R. Ajitesh is a second-year master’s student at the Department of Geopolitics and International Relations at Manipal Academy of Higher Education (Institution of Eminence), Manipal, India.
China integrates its foreign aid policy deeply within its worldwide economic policy as well as geopolitical goals and strategic interests. China provides aid following a method of pragmatic economics and strict diplomatic non-intervention. The South Asian countries constitute a geostrategic hot spot where China directs substantial foreign aid support under its Belt and Road Initiative (BRI). The China-Pakistan Economic Corridor (CPEC) stands as China’s premier South Asian investment project, which undertakes multi-billion-dollar development to link China to the Arabian Sea. The Gwadar Airport stands as a vital element of this route since it will function as both a trading facility and a military command center for operations in the Indian Ocean. The Chinese investments in such projects target maintaining secure connectivity of energy supply routes and extending Beijing’s strategic power in the region while developing dependent economic relations among South Asian nations.
The pattern of China’s financial support to foreign nations has rapidly transformed, particularly since the early 2000s, with the launch of the ‘Going Out’ strategy in 2001, and later the BRI in 2013, which significantly reshaped its aid and investment priorities. The initial objective stemmed from ideological roots because it supported both socialist factions and nations that were non-aligned members. Beijing reoriented its diplomatic approach after the reform period, particularly from the 1990s onwards, to leverage aid resources that would achieve market entry, natural resource acquisition, and strategic positions in important regions.
The geographic location of South Asia is central to Beijing’s Indo-Pacific development plans since the region lies adjacent to China. Many BRI recipient nations, including Pakistan, which has received foreign aid from China totaling US$70.3 billion during the period from 2000 to 2021, and Nepal, which received US$2 billion in the same period, while Sri Lanka accepted US$ 20.6 billion, and Bangladesh gained US$20.8 billion. They have received extensive Chinese investments to develop infrastructure projects that meet the BRI goals. Economic advantages constitute the main promises of these development projects, yet they create substantial international political effects.
The fundamental difference between Western and Chinese foreign assistance becomes clear through their separate conditions for aid and their project motivations. The OECD Development Assistance Committee member nations, along with Western countries link their financial aid to requirements for democratic systems, human rights protection, and financial transparency. Good governance promotion from this model leads to implementation delays and bureaucratic barriers. The World Bank and the International Monetary Fund enforced structural adjustment requirements on recipient nations before extending funding through programs that mandate economic freedom and budget cuts. This assistance method tries to build responsible government systems and economic stability, yet critics say it reduces national policy freedom and achieves no real development benefits.
The Chinese aid model emphasises building extensive infrastructure along with economic integration combined with low-conditioned financial resources. A key benefit arises from the lack of political conditions, which draws South Asian nations towards this system through their need for speedy development. Sri Lanka and Pakistan have faced increasing debt challenges because of their extensive Chinese investments. Chinese financial transparency issues created by bilateral loan negotiations outside public observation continue to concern countries about becoming economically dependent and exposed to risk. South Asian countries decide whether to prioritize the two macroeconomic models depending on their political needs. The Nepalese government accepts Chinese infrastructure investment while continuing its relations with Western donors to support social development initiatives. Sri Lanka has adjusted its financial strategy because Chinese loan debts created economic difficulties, so that the country remains resistant to extreme indebtedness. The Maldives has also raised concerns over mounting debt, a total of US$2.1 billion from Chinese infrastructure projects, prompting discussions about financial sustainability and economic dependence.
China offers solutions to nations seeking rapid development options while lacking entry to Western banking institutions. The flow of Chinese aid differs from Western assistance because it operates under state control to finance major projects that build things like roads, bridges, and power plants. The straight investment method is criticised, yet it creates noticeable infrastructure progress throughout numerous beneficiary countries. The non-interference policy followed by China meets the expectations of governments, which value territorial integrity more than changes to their governing systems.
Gwadar Airport has transformative power as a strategic asset that goes beyond being an infrastructure project for China. The Persian Gulf gateway position enables Gwadar Airport to establish CPEC connectivity by serving as CPEC’s maritime terminal and thus allowing China to avoid the Malacca Strait on their way to Middle Eastern and African markets. China uses airport development as a strategic move to establish better sea trade routes and decrease dependency on the disputed South China Sea maritime areas. Officially designed for civilian needs, the infrastructure at Gwadar Airport provides sufficient support for military logistics operations, which leads analysts to suspect China will maintain security interests in the Indian Ocean. The Gwadar Project faces criticism because experts worry the facility might function as both a commercial and military space that allows China to advance its naval forces throughout the Indian Ocean Region. Gwadar Port positions China to establish a strategic base that facilitates access to the global energy transport route at the Strait of Hormuz.
The control of vital infrastructure in Pakistan enables China to shape Islamabad’s policy direction regarding both security issues and international trade agreements. The strategic nature of Gwadar city is confirmed by the mounting security measures, which now deploy additional Pakistani military defence forces to safeguard Chinese investments. This project has global implications because Beijing demonstrates its goal to secure enduring strategic positions throughout the region.
India views Chinese assistance to South Asia with suspicion because it seems to be a strategic move for encircling India. Cautions about Chinese military encroachments exist due to the Gwadar development and China’s growing influence in the Indian Ocean. India increased its military naval power through enhanced cooperation with the US, Japan, and Australia through the Quad strategic partnership framework. These nations have stepped up their Malabar naval exercises to enhance cooperation and the development of maritime security initiatives because of increasing Chinese naval influence in the region.
In December 2017, unable to service its debt, Sri Lanka was compelled to lease the port to China for 99 years, a situation that has raised apprehensions about potential debt traps associated with Chinese financing. Assigning strategic assets to China after defaulting on loans has become a major concern because of Beijing’s pursuit of “debt-trap diplomacy” tactics against recipient nations. New Delhi has intensified its infrastructure investments across neighbouring countries to reduce Chinese influence by building the Chabahar Port project in Iran, which gives India exclusive access to trade with Afghanistan and Central Asia through that route.
In its diplomatic efforts, India provides neighbouring countries with advantageous funding programs and development assistance tools to counter Chinese diplomatic influence. Through the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), India demonstrates its dedication to building regional alliances without any strategic limitations that exist in Chinese assistance programmes.
The approach China uses to support foreign nations in South Asia participates as a key aspect of worldwide power rivalries between major global actors. China’s deepening economic ties in the region demand that the West, along with India, adjust their responses to fight Beijing’s intensifying regional power. The country of India requires a multiple-approach strategy that combines strengthened economic and diplomatic relationships with Nepal, Sri Lanka, and Bangladesh to compete against Chinese investment activities.
Chinese aid can promote economic growth in recipient countries, but its effectiveness varies and may not always lead to sustainable development. A study published in Sustainability examined China’s foreign aid to 121 countries from 2000 to 2017, finding that while aid positively impacted economic growth, this effect was contingent on factors such as the type and amount of aid as well as the recipient’s economic context. Similarly, an analysis by the Brookings Institution found that Chinese official assistance had a negligible effect on development outcomes, suggesting that while aid can contribute to economic growth, it does not necessarily lead to long-term financial stability.
China’s foreign aid policy in South Asia reflects a calculated blend of economic pragmatism and strategic ambition. Through initiatives like the BRI and key projects as CPEC and Gwadar, Beijing has entrenched its influence in the region, often challenging traditional Western aid models. While Chinese aid accelerates infrastructure development without governance conditions, it raises concerns of debt dependency and strategic overreach. Countries like Nepal, Sri Lanka, and Pakistan navigate this aid balancing act based on national priorities. Ultimately, China’s aid serves as a tool of geopolitical influence, demanding strategic recalibration from regional actors like India and global powers alike.
Disclaimer: The views expressed in the article are personal.
