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6d ago

Western Cuts Leave China as Top Infrastructure Financier in Southeast Asia

Australia channels most of its 2025-26 aid budget into Indo-Pacific programs to offset Western retrenchment.

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The China-backed East Coast Rail Link under construction in Malaysia in 2019. China is poised to gain influence over Southeast Asia's development as Western donors slash aid, a Lowy Institute study says
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A Chinese-owned oil refinery on Made Island off Kyaukphyu, Myanmar, photographed in 2019. Beijing is financing a deep-sea port project at Kyaukphyu

Overview

  • Official development finance to Southeast Asia peaked at US$29 billion in 2023 but is projected to shrink by over US$2 billion by 2026 due to US and European aid cuts.
  • President Trump’s administration has scrapped roughly US$60 billion in overseas aid and Europe plans to cut US$17.2 billion through 2029 while the UK reduces annual aid by US$7.6 billion.
  • China’s infrastructure commitments surged fourfold to nearly US$10 billion in 2023, driven largely by the revival of Myanmar’s Kyaukphyu deep-sea port project.
  • Under a no-strings-attached policy, Beijing has overtaken individual Western donors as the region’s largest single infrastructure financier, expanding high-speed rail links in Vietnam, Thailand, Indonesia and Malaysia.
  • Australia increased its aid to Southeast Asia in 2023 and its 2025-26 budget prioritises health, climate and humanitarian programs across the Indo-Pacific, directing about 75 percent of its assistance there.