“China’s relative importance as a development actor in the region will rise as Western development support recedes,” the Sydney-based Lowy Institute said.
CHINA HAS THE chance to expand its influence over Southeast Asia as the United States and the West reduce official development assistance (ODA) to the region, according to a study from an Australian think tank.
“Declining Western aid risks ceding a greater role to China, though other Asian donors will also gain in importance,” the Sydney-based Lowy Institute said.
This, as total ODA to Southeast Asia from the west grew “modestly” to $29 billion in 2023, the report said. ODA refers to grants and low-interest rate loans with relaxed concessions.
Also, US President Donald Trump has ordered holding about $60 billion in development assistance, while several European countries and the European Union said that $17.2 billion in aid reductions will be made from 2025 and 2029.
The study projects that ODA to Southeast Asia will fall by more than $2 billion by 2026. “These cuts will hit Southeast Asia hard.”
“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,” it added.
The Philippines can also be considered fortunate, as the study cited the case of poorer nations like East Timor, Cambodia, Laos and Myanmar.
CHINA’S RISE
As the US and the West reduce their ODA to Southeast Asia, other countries in Asia such as China, Japan and South Korea are stepping up their assistance to the region.
“The centre of gravity in Southeast Asia’s development finance landscape looks set to drift East, notably to Beijing but also Tokyo and Seoul,” the study said.
However, it pointed out that with the region now having weakened trade ties with the US, Southeast Asian countries is seen having less leverage to negotiate in getting favorable terms or concessions with China in seeking ODA.
“China’s relative importance as a development actor in the region will rise as Western development support recedes,” it said.
China’s ODA to Southeast Asia notably increased by $1.6 billion to $4.9 billion in 2023, with Indonesia and Malaysia benefitting to fund big infrastructure projects. The mainland’s infrastructure commitments to the region also went up by 400 percent to almost $10 billion, with the revival of a deep seaport project in Myanmar fueling that surge.
However, the West’s support had faltered in the region, the study pointed out.
“Similarly, Western promises to support the region’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,” it added.
