Development as a Tool of Economic Statecraft: A Net Assessment of U.S. and Chinese Approaches

Over the past decade, China has upended the world of development assistance, rapidly becoming the world’s largest bilateral lender by channeling large sums of money into the developing world. As China’s economic engagement in the developing world has grown, so too have U.S. and allied concerns that China is leveraging development assistance to assert Chinese influence, weaken the United States’ relative position, and achieve Beijing’s broader national security interests.

In this report, the authors conduct a net assessment of U.S. and Chinese development assistance and cooperation. The authors describe each country’s differing approaches to economic engagement with developing countries and conduct a data-driven comparison to identify strategic asymmetries that might present opportunities for the United States to better compete with China for relationships and influence in the developing world.

The assessment reveals that Chinese economic engagement in the developing world should not be conceptualized as aid or assistance; this mischaracterization has potentially led to an overreliance on U.S. development tools as a primary response. Moreover, despite evidence of the short-term benefits that China might gain from its development financing, it is not clear whether these benefits are sustainable or effective over the long term when compared with the U.S. approach. Nevertheless, China’s efforts — its heavy emphasis on energy and infrastructure projects, its approach to working through elite actors in developing countries, and its willing embrace of greater risk and reduced transparency — create challenges and opportunities for the United States as it looks to compete with China in the developing world.

Funding for this research was made possible by the independent research and development provisions of RAND’s contracts for the operation of its U.S. Department of Defense federally funded research and development centers. The research was conducted within the International Security and Defense Policy Program of the RAND National Security Research Division (NSRD).

This report is part of the RAND Corporation Research report series. RAND reports present research findings and objective analysis that address the challenges facing the public and private sectors. All RAND reports undergo rigorous peer review to ensure high standards for research quality and objectivity.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors.