As West recoils, China surges south in Myanmar
Leader Aung San Suu Kyi is paving the way for Beijing to build a long-envisioned economic corridor in Myanmar which previous military regimes resisted
A massive monument depicting four Chinese figures wheeling a large circular object, determined faces pointed directly south, stands in the Chinese border town of Jiegao opposite Muse in Myanmar.
The Chinese language characters on the base of the monument read “Unite, Blaze Paths, Forge Ahead!” – or, in more mundane terms, “Southeast Asia, here we come!”
While the motto would seem to speak for the ambitions of China’s Belt and Road Initiative (BRI), a US$1 trillion dollar global infrastructure-spending program first articulated by President Xi Jinping in 2013, the statue at Jiegao was actually erected 20 years earlier in 1993.
The idea of opening a trade outlet for China’s landlocked southwestern provinces through Myanmar to the Indian Ocean was first articulated by Pan Qi, a former vice minister of communications, in an article for the official weekly Beijing Review in September 1985.
But logistics, civil war and, most importantly, military suspicion of China’s ambitions all conspired against the corridor’s realization – though border trade took off in the early 1990s, just as Western sanctions on the then military regime’s rights abuses started to pinch.
That is changing now under nominal national leader Aung San Suu Kyi, notably at a time her elected government faces rising fire from Europe and America for the Rohingya crisis, a military-driven expulsion of over 700,000 refugees the United Nations suggests had “genocidal intent.”
China has seized on Myanmar’s renewed international pariah status to push forward its corridor ambition. On September 10, the two sides signed a Memorandum of Understanding on the construction of a so-called “China-Myanmar Economic Corridor”, or CMEC,
The CMEC is envisioned as a 1,700 kilometer-long corridor of roads and railroads connecting the Chinese city of Kunming, the capital of China’s southern Yunnan province, with three Myanmar commercial centers, namely Mandalay, Yangon and the Kyaukpyu port and economic zone that lets out on the Indian Ocean.
It appears that China is doubling down on its push for the CMES as progress on the China-Thailand railroad that envisions connecting China with mainland Southeast Asia through Laos appears to be stalling. China has already constructed oil and gas pipelines that run the length of Myanmar into southwestern China.
Global Times, a Chinese state mouthpiece tabloid, said after the MOU was signed that the CMEC will provide China “an alternative way to transfer oil from the Indian Ocean”, reference to Beijing’s desire to bypass the Strait of Malacca chokepoint through which 80% of its energy imports pass, and “is a further sign of Myanmar’s willingness to integrate and benefit from the BRI.”
It is not likely the CMEC-enabling MoU was even on the Myanmar government’s agenda a couple of years ago, a time when Myanmar’s relations with the West were riding high amid optimism for the country’s move to democracy and ties with China at a countervailing low point.
While Suu Kyi’s National League for Democracy (NLD)-led government seems more willing to engage China’s BRI ambitions, it is still unclear how far Myanmar’s military and other political leaders are willing to play along with Beijing.
Recent history shows at times strong military resistance to China-led projects, particularly those perceived as a threat to national sovereignty.
In 2011, then president Thein Sein, a former military general, suspended a US$3.6 billion China-backed hydroelectric power project at Myitsone in the country’s northern Kachin state. That project was slated to export 90% of the power produced to China and threatened to significantly disrupt the flow of the nation’s main Irrawaddy River.
More tellingly, perhaps, Thein Sein also allowed a May 2011 MoU to build a high-speed railroad from the Chinese city of Ruili, near Jiegao, to Kyaukpyu on Myanmar’s western coast to expire in 2014.
In a sign of the changed times and shift in foreign relations under Suu Kyi, the daily Myanmar Times reported back in July this year that the railroad project that expired under Thein Sein is “quietly back on track” under Suu Kyi’s government.
In late June, Thaung Tun, a minister in Suu Kyi’s Cabinet, led a delegation to a BRI summit in Hong Kong and was quoted by the South China Morning Post as saying that the railroad “connecting Ruili in Yunnan…with Mandalay would start quite soon” and “in all likelihood it will be extended to Yangon and Kyaukpyu.”
He portrayed the railroad as a “win-win deal” that would not become a “debt trap”, as many big ticket BRI infrastructure projects in the region are now being portrayed, including in Sri Lanka, Pakistan and Laos.
That’s not how others see it, however. In May, Sean Turnell, an Australian economist who serves as an adviser to Suu Kyi’s government, said the US$7.5 billion price tag for the deep-sea port at Kyaukpyu and the US$2.3 billion for an accompanying special economic zone as “crazy.”
His and other criticism led to a downsizing of the project in August to a more manageable US$1.3 billion for the port. In October 2017, China’s CITIC Group and its subsidiaries had already agreed to drop its stake in the project from 85% to 70% amid Myanmar fears of becoming too dependent on its powerful northern neighbor.
Still, the BRI writing is on the wall in Myanmar. There will be a huge deep-sea port built at Kyaukpyu – and, most likely, a high-speed railroad connecting it will Ruili in Yunnan – both with Chinese majority stakes. The exact financial terms of the projects are either still being worked out or have not yet been publicly disclosed.
Suu Kyi’s civilian government clearly wants to show it has accelerated economic development since its election in late 2015 and before new polls are held in 2020.
Many in Myanmar had earlier hoped that the transition to semi-democracy would spark a foreign investment-led economic boom, but that hasn’t – and now likely won’t – happen with rising Western criticism of the Rohingya crisis.
The previous Thein Sein government, under which both the Myitsone dam and initial plan to build a China-Myanmar high-speed railroad were scrapped, was dominated by the pro-military Union Solidarity and Development Party (USDP), the NLD’s main electoral rival at the next 2020 polls.
The USDP’s “reform program”, under which political prisoners were released and a more open political climate replaced the old rigid dictatorship, also aimed to lessen the country’s economic dependence on China through improved relations with the West.
It is unclear what steps the highly autonomous military might take if it feels that the NLD government is ceding too much to China, but it certainly has several leverage points to thwart any move in that direction, including a strong military presence along various sections of the proposed corridor.
What is clear is that China is forging ahead again with its 25-year-old vision to push south, strategically at a time when Myanmar is once again estranged and isolated from the West.