President Donald Trump’s withdrawal of foreign aid is raising fears that China will increasingly dominate development in southeast Asia.

A new report by the Lowy Institute shows Beijing is getting the upper-hand, putting pressure on the Albanese government to act.

It’s the third edition of Southeast Asia Aid Map, a comprehensive database tracking official development finance flows across the region.

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The map shows total official development finance to Southeast Asia increased modestly to US$29 billion in 2023, but the region is facing a much bleaker outlook, with the Trump administration’s decision to scrap about US$60 billion in aid and European countries pulling back more than $US25 billion.

Speaking to ‘The Issue,’ a 7NEWS Podcast, Senior Economist Alexandre Dayant says if Australia does nothing, ‘China will become a bigger leader of development finance because others are retracting’.

“You could argue southeast Asian nations will have less agency to push back on Chinese aid projects but also to push for better quality of them.

“Foreign aid provides you with long and strong relationships, I think it is sometimes a tool that we forget.”

China dominates the region by focusing on infrastructure, whereas Australia spends on health and education.

Among China’s development projects in Australia’s backyard is a $16 billion mega railway in Malaysia, a 600MW coal fired power station in Vietnam, and a $5.6 billion industrial park in Indonesia dedicated to nickel production.

According to the Lowy Institute China has committed 34 per cent of all aid funding in the region, Japan 12 per cent, South Korea 6 per cent, the United States 3 per cent and Australia just 2 per cent.

To combat Beijing, experts like Alexandre Dayant want the Albanese Government to increase aid, and work with like minded partners, still invested in the region, such as Japan and South Korea.

Australia’s Minister for International Development, Anne Aly, has defend the Albanese’s Governments handling of foreign aid.

“Our neighbours in the Pacific and Southeast Asia look to us, they look to us as a trusted partner,” Aly said.

For more from Josh Martin and his interview with Alexandre Dayant, you can listen to The Issue in the player below or watch their full conversation in the video above.