(Singapore, 22nd) The US and other Western countries cutting their foreign aid funds will impact development projects in Southeast Asia. This is expected to indirectly allow China—continuing its financial support for Southeast Asian development—to strengthen its regional influence.
The Australian think tank Lowy Institute released its ‘Southeast Asia Aid Map’ report on Sunday (July 20), predicting that after multiple Western countries recently announced reductions in overseas development assistance, the amount of aid Southeast Asia can receive in 2026 will be over US$2 billion (about S$2.56 billion) less than in 2023, dropping to US$26.5 billion.
Earlier, US President Trump announced the termination of about US$60 billion in overseas development aid. Another seven European countries and the EU have also successively announced reductions in foreign aid funds.
In contrast, China provided US$4.9 billion in development funding to Southeast Asia in 2023, an increase of US$1.6 billion compared to the previous year. Newly committed project funds surged threefold over the previous year, reaching nearly US$10 billion—mainly due to the restart of the Kyaukphyu deep-water port project within the China-Myanmar Economic Corridor.
The report points out that although China’s funded infrastructure projects in Southeast Asia face numerous challenges, the incessant project launches allow China to maintain its position as the region’s largest infrastructure financier.
The report writes: “The reduction of Western aid may allow China to play a bigger role.”
“Future development funds in Southeast Asia will increasingly be led by Tokyo, Seoul, and Beijing, while Brussels and Washington’s roles will diminish. China’s importance may increase, especially in the Greater Mekong Subregion and Indonesia.”
Dr. Lin Weiling, Program Director (Concurrent) of the ASEAN Studies Centre at Singapore’s ISEAS–Yusof Ishak Institute, told Lianhe Zaobao: “China’s strong commitment to infrastructure construction allows many countries to benefit, especially those with close ties to China, such as Cambodia and Laos, as well as countries increasingly leaning towards Beijing like Malaysia and Indonesia.”
The Australian think tank Lowy Institute released its ‘Southeast Asia Aid Map’ report on Sunday (July 20), predicting that after multiple Western countries recently announced reductions in overseas development assistance, the amount of aid Southeast Asia can receive in 2026 will be over US$2 billion (about S$2.56 billion) less than in 2023, dropping to US$26.5 billion.
Earlier, US President Trump announced the termination of about US$60 billion in overseas development aid. Another seven European countries and the EU have also successively announced reductions in foreign aid funds.
In contrast, China provided US$4.9 billion in development funding to Southeast Asia in 2023, an increase of US$1.6 billion compared to the previous year. Newly committed project funds surged threefold over the previous year, reaching nearly US$10 billion—mainly due to the restart of the Kyaukphyu deep-water port project within the China-Myanmar Economic Corridor.
The report points out that although China’s funded infrastructure projects in Southeast Asia face numerous challenges, the incessant project launches allow China to maintain its position as the region’s largest infrastructure financier.
The report writes: “The reduction of Western aid may allow China to play a bigger role.”
“Future development funds in Southeast Asia will increasingly be led by Tokyo, Seoul, and Beijing, while Brussels and Washington’s roles will diminish. China’s importance may increase, especially in the Greater Mekong Subregion and Indonesia.”
Dr. Lin Weiling, Program Director (Concurrent) of the ASEAN Studies Centre at Singapore’s ISEAS–Yusof Ishak Institute, told Lianhe Zaobao: “China’s strong commitment to infrastructure construction allows many countries to benefit, especially those with close ties to China, such as Cambodia and Laos, as well as countries increasingly leaning towards Beijing like Malaysia and Indonesia.”
However, Dr. Lin also pointed out that the debt burden of some countries has thus increased, and the transparency and environmental sustainability of certain projects have repeatedly been questioned; therefore, these countries are becoming increasingly cautious when accepting Chinese aid and investment.
A May report by Lowy Institute, based on World Bank data, estimates that the world’s 75 poorest countries this year owe China a collective debt repayment of US$22 billion—the highest level on record.
US Aid Reduction May Weaken Influence; Southeast Asia Expands Scope of Cooperation
A May report by Lowy Institute, based on World Bank data, estimates that the world’s 75 poorest countries this year owe China a collective debt repayment of US$22 billion—the highest level on record.
US Aid Reduction May Weaken Influence; Southeast Asia Expands Scope of Cooperation
Interviewed experts further pointed out that the influence of China and the US in Southeast Asia is not necessarily a zero-sum game—America’s influence depends more on its own policies.
Dr. Jayant Menon, Visiting Senior Fellow at the ISEAS–Yusof Ishak Institute in Singapore, believes that America’s increasingly aggressive and protectionist policies are the main factors affecting its influence in Southeast Asia.
Dr. Menon said in an interview that Southeast Asian countries do not want to lose their advantage of maintaining close ties with both China and the US. “However, under Trump’s leadership, the US has the image of being a somewhat unreliable trade partner. If this continues, it will also raise doubts about the US’s reliability in other areas.”
Dr. Lin Weiling believes that, with concerns over both China and the US, Southeast Asian countries may diversify their trade and economic relations, seeking other open and trade system–respecting partners, such as Japan and South Korea.
Dr. Jayant Menon, Visiting Senior Fellow at the ISEAS–Yusof Ishak Institute in Singapore, believes that America’s increasingly aggressive and protectionist policies are the main factors affecting its influence in Southeast Asia.
Dr. Menon said in an interview that Southeast Asian countries do not want to lose their advantage of maintaining close ties with both China and the US. “However, under Trump’s leadership, the US has the image of being a somewhat unreliable trade partner. If this continues, it will also raise doubts about the US’s reliability in other areas.”
Dr. Lin Weiling believes that, with concerns over both China and the US, Southeast Asian countries may diversify their trade and economic relations, seeking other open and trade system–respecting partners, such as Japan and South Korea.