The slashing of aid to Southeast Asia (SEA) by the West leaves the region vulnerable to China’s expansion of influence, with the Eastern superpower taking over in the void left by Western countries, points out a recent study by Australian think tank, the Lowly Institute.

The region, said the institute, is now at an uncertain state, facing cuts of as much as $17.2 billion in development financial assistance from Europe, including France and Germany, and $7.6 billion from the UK, which will apparently be redirected to defense spending.

These amounts, however, are dwarfed by the United States’ $60 billion overseas aid program pulled back by Trump since his return to the White House.

US foreign aid had particularly played a critical role in tackling poverty, hunger and inequality worldwide. Thus, the Trump administration’s shutdown in January 2025 of the US Agency for International Development (USAID), which facilitated much of the US government’s humanitarian and foreign development assistance since its establishment in 1961, was particularly met with much outrage and despair.

The exact amount of USAID’s poverty-focused development aid varied yearly but until 2025 it was around 0.49 percent of the US federal budget. In 2023, USAID’s budget was some P63 billion, nearly $900 million of that directed to SEA.

As Trump dismantles USAID, many of those in the direst life-and-death situations in the world will be without succor.

And for sure, the US receding from the foreign aid arena won’t happen in a vacuum — it will be creating one. As Washington voluntarily sidelines itself, Beijing will not just be filling the gap, it will most likely rewrite world development rules.

Unlike USAID, which dispenses grants that do not need to be repaid, China’s aid prioritizes high-interest loans that could create long-term debt traps.

China channels aid through such agencies as the China International Development Cooperation Agency (CIDCA), which manages and coordinates China’s foreign aid and development cooperation efforts, and state-owned banks like China Exim Bank, which is focused on infrastructure investment rather than humanitarian relief.

The Lowly Institute study says Beijing invests heavily in its neighboring countries and, of late, has been focused on building soft power through goodwill exchanges and diplomatic engagement.

It does not provide traditional aid on the same scale as Western democratic nations like the US, and has scant experience in providing such assistance as combatting disease outbreaks or distributing humanitarian aid in conflict zones which USAID had been known for.

Trump’s cessation of US aid will cripple humanitarian work and human rights at a time when America is in a tussle with China for influence over SEA.

Council on Foreign Relations analyst Joshua Kurlantzick says, “The overall shift (in SEA) will be towards China and away from the US, as the latter squanders its soft power.”

As that happens, China’s providing more assistance as America fades away from the humanitarian development aid scene will see democratic potential being crushed in virtually every country in the region.

The dark scenario is that each assistance program abandoned by the US will create space for China to shape global development priorities. If this trajectory continues, Washington risks being replaced by China as well as being sidelined diplomatically as nations increasingly turn to Beijing for stability, pushing the US further into isolation, making it a cultural and diplomatic pariah.

America’s virtual withdrawal from global leadership in development and foreign aid in totality would most likely find it on the receiving end of the very power dynamics it once shaped.

The consequential impact may not be immediately felt in Washington, but in conflict zones, in disaster and crises-ridden areas, in war-torn regions and struggling economies they already are.