Western aid wanes as China claims Southeast Asia foothold: study
China Expands Influence Over Southeast Asia Development
Key Findings of Lowy Institute Study
Australia’s Lowy Institute highlights that the Trump administration and other Western donors are trimming aid to Southeast Asia, potentially allowing China to play a larger role in the region’s development.
Official Development Finance Trends
In 2023, total official development finance (ODF) to Southeast Asia rose to US$29 billion, comprising grants, low‑rate loans and other financial instruments.
Western Aid Reduction Impact
- U.S. Cuts: Approximately US$60 billion of overseas aid was halted by President Trump.
- European Cuts: Seven EU member states, including France and Germany, announced planned cuts totalling US$17.2 billion between 2025 and 2029.
- U.K. Cuts: The United Kingdom disclosed a reduction of US$7.6 billion in annual aid to redirect funds toward defence.
These reductions threaten to shrink development options for Southeast Asian countries, diminishing their leverage to negotiate favourable terms with Beijing.
China’s Development Finance Growth
- Infrastructure Projects: China’s finance for projects such as the East Coast Rail Link in Malaysia and rail links in Indonesia increased by US$1.6 billion in 2023, reaching a total of US$4.9 billion.
- Infrastructure Commitments: China’s infrastructure commitments surged fourfold to nearly US$10 billion, largely due to the revival of Myanmar’s Kyaukphyu Deep Sea Port.
- Western Infrastructure Gap: In recent years, Western promises for infrastructure projects failed to materialise, leaving a clear gap in the region’s development landscape.
Carbon Emissions and Clean Energy Transition
Despite significant economic progress across Southeast Asia, about 86 million people still live on less than US$3.65 a day. China’s growing presence in the region underscores the need for sustainable development, especially as many Southeast Asian nations remain heavily reliant on coal, contributing to rapid carbon emissions.
Conclusion
The decline in Western aid is set to shift the center of gravity of development finance in Southeast Asia more firmly towards East Asian powers, notably China, Japan, and South Korea, according to the Lowy Institute’s assessment.
