Congress is considering a huge increase to the DFC’s budget — with no Buy America standards or guardrails for China’s participation.
In 2018, and with an eye on countering the influence of China’s “Belt and Road” initiative abroad, Congress passed and President Trump signed into law the BUILD Act, which consolidated a pair of government offices into one agency that promotes private investment in developing countries with the backing of the U.S. taxpayer.
The new agency, the U.S. International Development Finance Corporation (DFC), extends loans and loan guarantees, equity investments, political risk insurance and other financial assistance to development projects around the world. The program’s reauthorization is due for reconsideration, and Congress is weighing okaying it again for another seven years. Yet, critics of the program argue that it is riddled with loopholes that allow China to benefit from DFC-funded projects.
Both the DFC’s 2018 charter and the DFC Modernization Act of 2025 (HR 5299) currently under consideration have weak rules to restrict participation of “foreign entities of concern,” which is alarming given China’s state-driven presence in global supply chains for everything from steel to solar panels … and not to mention that country’s whole economy is primed to export its excess capacity.
While the DFC charter includes vague “due diligence” standards to limit projects in places like China, its taxpayer-backed projects in developing countries have no such limits on sourcing Chinese products and materials for construction. There are notable projects that have relied on Chinese content, such as the $553 million Lobito Atlantic Railway project that used Chinese-built unloading cranes and railcars fabricated with Chinese-sourced steel.
But that’s not the only issue with this reauthorization bill. It also has no standards for domestic procurement, meaning American-made requirements for the products, materials, and services necessary to complete a DFC-financed project are non-existent. That’s unlike the Export-Import Bank (EX-IM), another federal institution with a similar mission. EX-IM mandates U.S. content as a condition of eligibility for the projects it finances.
To make matters worse, H.R. 5299 seeks to drastically expand the DFC’s activities in the coming years – a $190 billion increase.
That’s why Congress needs to slow down the DFC reauthorization process and focus on tightening rules around who ultimately benefits from its financing. There’s little disagreement that China’s overcapacity should not be soaked up by U.S. taxpayer-backed projects around the world, but projects supported by the agency routinely overlook U.S. manufacturing companies and America’s workers while allowing direct and indirect Chinese participation throughout their supply chains. And in case you were wondering, no, U.S. tariffs on Chinese steel and other products are not collected when sourced for these types of overseas development projects.
The Alliance for American Manufacturing (AAM) has already called on Congressional leaders to establish DFC rules on domestic procurement similar to that of the EX-IM Bank and impose robust restrictions on foreign entities of concern like those in the recently enacted One Big Beautiful Bill before putting this reauthorization to a final vote. “DFC-funded projects should advance U.S. interests,” AAM wrote in a recent letter to committee members. “They should not serve to subsidize global overcapacity to the detriment of U.S. companies and America’s workers.”
The United Steelworkers also weighed in with its own letter and provided a detailed statement to the House Foreign Affairs Committee in July, in which it wrote, “Simply put, U.S. tax dollars, through DFC financing, should not be used to procure content from the PRC.”
You can read our whole letter here.