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Powerful states often use tools of economic statecraft, such as foreign aid and other financial policy instruments, in a bid to "purchase" influence as well as establish regional leadership among their neighbors. How and why do these states undertake similar economic statecraft strategies and policies? The article examines the evolution of infrastructure financing policy of China and Japan and identifies the ever changing and, yet at the same time, mirroring interaction between the two countries' development finance practices. We argue that emulation and competition have led to the process of policy diffusion between these two countries. The competition between these two foreign aid leaders in East Asia especially after China's Belt and Road Initiative has shaped the region's infrastructure development dynamics as they strive to move the equilibrium outcome to their advantage. Such equilibrium through the policy diffusion process has important implications on global development governance. [ABSTRACT FROM AUTHOR]