Foreign Aid, Trade Flows, and the Public Image of China and the United States in Developing Countries: A Cross-Country Time-Series Analysis

Abstract

How do trade flows and foreign aid by a donor country affect public opinion about the donor in recipient countries? This paper studies how China’s economic engagement between 2002-2018 in developing countries in Latin America and the Southeast Asia region has shaped these countries’ attitudes toward China, using the United States as a baseline comparison case. Using a linear probability model and cross-sectional time series approach, this paper finds that countries that received more foreign aid as a share of GDP from China are more likely to have a positive perception of China. In contrast, the same set of countries is more likely to harbor negative views toward the United States when financing aid from the United States increases during this period. This paper also finds that an increased net imports with China is likely to lead to more negative views toward China; however, when a country has higher net imports with the United States, its citizens are more likely to regard the US as a positive influence. These results carry significant implications for both the US and China when crafting a sound foreign policy around gaining a positive influence in both Latin America and Southeast Asia. This positive influence could translate to global success in the form of strengthening diplomatic relations, promoting soft power, and gaining influence in international organizations.