National Interest

by Dan M. Ford and Wenjing Wang

    The United States can compete more effectively with Chinese investment in Africa if it sheds its security-focused, all-or-nothing mindset.

    Geoeconomic policies—defined as the use of economic tools to achieve geopolitical ends—serve as a corollary to more traditional security policy. When used correctly, they can help advance restraint and shift competition with great or regional powers away from zero-sum militarized security and towards positive-sum trade and global economic investment.

    In geoeconomic competition, a nation can strengthen its influence by either deepening engagement with targeted countries or degrading the competitor. Tariffs and export restrictions, for example, can be used as tools to promote domestic industry at the expense of foreign competitors. On the flip side, government-supported international infrastructure projects can promote the economic growth of international partners while supporting the global business endeavors of its own domestic firms, thus promoting domestic interests while pursuing its geoeconomic ends.

    While the Donald Trump administration has primarily used geoeconomic policy as a stick against countries that it says have used the international system to promote their own interests at the expense of American interests, the Chinese have been using a subset of geoeconomic policy—namely financing infrastructure investments across the Global South—to promote their interests while seeking to buoy foreign economies to an extent far greater than has the United States.

    The Chinese are seeking to become a reliable partner for Global South countries across parts of the world with abundant critical minerals, other essential resources and geopolitical clout. This has been particularly true of China’s geoeconomic engagement in Africa, where Chinese lenders provided $182.28 billion between 2000 and 2023, though its investment has dropped significantly in recent years. Following a peak of nearly $30 billion in annual loans in 2016, Chinese loans to the continent fell to just $1 billion in 2022, rising to $4.6 billion in 2023, the last year with complete data.

• The Myth of Chinese Debt-Trap Diplomacy

    China hawks have often deployed the term “debt-trap diplomacy” to discredit China’s geoeconomic engagement with the Global South, particularly the Belt and Road Initiative (BRI). Debt-trap diplomacy refers to a practice allegedly aimed at ensnaring these countries in unsustainable debt to acquire their strategic assets in return, thereby maintaining leverage over the debtor countries.

    China has emerged as a major bilateral lender for African countries in recent years. Yet, as a growing number of its partner countries struggle with default risk, China faces criticism for unsustainable lending practices and for a perceived reluctance to coordinate debt restructuring with the Western-backed International Monetary Fund (IMF) and the Paris Club—a group of wealthy creditor countries ostensibly aiming to provide sustainable financial support and relief measures to heavily indebted countries. All of this resonates with the narrative of China’s “debt-trap diplomacy.”

    Nonetheless, such a narrative fails to hold up. Numerous studies, as well as influential pieces written by Deborah Brautigam, found no concrete evidence that China intentionally practices “debt-trap diplomacy”. In fact, detailed quantitative analyses, including on the debt structures of countries at risk or already in default—of which China is not the sole major creditor—and China’s, albeit insufficient, debt-relief measures, easily dispute the “debt-trap diplomacy” narrative.

    Rather than an intentional trap, the issues emerging from China’s international engagement in its pursuit of regional influence and advancement of its economic interests are primarily the results of unclear guidance, poor management, corruption, intransparency and constraints imposed by China’s domestic conditions, including its institutional complexity and loss avoidance.

    Since recognizing these issues, China has sought to address them proactively. The Chinese Ministry of Finance released two “Debt Sustainability Frameworks of the Belt and Road Initiative,” one in 2019 and another in 2023. While not legally binding, these frameworks provide a reference for Chinese financial institutions and other BRI countries on lending decisions and also serve as a response to the “debt-trap diplomacy” narrative.

    In Africa, with declining loan volumes after 2016, more of China’s loans in recent years have been directed to the financial sector and outsourced investment decisions to local financial institutions, which are more familiar with the market, reflecting China’s risk mitigation strategy to minimize exposure to debt challenges.

• China’s Continued Geoeconomic Engagement with Africa

    Although Chinese investment across the continent has slipped in recent years as the Chinese have struggled to deal with slowing domestic economic growth, last year’s Forum on China-Africa Cooperation (FOCAC)—China’s premier multilateral summit with African countries—indicates the Chinese government is looking to refocus its global economic and foreign policy back to the continent.

    At last year’s FOCAC, Chinese president Xi Jinping laid out 10 “partnership actions” by which the Chinese government would look to form close ties with African countries on a number of issues related to the continent’s economic development and security. During the forum, China pledged more than $50 billion in financial investment over the next three years. This financing will cover numerous sectors in both economic development and security and includes various forms of financial assistance, such as credit, development aid and private Chinese capital.

    China has consistently drawn lessons and adjusted its approach to international financial investment with countries across the Global South. As Brautigam has pointed out, China’s initial engagement with regions such as Africa simply replicated the Western pattern, particularly by copying Japan’s engagement with China in the 1980s, of using resource-backed loans to build economic connections with the continent and support its growth.

    However, once it realized serious issues emerging from this pattern, including unsustainable debt, China sought to develop a new approach that relied less on debt issuance and more on advanced financial frameworks. Among these frameworks are cases in which Chinese companies’ financial clout and infrastructure expertise are used to finance and develop the projects themselves, then retain some equity ownership to profit from their investment, before returning the project to the African country after some time.

    One example of a large Chinese-funded project in Africa is the Tazara rail line, a historic but dilapidated railroad connecting Zambia to the Dar es Salaam port on Tanzania’s coast along the Indian Ocean. The China Civil Engineering Construction Corporation—a Chinese state-owned enterprise—will finance the $1.4 billion railroad project on a 30-year concession, giving the Chinese-owned company control over the port and the port’s revenues for three decades.

    Under the terms of the agreement, Zambia and Tanzania can connect their cities to a major global port without incurring additional debt. This large investment project serves as a good example of the types of current Chinese economic engagement efforts on the continent that seek to benefit local economies while strengthening the economic connection between Africa and China.

    Additionally, China has repeatedly stressed the promotion of the “clean Silk Road,” emphasizing cross-border cooperation on anti-corruption under multilateral frameworks, something many African governments have been desperately seeking external support with. Under the China-Africa Cooperation Beijing Action Plan (2025–2027), released in 2024, the two sides agreed to cooperate on anti-corruption, upholding the central role of the United Nations Convention against Corruption.

    While institutional measures may take years to yield significant results, the most noticeable change in China’s international engagement is a shift in focus from large infrastructure to the so-called “small and beautiful” projects. For example, leveraging its green technology advances, China aims to launch the “Africa Solar Belt” program, injecting around $14 million in public funds and supplying electricity and lighting solutions to 50,000 households between 2025 and 2027, thereby facilitating low-carbon development across the continent. In contrast to only 30 infrastructure connectivity projects, China plans to commit 1000 “small and beautiful” projects in Africa between 2025 and 2027.

    At the third symposium on BRI in 2021, Chinese president Xi Jinping stressed that “small and beautiful” projects should be a priority in international cooperation. Unlike the grand scale of large infrastructure projects, “small and beautiful” projects emphasize lower funding, shorter construction periods and green, low-carbon development. It aims to strengthen project sustainability, ensuring they are economically viable and benefit local communities by meeting basic needs.

    Given that debt relief is about easing the burden on indebted countries, shifting to “small and beautiful” projects can be seen as addressing the issue at its root, as it reduces large-scale financial commitments.

    Nonetheless, all the measures mentioned above do not necessarily mean that China’s engagement with the Global South is without shortcomings. More “small and beautiful” projects might come at the expense of large-scale infrastructure investments, which are necessary to meet the demand of a continent with a rapidly growing population and exploding urban centers. However, the Tazara case evinces that China isn’t completely abandoning these larger projects. Moreover, past financing mistakes have made China more risk-averse to overseas investment, favoring countries that present lower risks or with whom it has closer ties, or where it has room to wield a wedge strategy against US influence.

    While China’s investments across Africa have helped it build economic and diplomatic bridges with the continent, the United States has largely chosen to use its voice to scold African countries that choose to do business with the Chinese rather than to offer these countries legitimate alternatives.

    Among the most notable examples of American indifference to Africa is the fact that, just a year after China agreed to invest $50 billion on the continent and just a couple months after China agreed to offer tariff-free access to 53 African countries, the United States’ preferential trade agreement with sub-Saharan Africa countries—the African Growth and Opportunity Act (AGOA)—lapsed on September 30.

    Although the Trump administration has signaled its interest in extending it for one year as negotiations occur over the future of the trade agreement, the very fact that it has been allowed to lapse shows how indifferent the US government has been in supporting economic connections between Africa and the United States and its apparent disinterest in supporting the growth trajectory of African economies.

• Toward Restrained US-China Competition in Africa

    Broader American economic engagement with African countries will serve a dual purpose: enhance US strategic interests while fostering positive-sum competition with global rivals, particularly China. With the US Agency for International Development (USAID) now defunct, economic engagement will be a sustainable alternative for the United States to strengthen its influence and diplomacy in Africa.

    While China is becoming more cautious about implementing large infrastructure projects on the continent and African countries continue to struggle with an infrastructure gap, the United States should seize the opportunity to meet local demand for sustainable, high-quality infrastructure, unlocking more business potential there. Competition with Chinese projects not only serves US economic and diplomatic interests but also creates a race-to-the-top that benefits local communities while avoiding the potential risks inherent in great power competition.

    Among these risks is increasing coercion over African countries through the use of economic tools, such as tariffs, to force them, against their will, to buy from American sellers rather than Chinese providers. This exclusionary policy adds to the tensions of an intensifying cold war.

    This is precisely why restraint in foreign policy necessitates smart geoeconomic policy in addition to focusing on more traditional security issues. Economic and business exchange is one area where great power competition could actually benefit both the United States and the countries with which it does business. As long as the competition doesn’t become overly exclusionary, American trade with countries across Africa will provide new markets for American goods and spur innovation in American trade, while also accessing resources that can be downstreamed both locally in Africa and back home in the United States.

    When necessary, the United States should develop a cooperative pattern with other global powers, especially its existing partners in Europe and Asia. Ultimately, the United States can leverage its own strengths, such as advanced technology, transparent standards and deep capital markets, while partnering with local players and global multinational corporations to provide Africans with products and services that meet their needs.

    This will help the United States improve its relationship with the continent and deepen trade and economic ties between Americans seeking to expand exports to new markets and Africans seeking new technology and investments across the continent, without allowing great-power competition to spiral out of control.