To be honest, even in good tank conditions these things do happen. It's possible he somehow acquired this infection by chance or a minor injury and it's not something he can beat on his own. But to help solve the problem he should be in a quarantine tank (about ten gallons, heated, filtered) to help prevent the spread of this ailment to other fish and monitor his water parameters more closely. Also do run as thorough a diagnostic on the main tank as you can.
With the red seeping through like that, it could be aeromonas or some other unusual bacteria that might be very difficult to treat. If that was my fish and I was determined to save it, I'd hit him with clout. But don't raise the temps, that will only speed up the infection and it can (will) reduce the oxygenation of the water. Chinese Algae Eaters are really more of a subtropical species if I recall, and do best around 75ºF in somewhat hard water. Feed very lightly if at all, and soak his food in the clout or whatever medication you decide to try if you really want to save him. But that looks really painful. I'd clove oil him ASAP and possibly replace him if appropriate.