Latest news with #GraceStanhope
SBS Australia
2 days ago
- Business
- SBS Australia
China increases Southeast Asia development spend as West leaves the region
"The lack of Western and European money going into Southeast Asia is a real problem." That's Grace Stanhope from the Lowy Institute. "We're projecting a 20 per cent drop in bilateral foreign aid to the region by 2026." The third edition of the think tank's Southeast Asia Aid Map has found China leads the development race in Southeast Asia, boosting its financing in 2023 after reducing its development spend in the region by 68 per cent over five years. The regional superpower favouring market-rate loans for infrastructure projects, with rail ventures in Indonesia and Malaysia accounting for most of the annual increase. But it's the loans to the region's poorest countries, like Myanmar, Laos, and Cambodia that have some concerned. Ms Stanhope says the reduced competition is leaving few options other than taking on China-funded debt. "These countries have far less options in terms of other development providers, and also far higher development needs, so there's really, there's very little option for them. Increasingly, these countries have little room to manoeuvre in their negotiations." Globally, a third of developing nations spend more on interest repayments than health each year. Executive Director at the Asia Pacific Development Diplomacy and Defence Dialogue, Melissa Conley Tyler doesn't want that to become the case in Southeast Asia. "In our region, thankfully, debt has not been as much of an issue, and I think we want to keep it that way. We don't want countries in the Indo Pacific to be heavily indebted. That's a huge problem if countries can't provide the services that they need to their citizens because they're paying back debt, which is usually at very, very high interest rates." The full impact of ongoing aid cuts is yet to be seen in the region.... with the US cutting its aid spend by more than 80 per cent this year, and the UK planning to redirect billions in foreign assistance towards its defence budget. Ms Conley Tyler says some of that has already been felt. "We know that the first deaths because of the US A-I-D cuts happened in Southeast Asia. It was in hospitals on the Myanmar border, where refugees who were fleeing the conflict." The Lowy Institute says that will result in the "centre of gravity" shifting in Southeast Asian development financing, with China, Japan, and South Korea making up most of the financing. Australia increased its aid to Southeast Asia in 2023, with Labor committed to raising its international assistance budget annually in line with inflation. Speaking at the ASEAN Leaders Summit earlier this month, Foreign Minister Penny Wong reaffirmed Australia's commitment to the area. "We now dedicate 75 cents of every Australian development dollar to our region, the Indo-Pacific. And our response to others reducing their funding has been to pivot and reprioritise, ensuring we respond to the most acute needs." Conley-Tyler says its critical for Australia to maintain that focus. "If you have a failed state on our doorstep, if you have a pandemic or animal diseases, if you have climate migration, all of those things are going to matter greatly to Australia. We would, of course, prefer to live in a region that is secure and stable and prosperous. And so the money we put into things like our development assistance is helping on our national interest in that."
ABC News
3 days ago
- Business
- ABC News
Lowy Institute South-East Asia aid map reveals retreat of US and Europe from Australia's region
China is expected to fill a gap in aid funding to South-East Asia as the Trump administration dismantles United States development programs worldwide. The Lowy Institute's latest South-East Asia aid map warns some of the region's poorest countries, including Myanmar, Cambodia, Laos, and Timor-Leste, will suffer due to $US60 billion ($92 billion) worth of aid cuts from the US. China would "continue to play a really big role as the region's infrastructure provider," said Grace Stanhope, a research associate with the Lowy Institute's Indo-Pacific Development Centre, who co-authored the report. "Infrastructure is certainly a soft power tool that China has used not only throughout South-East Asia, but in the Pacific, South Asia, all over the world," she said. Lowy's report cited China's construction of high-speed rail between the Indonesian cities of Jakarta and Bandung, as well as funding for Malaysia's East Coast Rail Link. Due to a delay in the public release of data, Lowy's report focused on the situation in 2023, since when major geopolitical shifts have occurred, not least due to the return of US President Donald Trump to the White House. After returning to office in early 2025, Mr Trump moved to abolish the US Agency for International Development (USAID), which had previously provided over 40 per cent of humanitarian funding worldwide. Major European development providers such as Germany, France, the Netherlands, and Sweden — as well as the European Union — have also withdrawn some $US25 billion ($38 billion) from their aid budgets. Despite enduring poverty and reliance on external aid for its economic survival, Cambodia saw Sweden end its bilateral aid program in 2024. Lowy's analysis found that while spending for humanitarian aid responses to natural disasters in South-East Asia had increased, support for longer-term climate adaptation in the region remained inadequate. Yet, she said Western nations had not made good on financial pledges for middle and low-income countries to aid their transition to clean energy. "If that support is not being delivered, we're at political risk of being perceived as not following through on our promises," she said. The world's entire aid and development system had been "rewritten and rebuilt" over the past six months, Ms Stanhope said. The Australian Council for International Development's head of policy and advocacy, Jessica Mackenzie, recently told the ABC's Pacific Beat that the US was previously the top contributor to the World Bank and Asian Development Bank, which would also have major flow-on effects. "A lot of projects are still coming down the line that are going to be cancelled from those [institutions]," she said. "The US was working on a lot of projects with DFAT [Australia's Department of Foreign Affairs and Trade] … as soon as that US funding is stripped, the whole project stops. The ABC revealed last week that the US had returned $1.5 million to DFAT, which Australia had provided to USAID to deliver a clean water project in Indonesia. Still, the Lowy analysis noted that South Korea and Japan remained major aid donors to South-East Asia. Ms Stanhope said the East Asian democracies had larger development programs than Australia and were able to use public finance to lend to South-East Asian countries to develop sectors such as energy, transport, and communications. "Australia can stick to doing our more traditional, very human-based development, and we can trust that for the infrastructure and the bigger-spending, more visible [projects] … Japan and Korea are very trusted partners," she said. Australia's expenditure on overseas development assistance is among the lowest of comparable rich countries, providing 19 cents for every $100 of national income in 2024, according to Oxfam Australia. "Outside of the OECD, Australia trails behind countries like Malta and Croatia, who give more as a proportion of their economies," Oxfam Australia's acting head Chrisanta Muli said earlier this year. But Ms Stanhope said Australia continued to play an important regional role, for example by being the largest development provider to Timor-Leste and running specialist programs focused on gender, climate, and disability.
South China Morning Post
3 days ago
- Business
- South China Morning Post
As US and Europe cut aid budgets, China's star is on the rise in Southeast Asia, report says
China's role as Southeast Asia's largest infrastructure financier is increasing its regional influence at a time when the United States and the European Union are slashing their foreign aid budgets, a new report by an Australian think tank said. With the Trump administration in the United States scrapping about US$60 billion in aid and European countries pulling back more than US$25 billion, '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 Lowy Institute report, which was released today, said. 'China is the single largest partner on infrastructure financing in Southeast Asia, but traditional donors combined still outspend it,' the report's lead authors, Alexandre Dayant, Grace Stanhope and Roland Rajah, wrote. 'As Western aid declines and China recalibrates its strategy, Beijing is well positioned to regain dominance.' Southeast Asia's traditional partners include countries such as the US and Australia, and international organisations such as the United Nations, the Asian Development Bank and the World Bank. With the US expected to cut its foreign assistance by 83 per cent this year, the retrenchment of funds from Europe and tariff uncertainties undermining trade ties between the US and other countries, China is enhancing its influence in the region through infrastructure connections. Recent examples include work on high-speed railway links with Vietnam and Thailand. China International Development Cooperation Agency spokesman Li Ming told a news conference in March that China's 'principles related to foreign aid, including non-interference in internal affairs, no political strings attached and no empty promises made, will not change'. 'A major country should act like a major country by shouldering its due international obligations and fulfilling its responsibilities, rather than renege on its promises, be mercenary or bullying,' he said.
SBS Australia
3 days ago
- Business
- SBS Australia
In a $29 billion race for influence, Australia trails China as our allies turn away
China is leading the development race in Southeast Asia as traditional donors like the United States and United Kingdom step away from the region, according to a new Lowy Institute report. The third edition of the Southeast Asia Aid Map shows China increased its regional development spend in 2023 for the first time in three years. "The lack of Western and European money going into Southeast Asia is a real problem," says Grace Stanhope, a research associate at the Lowy Institute. "We're projecting a 20 per cent drop in bilateral foreign aid to the region by 2026." Writing shortly after the 2025 federal election, the Lowy Institute's Grace Stanhope said the re-elected Albanese government would "have to move fast" if it wanted to increase Australia's influence in Southeast Asia. Source: Supplied China favours infrastructure, loans After reducing its annual Southeast Asian development spend by 68 per cent over five years, China boosted its financing in 2023. The regional superpower is still favouring market-rate loans for infrastructure projects, with rail ventures in Indonesia and Malaysia accounting for most of the annual increase. China is on track to overtake traditional partners in infrastructure spending, quadrupling its commitments from 2022 to 2023 through the revival of the Kyaukphyu Deep Sea Port Project in Myanmar. Development spending committed by both China and Australia's traditional partner nations to Southeast Asia has decreased since 2015. Source: SBS News It's the loans to the region's poorest countries — like Myanmar, Laos, and Cambodia — that have some concerned. "These countries have far less options in terms of other development providers, and also far higher development needs," says Stanhope. "Increasingly, these countries have little room to manoeuvre in their negotiations." Stanhope warns reduced competition could reduce domestic scrutiny on China's funding. "I think we can expect to see less pressure for reform in terms of China's development finance offering if there are no viable alternatives." Most countries in the Indo-Pacific region have avoided high debt burdens taken on by other developing countries. Globally, a third of developing nations spend more on interest repayments than health each year. "We don't want countries in the Indo Pacific to be heavily indebted," says Melissa Conley Tyler, executive director at the Asia Pacific Development Diplomacy and Defence Dialogue. "That's a huge problem if countries can't provide the services that they need to their citizens because they're paying back debt." Further cuts expected The full impact of aid cuts is yet to be seen in the region. The Lowy Institute says that will result in the "centre of gravity" shifting in Southeast Asian development financing. Source: SBS News Australia's response Australia increased its aid to Southeast Asia in 2023, with Labor committed to raising its international assistance budget annually in line with inflation. Speaking after the ASEAN Leaders Summit earlier this month, Foreign Minister Penny Wong said Australia had "sought to pivot our aid to the [Indo-Pacific] region" in response to recent cuts. "Some 75 cents in every dollar that Australia provides in development assistance is directed to our broader region;" said Wong. "We will continue to prioritise that." Source: SBS News Conley-Tyler says it's critical for Australia to maintain that focus. "If you have a pandemic or animal diseases, if you have climate migration, all of those things are going to matter greatly to Australia," she says. "We would, of course, prefer to live in a region that is secure and stable and prosperous. And so the money we put into things like our development assistance is helping on our national interest in that."
South China Morning Post
07-04-2025
- Business
- South China Morning Post
Southeast Asia's balancing act with China threatened by Western aid cuts
Continuous cuts in foreign aid by Western governments such as the United States may aggravate a power imbalance between Southeast Asia and China , according to findings from a study on the region's approach to China's aid. Advertisement The study also found that countries had different strategies for accepting aid from Beijing. Southeast Asian states with acute development needs and constrained access to development financing, such as Cambodia, Laos and Myanmar, were found to be the most reliant on China. The findings, released on March 26, came from the report 'Hedging bets: Southeast Asia's approach to China's aid' by Lowy Institute's analysts Alexandre Dayant and Grace Stanhope. Meanwhile, lower-middle-income countries with more diverse foreign relations, such as the Philippines and Vietnam, were classified as 'restrained' in accepting Chinese funds, while higher-income nations with moderate development needs, such as Indonesia, Malaysia, and Thailand, approached ties with China 'the most opportunistically and politically'. The study said the 'new-found agency' of many Southeast Asian countries to calibrate development ties with China might be undermined if Western aid cuts – such as President Donald Trump's decision to impose a 90-day freeze on foreign aid provided by the US across the board – translated to a drastic reduction of development financing available in the region. Countries already reliant on Chinese development support will have even less room to explore diversifying their ties Alexandre Dayant and Grace Stanhope, Lowy Institute's analysts 'Countries already reliant on Chinese development support will have even less room to explore diversifying their ties. Countries with restrained or opportunistic approaches to China will find it harder to maintain this precarious balancing act,' the study said.
