As trade tensions dominate headlines, a quieter but more consequential shift is reshaping the global financial system: China has become the world’s largest banker.

In 2025, China disclosed a record trade surplus approaching $1 trillion, driven by exports to Europe, South America, and Southeast Asia despite escalating U.S. tariffs. Those export earnings have not sat idle. According to a recent AidData report analyzing more than 30,000 projects, China’s overseas lending portfolio reached $2.1 trillion, making it the largest official creditor in the world—surpassing the International Monetary Fund, the World Bank, and traditional Western lenders.

China now supplies financing to projects in 179 countries, positioning itself as both lender of first resort and lender of last resort for many governments. In doing so, Beijing has fundamentally rewritten the post-war rules of development finance.

Commerce, Not Charity

Unlike Western development institutions that historically emphasized concessional lending and social welfare, China’s model is unapologetically commercial. Official development aid has fallen sharply, even as overseas lending has surged. Capital is deployed with a clear focus on repayment security, profitability, and strategic alignment.

This shift is visible in where the money goes. While China was once associated with financing projects in low-income countries, recent lending has increasingly flowed to higher-income economies with stronger credit profiles, established brands, and valuable technologies. In fact, one of the largest recipients of Chinese lending has been—perhaps unexpectedly—the United States.

Chinese banks have financed U.S. infrastructure including energy projects, pipelines, data centers, and airport expansions. In many cases, these investments are driven less by geopolitical ambition than by straightforward financial return.

An Extension of Industrial Policy

China’s lending strategy is not merely financial; it is also industrial.

Earlier waves of overseas financing supported the Belt and Road Initiative, securing trade routes and building global infrastructure. More recently, however, lending has increasingly aligned with China’s Made in China 2025 agenda, which prioritizes self-sufficiency and leadership in advanced technologies.

AidData’s analysis shows a sharp increase in lending tied to acquisitions in sectors deemed strategically sensitive, including semiconductors, robotics, biotechnology, quantum computing, and defense technologies. Financing is often structured to favor Chinese contractors, ensure collateralization, and accelerate access to know-how that supports long-term national objectives.

How the West Is Responding

China’s rise as a global creditor has forced Western governments to rethink development finance through the lens of national interest rather than altruism.

The United States has expanded the mandate of its International Development Finance Corporation, enabling it to take equity stakes, finance projects in higher-income countries, and support domestic supply-chain resilience. Europe has moved to more aggressively screen foreign acquisitions in critical technology sectors, particularly where Chinese capital is involved.

This shift reflects a broader realization: development finance is now a tool of strategic competition, not merely humanitarian engagement.

Limits to Imitation

Despite these adjustments, the West cannot simply replicate China’s model. The U.S. does not control its banking system, does not run large trade surpluses, and lacks the centralized industrial planning apparatus that enables Beijing to deploy capital at scale.

America’s comparative advantage lies elsewhere—in its private capital markets, entrepreneurial ecosystem, and capacity for innovation. Targeted public financing that catalyzes private investment may prove more effective than direct state-led lending.

Encouragingly, investment in defense, energy security, and frontier technologies is accelerating, suggesting that a hybrid approach—government support paired with private-sector dynamism—may offer a viable path forward.

A New Financial Order Taking Shape

The global regime governing aid and credit is undergoing a profound reinvention. China has disrupted the status quo, compelling other nations to reconsider how capital is deployed, to whom, and for what purpose.

Whether this new era produces productive competition and innovation—or devolves into cronyism and inefficiency—will depend on how governments balance strategy with transparency and market discipline.

What is clear is that global finance is no longer neutral. Capital now moves with intent, and China has learned how to wield it with scale, speed, and strategic clarity.