China Expands Southeast Asia Influence Amid US, EU Aid Cuts

The Trump administration has accelerated the U.S. economic pivot to Asia, particularly Southeast Asia, through aggressive trade policies such as reciprocal tariffs and restrictions on third-country trade diversion, which have strained relations with ASEAN states and pushed them closer to China. Concurrently, the Trump administration has significantly reduced U.S. foreign aid programs, including the abolition of USAID, cutting about $60 billion in development assistance worldwide, which, along with aid reductions by European countries, has resulted in a decline of official development finance to Southeast Asia. This aid retrenchment threatens poorer Southeast Asian countries like Myanmar, Cambodia, Laos, and East Timor the most, impacting critical social sectors such as health, education, and civil society support, and exacerbating regional inequalities. In contrast, China is expanding its influence by filling the aid and infrastructure financing gap, becoming the largest infrastructure financier in Southeast Asia and investing in major projects such as high-speed rail links in Indonesia and Malaysia. Chinese officials emphasize their approach is based on principles of non-interference and no political strings, positioning Beijing to regain dominance in the region's development landscape as Western support wanes. This shift in aid and investment dynamics risks reshaping Southeast Asia’s geopolitical alignment, with China’s growing role potentially undermining long-term stability and equity in the region.