The Development Finance Corporation (DFC), a little-known government agency, opened its first Wall Street outpost last week — and it’s got $205 billion and a mission to out-invest China on the world stage.

The government agency relying on Wall Street to go up against China’s soft power

Previously:

How to DOGE USAID: The Wall Street Consensus under Trump

But this was not smashing without a plan. We learned in early February from Bloomberg that the Trump Administration planned to shift some USAID funding to the US International Development Finance Corp (DFC). Created during the first Trump administration, the DFC deploys public money to leverage or mobilize private investment overseas, in partnerships with institutional investors. As Bloomberg summarizes it: “The new approach would see reduced humanitarian assistance and a greater role for private equity groups, hedge funds, and other investors in projecting economic might as the US competes for influence and strategic projects overseas with China.”

At first glance, this looks like the privatization of foreign aid: a shift from public provision to market solutions. But there’s a larger story at play. The new Trump Administration is turbo-charging the lesser known but increasingly dominant agenda within USAID: “mobilizing private capital.” This approach, which I have termed the Wall Street Consensus, is a decade-old international development paradigm that has been promoted by the World Bank, the United Nations, and rich countries’ development agencies, including the USAID under the Biden Administration.

The Consensus reimagines the role of the state as a facilitator of private investment through various subsidies to investors that are often described as “derisking.” Development is no longer a public good to be directly financed by states, but a market opportunity to be unlocked through the alchemy of public-private partnerships (PPP) into “investible,” privately-owned projects.