Is China Filling America’s Vacuum?

Sachin Yadav

America’s retreat from the developing world happened fast, and the numbers back that up. Foreign aid from OECD countries dropped by about 23 percent between 2024 and 2025, and most of that fall came from the United States, whose foreign aid shrank by nearly 57 percent in a single year. The story behind this is dramatic. In March, 2025, the Trump administration froze foreign assistance, then dismantled USAID entirely, cancelling 83 percent of its programs. Because of this, total aid from all OECD donors combined fell from $214.6 billion in 2024 to just $174.3 billionin 2025, a 23.1 percent decrease. Africa felt this the hardest. US funding to the continent dropped from $12.1 billion to $7.86 billion in just one year, its lowest level in a decade.

What makes this worse is that nobody stepped in to fill the gap. For the first time in nearly 30 years, the US, UK, France and Germany all cut their aid budgets in the same year. Britain trimmed its aid and announced plans to cut it by 40 percent, while France reduced its contribution by nearly $1 billion. Yes, the US Congress later passed a $50 billion aid package in February 2026, but even that was 16 percent lower than 2025 levels. Experts aren’t calling it a comeback. They’re calling it a “managed decline.”

Meanwhile, China has clearly noticed the opening. According to some experts, the cuts to US aid and Trump tariffs which are hitting developing economies negatively feel like a diplomatic gift for Beijing. With America stepping back, China gets to step forward and present itself as a dependable partner for developing nations, and possibly even as an alternative leader of the global order. This isn’t just about money changing hands. It’s about who shows up, who listens, and who gets a seat at the table when developing countries are shaping their future.

Beijing’s Global Influence Campaign

China isn’t just talking about filling the gap. It’s acting on it through trade deals, tariff cuts, and a busy travel calendar. Starting May 1, 2026, China removed tariffs entirely on imports from 53 African countries. This ties into a bigger plan Foreign Minister Wang Yi has spoken about, marking 70 years of China-Africa relations with new economic partnerships and this zero-tariff policy.

Just look at who’s been visiting Beijing lately. In 2026 alone, Xi Jinping has hosted the president of South Korea, the prime ministers of Britain, Canadaand Finland, Ireland’s Taoiseach, and Germany’s chancellor. Many of these leaders came to Beijing partly because their trade relationships with America have been souring under sweeping US tariffs. Even Uruguay’s president made the trip, the first visit by a South American leader since the US took military action in Venezuela.

This isn’t just diplomatic photo-ops though. There’s a real economic shift happening underneath it. Trade between developing countries, what’s called “South-South trade,” has grown from approximately $600 billion to roughly $5.6 trillion, roughly tenfold over the last three decades. It now makes up more than a third of all global trade, having jumped from $2.3 trillion in 2007 to $5.6 trillion in 2023. Developing countries as a whole now account for 45 percent of global GDP, nearly double their 25 percent share back in 2000.

Chinese tech companies are cashing in on this too. Loans tied to China’s Belt and Road Initiative helped Huawei build a data center in Papua New Guinea using a $53 million loan from a Chinese state bank. Similar funding has helped Alibaba, Baidu, China Telecom, Tencent and ZTE plant their flags across developing markets. Over time, this gives these firms a lasting edge that makes life harder for American competitors trying to enter the same markets. On top of that, China’s currency, the yuan, is believed to be undervalued, by 16 percent according to the IMF and by as much as 25 percent according to Goldman Sachs. That makes Chinese exports cheaper and harder to compete with for other developing economies trying to sell similar goods.

The Next Phase of China’s Rise

China’s own economic planning documents make the ambition explicit. The March 2026 Two Sessions meetings are set to outline the 15th Five-Year Plan, strengthening trade foundations with the Global South across Asia, Africa and the Middle East, supporting Belt and Road cooperation, and working toward Xi Jinping’s goal of doubling the size of China’s economy by 2035, with the Chinese market expected to reach $20 trillion by 2026.

Institutionally, Beijing is also pressing for reform of existing global bodies rather than building parallel ones. China’s Global Governance Initiative, formally unveiled in 2025, reflects its goal to reshape global governance toward what it describes as a fairer and more inclusive system, emphasizing extensive consultation, joint contribution and shared benefits. Beijing has also said it will support a bigger and stronger BRICS mechanism, host the second China-Arab States Summit, and accelerate negotiations toward a China-GCC Free Trade Agreement.

Yet real constraints remain. China’s trade with emerging economies stays asymmetrical and unbalanced, importing commodities from developing countries while selling them manufactured goods, and closing that gap would require China to boost domestic demand and allow the renminbi to strengthen. India, too, is positioning itself as a strong contender for Global South leadership, though its influence is tempered by the diversity of the Global South.

What emerges is not a single hegemon replacing another, but a more contested, multipolar order where China has moved furthest and fastest to fill the space Washington is leaving behind, without yet resolving the trade imbalances that could limit how far its leadership claim can ultimately go.