US aid freeze risks handing influence to China in Beijing's backyard

Beijing has doubled its contributions over the past three years to the Cambodian Mine Action Centre (CMAC), which helps clear millions of unexploded munitions, said Heng Ratana, who leads the group.

On Feb. 5, CMAC said it had received a pledge from Beijing to contribute $4.4 million - surpassing the $2 million donated by the U.S. last year. Ratana said China understands that such support helps "build up people-to-people networks" and generates economic returns.

Beijing invests heavily in its neighboring countries and has recently focused on building soft power through goodwill exchanges and diplomatic engagement, according to the Lowy Institute in Sydney, which studies Asia-Pacific geopolitics.

But it does not provide traditional aid on the same scale as Western democratic nations. China also has little experience providing the specialist assistance - from combating disease outbreaks to distributing humanitarian aid in conflicts zones - that the United States Agency for International Development (USAID), Washington's main vehicle for delivering such support, is known for.

Trump has halted most U.S. government-funded aid globally for 90 days, while moving to dismantle USAID, which he accused of being run "by a bunch of radical lunatics." The move is part of an effort by his administration to slash the federal government workforce and curb spending it considers wasteful.

While the administration has said some funds may be released when the pause expires, a lack of clarity around what could be restored has prompted scores of groups across Asia to abruptly stop work or lay off staff.

The U.S. provided over $894 million in assistance to Southeast Asia in 2023, the latest year for which official data is available.

The freeze will hobble humanitarian work and human rights at a time of a tussle with China for influence over the region, said Joshua Kurlantzick, an analyst at the Council on Foreign Relations think-tank in New York.

"The overall shift will be toward China and away from the U.S. as the U.S. squanders its soft power," he said, adding that the combination of Beijing providing more assistance and Washington retreating from funding civil society programs "crushes democratic potential in virtually every country in the region."

China has not publicly commented about the U.S. suspending development assistance and its Ministry of Foreign Affairs did not respond to Reuters' questions. The U.S. State Department, whose top diplomat Marco Rubio is now USAID's acting administrator, also did not respond to a request for comment.

CHINA UNLIKELY TO MATCH U.S.

China, which has its economic troubles at home, is unlikely to match the generosity of the U.S., the world's largest aid donor.

Instead, Beijing prizes "large-scale infrastructure and investment programs" that are a hallmark of the Belt and Road Initiative (BRI), said Derek Grossman, an analyst at the RAND Corporation think-tank. The BRI is China's $1 trillion infrastructure assistance program, which envisions ports and railroads connecting Asia, Europe and Africa.

The ISEAS-Yusof Ishak think-tank's annual poll of Southeast Asian decision-makers in 2024 found that China for the first time had "edged past the U.S." as their preferred partner, a finding attributed in part to pro-China sentiments among Beijing's BRI partners in Southeast Asia.

China says BRI boosts the economies of developing nations and brings needed modern infrastructure, but it has been accused by critics of lacking transparency, burdening countries with heavy debts, and serving primarily as a tool to expand Chinese economic influence.

Among those who have most enthusiastically embraced BRI is impoverished Laos, which borrowed heavily to finance railways, highways and hydroelectric dams, but has a public debt burden the World Bank considers "unsustainable."

BLOW TO DISSIDENTS

President John F. Kennedy, who spearheaded the creation of USAID during the Cold War, saw it as a "powerful source" through which the U.S could "exert influence for the maintenance of freedom." Similar sentiments were previously echoed by Republican internationalists like Rubio.

Now, among the groups that stand to lose vital funding because of the U.S. suspension are those focused on causes that Beijing considers hostile, such as supporting Uyghur Muslims in China, as well as dissidents from Myanmar and North Korea.

In Myanmar, the Chin Human Rights Organization, which employs health professionals who went on strike following the military's seizure of power in 2021, has laid off 30 percent of its workforce since the freeze.

USAID's stop-work order has also halted programs including HIV prevention for women, skills training, and scholarships for future leaders in "what we hope will one day be a democratically elected government," said former U.K ambassador to Myanmar Vicky Bowman, who now campaigns for transparency and human rights in business.

The freeze has "undermined faith that the USA is a reliable friend of those in Asia who are fighting for equitable development, democracy, and human rights," she said.

With South Korean governments alternating between engaging and isolating Pyongyang, U.S. funding had also been a lone source of stability for North Korea-focused issues, said Hanna Song, executive director of the Seoul-based Database Center for North Korean Human Rights.

Most North Korea-related funding is disseminated through a State Department office that had a budget of about $5 million per year for such projects, Song said. That, too, has been paused.

China-focused nonprofits that track alleged rights abuses also face an "extinction event," said Bethany Allen-Ebrahimian, a China expert at the Australian Strategic Policy Institute think-tank in a post on X.

She declined to name specific groups in a subsequent ASPI article, saying some feared retribution by Beijing. The Tibet Fund nonprofit that supports Tibetan communities in exile on Saturday said that several of its programs were at "immediate risk."

"Now we worry not just about the short-term operations but the long-term effects on autocratic states," Song said.

Beijing has a mixed record of selling itself as a reliable partner: Xi offered a vigorous defense of globalization ahead of Trump's first term, only to turn to confrontational "wolf warrior" diplomacy, or aggressively defending China against foreign parties that Beijing believed were hostile.

But the U.S aid freeze, coupled with the targeting of Canada and Mexico for tariffs, was a warning to U.S. partners "of the capriciousness they'll face over the next four years," said Greg Poling, an expert on Southeast Asia at the Center for Strategic and International Studies think-tank in Washington.