USAID’s Withdrawal Paves the Way for China’s Expanding Influence in Cambodia and ASEAN

• 24 February 2025
• Local News
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The abrupt freezing of USAID funding under the Trump administration has halted vital infrastructure and development projects across Southeast Asia, leaving a geopolitical vacuum that China is poised to fill. With USAID’s cessation, critical services in Cambodia—including healthcare, education, and demining efforts—face significant disruption. The United States, which allocated nearly USD 68 billion in foreign aid in 2023, has now cut assistance to key Mekong countries, endangering millions who rely on these programs—according to scmp.com, reported on 9 February 2025.

The decision, stemming from Trump’s “America First” policies and the Heritage Foundation’s Project 2025, has raised alarm among regional experts, with researchers warning of long-term economic and political consequences. According to the Lowy Institute’s research associate Grace Stanhope, “this freezing of aid poses severe challenges for many nations in the region, but especially for the poorest ones such as Cambodia, Laos, and Myanmar.”

Since its establishment in 1961 by President John F. Kennedy, USAID has driven sustainable development, poverty reduction, and economic stability in developing nations. However, the Trump administration’s aggressive budget cuts have crippled U.S. humanitarian efforts. This suspension of assistance has already led to the closure of healthcare centers for refugees along the Thailand-Myanmar border, depriving many of essential medical care.

China is capitalizing on this retreat through its Belt and Road Initiative (BRI), an expansive infrastructure investment program reshaping Cambodia’s economic landscape. A prime example is the USD 1.7 billion Funan Techo canal project, which will connect Phnom Penh to the Gulf of Thailand, bypassing Vietnam’s Mekong Delta. This strategic project deepens China’s economic ties with Cambodia, one of its closest Southeast Asian allies, and cement Beijing’s regional trade dominance. The canal’s construction aligns with China’s broader ambitions, granting it control over critical trade routes and increasing Cambodia’s reliance on Chinese-backed financing and investment deals.

Local stakeholders are raising concerns about the broader ramifications. Heng Kimhong, president of the Cambodian Youth Network, highlighted the wider impact on NGOs: “Of course, the funding freeze affected NGO activities to empower youth and community participation to promote human rights and protect natural resources. Illegal loggers will take this opportunity to log in and clean the forest in protected areas. Some NGOs in Cambodia are affected, from 50 percent to 100 percent of their operations. This is a very big concern.” Without continued U.S. engagement, China’s unchecked expansion in Cambodia will reinforce its economic grip over the region, setting policies that favor Beijing’s strategic interests over Western-aligned governance models.

The broader implications of USAID’s withdrawal extend beyond Cambodia’s infrastructure and humanitarian needs. The absence of U.S. soft power mechanisms could allow China to dictate the rules of engagement in Southeast Asia. Beijing’s influence, rooted in debt-financed infrastructure projects and unconditional investment deals, reshapes regional alliances. As U.S. aid disappears, countries in the Mekong region are left with fewer alternatives, strengthening China’s leverage in trade agreements, security policies, and economic development frameworks.

The geopolitical realignment in Southeast Asia underscores the urgent need for renewed U.S. involvement in regional development. Without countermeasures, China’s strategic dominance will continue to expand, further marginalizing U.S. influence and leaving Cambodia and its neighbors increasingly dependent on Beijing’s economic and political agenda.

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