of spillover effects were quite limited in terms of employment opportunities and technology spillover effects.
Gobis, it’s fascinating to listen to what Danny and Blake are saying, because it feels in some ways that China and the U.S. are learning from each other or maybe copying each other in some respects, because here we heard Zainab talking about focusing more on industrialization, which has been a priority for the Chinese.
And at the same time, small is beautiful is something that the U.S. has been doing in some respects in terms of not doing these large-scale infrastructures, not big loans, but really coming in much more targeted. If you look at the Development Finance Corporation, it’s investing very targeted small amounts of money relative to what the Chinese are doing.
Interesting cross-pollinations that we’re seeing across the U.S. and China in the development space.
Yes, I think that’s definitely true. And of course, I think they were, even though they weren’t directly engaging that much, they were in a wider conversation with other aid professionals. And we saw this kind of cross-pollination happening, I think, across the field.
If it’s okay, I’d like to ask a very big landscape question. We know in broad terms that the U.S. has rolled back a lot of its foreign assistance, that USAID, a lot of on-the-ground operations have been dismantled.
But I think beyond that, and beyond the broad pronouncements of, “Well, this changes everything,” and “The Global South is going to suffer,” and so on, we don’t actually have much of an idea of what that actually looks like on the ground.
So I was wondering if you could both give some impressions of what, a few months into the Trump administration, and all of these changes having now been rolled out, what does that actually mean? What does U.S. foreign assistance look like on the ground? Is there just simply nothing there? Or is there some aspects of it still continuing?
So, Kobus, we conducted our meetings in Southeast Asia and in East Africa prior to the firing up of the chainsaw that has largely demolished USAID and a lot of the development programs. So I don’t have a firsthand answer to your question.
But one of the points that I tried to stress in talking to policymakers in Washington is that the kinds of projects that USAID has focused on and that many American and international organizations and NGOs are involved in are not infrastructure projects. They’re not ports and roads and data centers. They are health-related. They are employment-related. They are skill and education-related. They’re sanitation-related projects.
And if those stop, as many, if not most have, at least the ones that were funded by U.S. government grants, then it is only a matter of time, and not very much time, before the pathogens, the disaffected migrants, the angry, radicalized youth find their way out of their difficult situations in search for a better life, a vulnerable host, retaliation.
In other words, if we’re not dealing with challenges, future challenges at a remove, whether it’s in Africa or in South America and Central Asia and South Asia, then we’re going to be dealing with them at JFK airport and beyond, that these problems are going to come home to roost.
And I sincerely believe that. Eric, you’ve made the point about the foreign affairs article that advocates for industrialization as the pathway to the next generation of development.
And in fact, our report very directly proposes and points out that there are many American businesses, like agribusiness, for example, that have a lot to contribute and a huge stake in building up the agricultural infrastructure and education training, etc., in Africa.
So yes, the private sector can help, and industrialization, à la the Chinese model, can be a contributor to progress and prosperity. But if you don’t have clean water, if you don’t have sanitation, if you don’t have health care, if you don’t have education and upskilling, then all the infrastructure is, all the industrialization is doomed to fail.
Moreover, newsflash, we’re not in the industrial era, we’re in the digital era. And that is something that came through loud and clear to both Blake and me in Southeast Asia and in Africa. They want to ensure that they don’t miss the train of the next wave of development, which is digital.
Yeah, I mean, that’s a minority view, unfortunately, in Washington. I fully agree, Danny, with everything you’re saying. But that is not the prevailing sense in the White House and certainly among Trump’s closest advisors and Trump himself.
Blake, go ahead.
What I would say is that a key point that was emphasized in both Southeast Asia and in East Africa was the importance of capacity building and the importance of good governance. And that was where the U.S. had played a key role for a very long time in building up bureaucracies and actually supporting local bureaucrats, national-level bureaucrats in implementing and ensuring good governance throughout projects.
And also helping actually build out legal systems. If you look at, for example, intellectual property regimes, the USAID and their capacity building arm had a huge impact in terms of building out intellectual property regimes throughout the world. And so without those aspects, there are going to be very large difficulties for countries going forward in ensuring that projects are actually implemented the right way, ensuring that corruption doesn’t become endemic throughout projects as well.
Another aspect…
Blake, let me stop you there. Let me just channel my inner MAGA right now. And they would say, “Listen, that’s a you problem, not a me problem. That is not up to the American taxpayers to help the Kenyans become better in their governance. That is up to the Kenyan people who, by the way, took to the streets last year to demand better governance of their people and actually got some results.” How do you respond to that, given the fact that, and again, I know you’re not representing USAID, the U.S. government, or anything like that.
But that line of thinking is exactly what President Trump is trying to really change, is that this is not our problem. If Indonesia is bad in governance, that’s Indonesia’s problem.
Actually, it is our problem because U.S. private sector is our global. And if it becomes difficult for U.S. private sectors to enter countries because of the governance deficits, that impacts American taxpayers at home. That limits the ability for U.S. companies to do business overseas. So it is an American problem.
And so having good governance provides Americans jobs. It provides Americans jobs at home.
But can I play devil’s advocate again? Just the Chinese, they don’t complain about this. The Chinese, again, and Donald Trump took down the Foreign Corrupt Practices Act with the explicit intent to make it easier for American companies to operate in these countries with weak governance.
In order to better compete with the Chinese, Chinese companies are global as well. And yet, they have to compete in the same environment. How is it that the United States can’t compete, but the Chinese can? Again, devil’s advocate there.
Well, dear devil, what you’re describing in your attributing to the Trump administration is obviously a race to the bottom. And the notion that the United States can out-compete China in corruption is a little bit far-fetched. But what you’re also pointing to is the fact that in addition to the commercial agendas, Blake referenced, which is phenomenally important, and you don’t get better results by paying bribes.
The company may have had its invoices, but the outcome and the sustainability of the commercial engagement is not going to flourish. But in addition to the commercial angle, there’s a political angle. Even the diehard isolationists in MAGA are not content to live in a world, an authoritarian world, that is dominated by the Chinese Communist Party.
And the simple fact is that there’s a difference between doing it for Kenya, for example, and assisting the Kenyans in building an accountable, responsible governance system that will benefit the people and will maintain stability and growth. We need not only a rules-based environment for our companies to operate in, not only a rules-based environment as a political matter, but we can’t afford the kind of instability and economic decay that comes from bad governance and corruption.
The Chinese themselves behind closed doors will acknowledge that they are paying a considerable price for their laissez-faire non-interference policies. Because even if they shun responsibility for the environmental or the financial impacts of some of their projects and activities, they are held responsible.
And you can deal exclusively with the power holder and ignore the stakeholders only so far in a country. And we have seen examples in which economic, political transformation in a country has taken the Chinese by surprise and undermined all of their state-led investments there.
Soterios Johnson: The title of the report is Development as Strategy. So Blake, I was wondering if you could reflect a little bit on the strategy aspect of it.
In addition to development strategy specific, like making development better or making it more efficient and so on. When we talk about development in the larger strategic landscape, particularly at a moment of very heightened geopolitical tension, I wonder if you could reflect a little bit about this kind of strategic aspect of development and how you see it in the bipolar, two-power current situation.
Sure. First on the kind of framing side for the U.S. is that development is a key part of national security. And as Danny pointed to earlier, without actually undertaking development activities overseas, doesn’t mean you’re absolved from responsibilities or that issue sets that are occurring overseas won’t hit you at home.
Whether they be pandemics or radicalization, you name it, just because you’re not doing it doesn’t mean you’re not impacted by it. And so it was framing development not solely as kind of Christian goodwill and charity, but actually as a part of a national security agenda that supports not only American businesses but also supports America’s security in the long term.
And when you frame it in this kind of great power competition, it’s to not cede the field solely to China. And I would point out that there are multiple other actors out there. Without actually playing a key role in development, capacity building, infrastructure development, you name it, you’re missing opportunities to build connections with government bureaucrats to actually seed different thoughts, different processes into those governments that can shape their trajectories in the long term.
I mean, one aspect that I would point to is the scholarships that USAID had provided for years and years and years. One, whether it be agricultural economists or, you know, economists, you name it, they got their scholarships from USAID, went to school in the United States, got their PhD, and went home. And then they had actually, in some cases, entered ministries, changed their trajectory, developed policies.
So there’s a key role in terms of development, not solely as actually working on the ground, but it’s also fostering the next generation of leaders to be able to tackle those issues domestically.
Yeah. And all of that, again, has been cut. Just to be clear, USAID has not been closed. It’s just been rendered functionally inoperable. There is a small team that’s there. They have resumed some operations. So out here in Cambodia, in Southeast Asia, they’ve resumed demining operations.
And then parts of PEPFAR in Africa have apparently gotten back going again, but not the whole system. And I also want to make one other point. The U.S. is not alone in cutting back its aid. The British have cut back their aid. The French have cut back their aid. So this is, again, part of a broader trend.
Let me just kind of state the obvious here that when I first saw the report, I was like, “Oh, Danny, Blake, I feel so bad for you. All this hard work that you guys put in, and then Donald Trump and Marco Rubio just pull the rug out from under you.” The immediate response that I had just related to the timing was, did what happened in Washington with the closure of many of the aid programs make your report basically redundant and not useful?
That was the gut reaction. When I dug into it, you addressed these issues, and you come back on them. But that was the first response that I had. Talk to us about the impact that these changes have had since you started this project well before we knew this was going to happen. And yet the circumstances changed radically on the ground.
Well, yes. The fact of the matter is that what began as an ambitious construction site turned ultimately into a bit of a salvage operation. We had held a series of bilateral and trilateral in-person and virtual convenings. We had just gotten together in early January before the inauguration of the Trump administration in Africa.
So yeah, the steps dissolution or the partial dismantling of USAID, the effort to freeze foreign assistance and so on, the gutting of America’s development toolkit was upsetting and devastating. We saw from early January the evolution towards the chainsaw.
And so we revised and reassessed what we had developed as potential recommendations and suggestions and conclusions. We rewrote parts of the report to strip out descriptions of how the U.S. development bureaucracy operates in as much as it was no longer operating and so on. But we focused instead, we refocused on the practical, what could still be done, what could be done through multilateral banks, what could be done through regional platforms, what could be done through non-governmental actors.
And we looked for ways to show that even without a functioning, fully funded aid agency, that the United States has tremendous assets in capacity building, technical training, education, standard setting, digital governance, and so on. We also made some adjustments in the report to ensure that our message was framed in terms of strategic interests.
In other words, as Blake said, development as a national security tool, not just as a form of Christian charity or as a moral obligation. And I think that we were able to find to salvage some very practical steps and recommendations that are not otherworldly, that are not unrealistic.
Moreover, I think that we were able to accurately represent some of the key messages from the Global South stakeholders, both to Americans and to Chinese, about the importance they place on their own agency.
And in fact, I think we flipped that and showed in ways that the countries themselves, the recipient countries, can use their agency to orchestrate what we called structured deconfliction. In other words, to get certain things from the Chinese side, to get other complementary things from the American side without the Americans and the Chinese ever having to hold their nose and be in the same room together, let alone shake hands, that they can orchestrate a combination of complementary or parallel activities in an area of importance to them, with the result being a hole bigger than the sum of… the parts.
Trey Lockerbie: Following up on that, I wonder if you could talk a little bit about where some of those opportunity areas lie, in your opinion. Obviously, throughout there’s been a lot of discussion for years. As we’ve been following this conversation, there’s been a lot, on the more optimistic side of this has always been the point made that in lots of ways, there is complementarity between the U.S. approach, which focuses a lot on, or used to focus a lot on capacity building and education, health, and soft infrastructure, and then China’s more construction and hard infrastructure focus. So, in theory, those two were complementary. Now, in a really kind of radically upended kind of aid landscape, where do you see some of these complementarities lying now?
Steve McLaughlin: Yeah, sure. I mean, I would say, as you kind of highlighted, the software hardware kind of framework of it, right? The U.S. provides the software, and the Chinese provide the hardware. One of our suggestions was actually to create a five-university system to promote digital skill sets among youth. So for U.S. and Chinese universities to pair up, and then to partner with African or Southeast Asian universities to prepare the next generation for the digital revolution, so to speak, or to also work on agricultural productivity and food security. There’s complementarities between the U.S. and Chinese approaches that aren’t necessarily completely divergent, but may actually just need to be sidestepped out of the geopolitical realm, or to have the ASEAN or the AU provide kind of more of a robust role in actually guiding and structuring a lot of these processes. Simply having the states do it on their own is possible, but having a regional organization play a more vital and more robust role in kind of structuring it actually seems like a great idea to us.
One example is the Africa CDC. The Africa CDC has both Chinese and U.S. experts working side by side. That’s not a political issue. They are directly supporting the health infrastructure and landscape of Africa, but it’s not politicized because it’s under the Africa CDC. There are skill sets that both the U.S. and China can bring to the table under the banner of a regional organization that depoliticizes it yet still gets the goal across the finish line, so to speak.
Ko, as I’ll give a concrete example. One of the specific recommendations that we had stemmed from the observation by one of the Global South participants that the unintended consequence of international, especially Western assistance, was that his government no longer budgeted money for public health because the Americans, the French, the World Bank, they take care of that. It had atrophied as an object of national spending because someone else was taking care of it. There was a shortage of money, and so resources went elsewhere.
With that phenomenon comes a diminution of responsibility, a sense that the government has to be the provider of health care or funder of health care in the nation. The person explained why that was a problem. The Americans and the Chinese came up with the idea of assisting developing governments in revenue generation, revenue collection, because it was clear also that these governments have a lot of trouble in collecting tax.
The discussion among the Americans and the Chinese continued. Where they came out was the U.S. Treasury has fantastic programs for improving tax administration systems, helping to set up independent revenue authorities, modernizing public procurement, and for fiscal transparency. The Chinese system has terrific and easy-to-use e-taxation systems and training for tax collection, simplified VAT, etc. None of this would require the U.S. and China to actually work together. The Department of Treasury has programs for sharing some of these measures and expertise. If a government sought from the Department of the Treasury those inputs and from the Chinese side, the e-tax system, then it could make a huge difference in generating and collecting the revenue that could fund public health programs.
So that’s an example, and I think it should resonate even with the most isolationist American because it gets to the principle of let those guys take care of themselves. Don’t give them a fish; teach them how to fish. The report is Development as Strategy, the U.S., China, and the Global South. A very timely report, especially amid everything that’s going on. Danny and Blake did a great job at modifying it to accommodate the realities on the ground today as they are in Washington. Danny Russell is Vice President of International Security and Diplomacy at the Asia Society Policy Institute. Blake Berger is a consultant at ASPI, joining us this evening from Singapore.
Danny and Blake, thank you so much for taking the time again, and congratulations on the hard work over the past couple of years to make this happen. These contacts that you’ve brought together are just so important, and we’re just so happy that you were able to do it, even though times have changed, but nonetheless still very important. Thank you, Eric. Thanks, Kobus.
Kobus, I have so much kind of swirling in my head, I don’t really quite know where to begin. It’s an important report. I admire the ambition of bringing people together to talk. Again, this is not something that happens in a meaningful way in the U.S.-China dialogue. Today, it’s even more so. I think those contacts are even further apart. One of the interesting things about the Trump administration right now is how few of his close advisors have been to China in the past couple of decades or have ever been to China. I think their understanding of China is quite limited.
It’s one of the reasons that I was talking to some journalists today, and I made the case that I think the Trump folks have completely miscalculated on the tariff war with the Chinese. These kinds of direct contacts, even on the track two level, are so important. I don’t think, just my gut, and this is no criticism of the work that Danny and Blake did. I don’t think anybody in Washington is reading this report. I don’t think that’s where their heads are. I don’t think they care about all the issues that Blake laid out in terms of why it’s important for the United States to fund aid because eventually the pathogens, the terrorism, the climate change will come to you, to JFK, as he pointed out. That’s falling on, that’s just dead on arrival as an argument right now in official Washington.
So this kind of report, maybe we have to bank in three or four or five years, we dust it off and see what the lessons are if the world ever goes back to the way it was, which I’m not entirely sure it will.
In lots of ways, I found the report very useful for my own knowledge. Among others, because it kind of gave the snapshot of what pre-Trump American aid looked like. It was a great summation of the kind of key dynamics and approaches and thinking that informed what USAID looked like. Of course, now we’re at this historical moment where no one in USAID wanted that, but we are at a moment where we can actually see whether it worked or not.
We can see what the actual impact on development has been, particularly to see what slides back and what kind of falls apart now that it’s gone. It’s really interesting you bring this up. We didn’t have the time to address this with Danny and Blake, but I want to read you some quotes from the report about what they said about USAID and Western-led aid initiatives. So you talk about the snapshot. They were not very complementary. Let’s remember, Danny’s a former high-ranking U.S. diplomat, two Americans. Keep that in mind when I’m going to read you some of the quotes.
Even before these efforts to sharply scale back foreign assistance, they wrote, “Western development efforts were struggling with inconsistent strategies and uncertainty about long-term commitments.” They go on to say, “The effectiveness of Western-led aid initiatives has been undermined by shifting priorities and limited coordination. Western initiatives such as Global Gateway and Build Back Better World,” which later became the PGII, the Partnership for Global Infrastructure Investment, “suffered from delayed rollouts and limited funding commitments, which reduced their appeal to partner countries.” That’s what you and I have been saying for a very long time in terms of criticizing Western aid initiatives. It comes from them. So when we look at that snapshot that you talk about, it’s not entirely a rosy picture.
In that sense, I think they’re quite clear-eyed about what worked and what didn’t work. Yeah, they were very sober about that. Very, very sober about it. In lots of ways, I think it then points to some of the bigger issues that I think were underlying or kind of precursors to Trump’s decision to cut all this aid, right? A lot of people have been pointing out for a long time that the aid system was broken. I think they also show that.
For me, it reflects something bigger about Western power as a whole, that in order for aid to work or for aid to have the kind of energy that it needs to really kind of have traction, I think one needs to believe in the future in some kind of way. One of the very interesting kind of large mega trends that I’ve been following is that the only people that are talking about the future are the Chinese. The Western powers, to a large extent, kind of pulled their energies away from the future. They’re very nostalgic, backward-looking.
On the hard right side, the mega wants to turn the world into a kind of a fantasy version of the 1950s, but also on the progressive side or leftist side in both the U.S. and in Europe, a lot of what they focus on are better jobs for people, better social services, social nets and so on, that hark back to some of their successes in the past rather than any kind of new idea of what that’s going to look like in the future.
This is very interesting for me. It seems like it underlies the kind of wider logic where it suddenly made sense to not only Americans, or not only right-wing Americans, but actually cuts across more than a lot of people would like to admit, and also in Europe, where it suddenly made sense to them that the kind of aid era is over. I think there is a larger kind of evacuation of the future on the Western side.
Well, I’ve been spending a lot of time listening to MAGA intellectuals and MAGA thought leaders like Steve Bannon and others. What they would talk about is they would counter probably. Again, I’m just speculating here, but trying to channel my inner MAGA. They would probably say that the urgency of addressing the $36.2 trillion national debt that the United States has, which interest payments could devour so much of the spending in the future, is more pressing than the diseases, the pathogens, the potential terrorists that will come possibly from places that used to receive U.S. foreign aid. I think that’s their thinking—that addressing the debt. They also would make the argument that you could not have phased out American aid or reformed it. It has to be shock and awe and just cut. That is the only way because special interests would have congealed around these reform efforts to really block any major structural reform in it.
So that would have been their point that they’re trying to make. We’ll see. I mean, I would counter that the U.S. also allocated more than $13 billion to Israel alone over the last year. Sure, but they are still spending. What they’re spending on money is about where the money goes.
But you know, that is itself a form of foreign aid, but it’s of course politically ring-fenced. In that sense, even in their aid spending, it has a particular kind of end-of-times aspect to it and a refusal to engage with the fact that certain countries are actually still growing, that certain regions are still growing, as well as emerging populations and emerging markets.
Interesting that Danny brought up the unpopularity of aid among the Chinese public. This is something, again, you and I have seen for many years, going all the way back to the late 2010s when the Chinese government was censoring on WeChat and in their media about a FOCAC forum on China-Africa cooperation, the big ticket announcements at the end. Again, this year it was also muted as well. It wasn’t entirely censored in the last FOCAC, but it was muted and played down again.
The politics of aid in China, as Danny pointed out, are very similar to what they are in the United States. It is not popular for taxpayers to give money to poor developing countries, especially during these difficult economic times that both the U.S. and China are going through. That’s one of the reasons why I push back a lot on these media narratives that we’ve been seeing of late—that with the United States pulling back from the aid industry, China is going to backfill. There is no indication whatsoever that the Chinese government or the Chinese public has any appetite to fund billions of dollars of humanitarian assistance the way that USAID did around the world.
They will be very targeted and very strategic with what they do with aid and their initiatives, China aid, and SIDCA. But there’s not going to be a wholesale revolution just to backfill what the Americans vacated. It’s just not politically popular. Contrary to what a lot of people in the United States and elsewhere think, Xi Jinping does have to account for public opinion. It is part of the equation of governing in China. It’s different than it is in the West, but it is still a factor. Aid is not a winning political issue in China.
Absolutely. It’s not a winning political issue, and certainly not now. But it also makes sense because China is a global South country. It doesn’t have the kind of colonial and imperial histories where aid comes from originally. Aid grew out of colonial charity, and it was fundamental in maintaining structures of European and U.S. control in global South countries post-decolonization.
China doesn’t have a colonial history, and it also doesn’t have this kind of guilt hangover that comes with colonial imperial history, which also fed into the aid issue for decades. In a lot of ways, it doesn’t make sense to even think of China in the same space because the aid regime, as we know it, fundamentally grew up around colonialism. Colonialism, as we know it, was fundamentally Western. So, in that sense, it comes from a very specific historical moment and a specific historical set of relationships. They not only grew out of those relationships, but they maintained those relationships. Africa’s structural role at the bottom of the ladder was partly maintained by aid, even though in lots of ways it saved many lives. Structurally, that was part of its role. So in that sense, there’s no getting away from that history when you’re talking about aid and China as a bystander in that history.
In a lot of ways, it’s reshaping the logics that underlaid that history.
We’re going to continue this discussion later this week. Gero went to Washington today, back in Washington again. That guy’s travel schedule is just bonkers. But he’s going to join us for our Friday Africa show. The three of us are going to get together, do a week in review. He’s talking to a lot of folks in D.C. this week, and we’re going to get a firsthand perspective on what some of the discourses are, particularly related to China.
We’re also going to talk about this AFDB issue a little bit more in depth. Again, what does it mean that the United States is no longer active in Africa’s main multilateral development bank? Does that create openings for China? We’re always trying to see if the chessboard is moving or not. Actually, in Africa, the pieces aren’t moving as much as one would think. But maybe again, this is still very early on in the process. Remember, Kobus, we’re only three months into the Trump administration. Three months.
For those of you who are listening, Kobus gave a very extenuated blink on that one when I said that. Let’s leave the conversation there. We’ll be back again on Friday in our Africa feed. If you’re not listening, if you’re not signed up for that, go and check that out with Gero.
Also, just a reminder, we’re producing so much amazing content right now on the site. We’ve got our fellows in Central Asia, in Latin America, in Africa, and we have new contributors. We’re just about to publish a story from Islamabad on Chinese EVs in Pakistan. The quantity of stuff that’s coming through is just amazing.
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