Americas

China Could Replace U.S. as World’s Donor After Trump Freezes Foreign Aid

Published

By Fuhua Hung/Aadil Brar

Open in App

U.S. President Donald Trump's decision to freeze large sums of foreign aid has raised concerns among the countries receiving the assistance. Nepal, located between China and India, saw US$500 million in funding frozen, bringing key infrastructure development projects to a halt. Experts say the decision is a strategic win for China, as Beijing could become the top aid provider to the world, challenging U.S. influence.

*This AI-generated summary is based on reporting by TaiwanPlus and was verified by newsroom fact checkers. Learn more about our policy here.     

The effects of U.S. President Donald Trump’s decision to freeze nearly all American foreign aid for 90 days has been felt in Asia, with Nepal emerging as a key battleground. The freeze, aimed at reassessing foreign aid in light of an “America first” agenda, has left recipient countries scrambling to fill the void left by Washington. Nepal, heavily reliant on foreign support, now faces uncertainty in critical sectors such as education and infrastructure, triggering a reassessment of its international partnerships. 

Experts indicate that China is poised to seize this opportunity. As Amish Mulmi, author of “All Roads Lead North: Nepal’s Turn to China,” explains, “I do not think China can match it dollar to dollar. But the U.S. withdrawal from certain sectors, particularly education, I think these are sectors where China can fill the void.” This observation underscores the belief that while the U.S. had been Nepal’s largest bilateral partner, Washington’s retreat in specific sectors paves the way for Beijing to step in. 

Further highlighting this shift, Manoj Kewalramani, chair of the Indo-Pacific Program at the Takshashila Institution, notes, “Does the U.S. withdrawing create an opportunity for China to be able to expand its influence? Yes, it does. Because it becomes the case that there are very few providers of aid. There are very few actors who are willing to step in.” Kewalramani also states that China’s cautious yet effective investments, particularly in soft infrastructure like education and sanitation, could blunt previous criticisms regarding the sustainability of its projects. 

China’s growing engagement in Nepal is already evident through significant investments, such as a US$200 million loan for Pokhara International Airport. With Nepal’s ties to Beijing recently upgraded to a strategic partnership, the region is witnessing a marked realignment. The outcome of this shift may have far-reaching implications, not only for Nepal but also for the broader balance of power in the Indo-Pacific region.