<figure id="attachment_3099785" aria-describedby="caption-attachment-3099785" style="width: 1600px" class="wp-caption alignnone"><img loading="lazy" class="size-full wp-image-3099785" src="https://media.freemalaysiatoday.com/wp-content/uploads/2025/07/a4257aba-asean-flag-bendera-bernama-030725.webp" alt="ASEAN flag bendera" width="1600" height="1000" /><figcaption id="caption-attachment-3099785" class="wp-caption-text">Due to western aid cuts, official development finance to Southeast Asia is projected to fall by more than US$2 billion by 2026. (Bernama pic)</figcaption></figure>
SYDNEY: China is set to expand its influence over Southeast Asia&#8217;s development as the Trump administration and other Western donors slash aid, a study by an Australian think tank said Sunday.
The region is in an &#8220;uncertain moment&#8221;, facing cuts in official development finance from the West as well as &#8220;especially punitive&#8221; US trade tariffs, the Sydney-based Lowy Institute said.
&#8220;Declining Western aid risks ceding a greater role to China, though other Asian donors will also gain in importance,&#8221; it said.
Total official development finance to Southeast Asia – including grants, low-rate loans and other loans – grew &#8220;modestly&#8221; to US$29 billion in 2023, the annual report said.
But US President Donald Trump has since halted about US$60 billion in development assistance – most of the US overseas aid programme.
Seven European countries – including France and Germany – and the EU have announced US$17.2 billion in aid cuts to be implemented between 2025 and 2029, it said.
And the UK has said it is reducing annual aid by US$7.6 billion, redirecting government money towards defence.
Based on recent announcements, overall official development finance to Southeast Asia will fall by more than US$2 billion by 2026, the study projected.
&#8220;These cuts will hit Southeast Asia hard,&#8221; it said.
&#8220;Poorer countries and social sector priorities such as health, education, and civil society support that rely on bilateral aid funding are likely to lose out the most.&#8221;
Higher-income countries already capture most of the region&#8217;s official development finance, said the institute&#8217;s Southeast Asia Aid Map report.
Poorer countries such as East Timor, Cambodia, Laos and Myanmar are being left behind, creating a deepening divide that could undermine long-term stability, equity and resilience, it warned.
Despite substantial economic development across most of Southeast Asia, around 86 million people still live on less than US$3.65 a day, it said.
&#8216;Global concern&#8217;
&#8220;The centre of gravity in Southeast Asia&#8217;s development finance landscape looks set to drift East, notably to Beijing but also Tokyo and Seoul,&#8221; the study said.
As trade ties with the US have weakened, Southeast Asian countries&#8217; development options could shrink, it said, leaving them with less leverage to negotiate favourable terms with Beijing.
&#8220;China&#8217;s relative importance as a development actor in the region will rise as Western development support recedes,&#8221; it said.
Beijing&#8217;s development finance to the region rose by US$1.6 billion to US$4.9 billion in 2023 – mostly through big infrastructure projects such as rail links in Indonesia and Malaysia, the report said.
At the same time, China&#8217;s infrastructure commitments to Southeast Asia surged fourfold to almost US$10 billion, largely due to the revival of the Kyaukphyu Deep Sea Port project in Myanmar.
By contrast, Western alternative infrastructure projects had failed to materialise in recent years, the study said.
&#8220;Similarly, Western promises to support the region&#8217;s clean energy transition have yet to translate into more projects on the ground – of global concern given coal-dependent Southeast Asia is a major source of rapidly growing carbon emissions.&#8221;

MatchPoint Times

Western aid cuts cede ground to China in Southeast Asia

A study by an Australian think tank shows that Beijing is set to expand its influence over the region’s development.

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