China remains largest infrastructure partner, but new project signings have stalled

China still dominates infrastructure spending in Southeast Asia, but post-2021 commitments remain a fraction of historic levels. As the financing gap grows and concessional capital shrinks, the MDBs are positioned to play a larger role

Infrastructure financing in the region is heavily concentrated: the six largest financiers accounted for 90% of total infrastructure spending in 2024. China remains dominant, accounting for about 31% in 2024 and 39% since 2015. Japan is the next-largest infrastructure partner at 21%, followed by the ADB (17%) and the World Bank (10%).

Almost 90% of China’s 2024 ODF spending was on infrastructure. In Cambodia, infrastructure accounted for 64% of China’s 2024 ODF, including $247.5 million for the Phnom Penh airport. In the Philippines, it accounted for 100%, including $213 million for the Kaliwa Dam, while in Myanmar, 55% was focused on infrastructure, including for the Kyaukphyu Deep Sea Port.

Legacy projects ensure China will remain a large infrastructure financing partner for the region.¹ But commitments to new infrastructure projects appear to have stalled for the third consecutive year. This provides further evidence that China is taking on a more selective financing role as it shifts away from ambitious megaprojects towards smaller, easier-to-manage infrastructure projects.²

The reduction in ODF by both traditional and non-traditional development partners will place pressure on the region in meeting its huge infrastructure financing gap, estimated at around $3.1 trillion when adjusted for climate impacts.³ The use of blended finance structures — where public or philanthropic funds are used to attract private sector investment — holds some promise. But aid cuts have reduced the availability of the concessional capital needed to draw in private sector investors. Meanwhile, cascading shocks have increased not only fiscal stress but also perceived risks in the region, all of which are likely to limit the appetite of private investors.

MDBs could step up to fill this gap. Representing 32% of the region’s ODF infrastructure spending in 2024, they have steadily increased both spending and commitments since 2022. MDBs offer a rare stability that could provide much-needed certainty in increasingly uncertain times.