China's footprint in Myanmar expands
By Brian McCartan
CHIANG MAI - Once under the radar in mostly remote areas, China's growing
investments in resource-rich Myanmar have become more openly apparent as
Beijing parlays its close diplomatic ties to the country's ruling military
junta into lucrative contracts and concessions. China's commercial advance
comes while the United States and Europe impose strict trade and investment
sanctions against the military regime.
Recent investigative reports, including from environmental groups EarthRights
International and Arakan Oil Watch, detail the involvement of some 69 Chinese
multinational corporations in at least 90 hydropower, mining and oil and gas
projects across the country. The growing commitments are a testament to China's
pragmatic approach to commercial diplomacy and underscore its
interest in maintaining Myanmar's political status quo.
China's Myanmar investments focus mainly on energy and natural resources, which
are required in ever-larger quantities to fuel its fast-expanding
industrialization and urbanization. Chinese projects range from hydropower dams
to the highly ambitious and controversial Shwe Gas pipeline that is projected
to cross the length of Myanmar to transport fuel to China's landlocked southern
Yunnan province.
That particular project is designed to open access for China to the Indian
Ocean for some fuel shipments and circumvent the congested Strait of Malacca,
through which over 70% of its current oil and gas imports travel. Beijing has
expressed strategic concerns that in a conflict the United States could block
the strait and starve the Chinese economy of fuel imports.
India and Thailand also aggressively jockey for access to the resources of
neighbor Myanmar, in contrast to US and Europe, which subject the country to
strict trade and investment sanctions in protest against its rulers' abysmal
rights record. Those curbs were recently augmented by so-called "smart
sanctions" aimed at hitting the private resources of senior junta members and
their top business associates.
The growing scale of China's commitments have the potential to provide huge
profits for the regime, funds which historically have been employed to buy
weaponry that is used to suppress the democratic and ethnic opposition. Some
economic analysts estimate the regime has in recent years earned US$3.5 billion
in natural gas sales alone.
China's investment in Myanmar's oil and gas reserves is on the rise.
EarthRights International identified 21 Chinese-funded onshore and offshore oil
and natural gas projects, including the Shwe Gas project in Arakan state and
newer blocks in Sagaing division. China is also reportedly interested in using
Kyaukpyu Island off Arakan state as a transshipment point for Middle Eastern
oil and gas imports, which will then be piped up through Myanmar to China's
Yunnan province.
A $1 billion contract has been signed between the Myanmar government and
China Petroleum and Chemical Corporation, or Sinopec, to build a first oil
pipeline. A parallel gas pipeline is expected to follow. A memorandum of
understanding has also been signed between China National Petroleum Corporation
(CNPC) and Myanmar Oil and Gas Enterprise (MOGE) for an assessment on the
construction of a crude oil terminal.
Chinese partners are also involved in the gigantic 7,100-megawatt Tasang Dam on
the Salween river in Shan state, while other dams on the N'Mai Hka, Mali Hka
and Irrawaddy rivers in Kachin state are being built to provide electricity to
Yunnan. According to EarthRights Internation, the Kachin state dams are
expected to have a combined capacity of 13,360 megawatts.
Sidestepping sanctions
Chinese companies have also long taken part in small-scale mining operations in
Myanmar, often in quest of gold and jade. According to EarthRights
International, China is now involved in at least six major mining operations in
the country, including China Nonferrous Metal Mining Company's recent $600
million investment in the Taguang Taung nickel deposit.
While the US recently imposed sanctions on the import of precious stones from
Myanmar, Chinese merchants have helped to fill the trade gap. A
government-sponsored gem fair in Yangon in October netted the regime an
estimated $175 million. Chinese traders, who were mostly interested in Myanmar
jade, represented the largest contingent at the event, with 2,200 out of the
2,648 attendees.
China's commercial embrace of Myanmar is underwritten by a long-standing policy
of non-interference between the two neighboring countries. First signed in 1954
and known formally as the Five Principles of Peaceful Coexistence, the policy
nominally separates business from politics. It has allowed China to invest
heavily in Myanmar's underdeveloped resources while resisting US, European and
United Nations calls to leverage its influence to push for political change.
Political change in Myanmar could erode Beijing's present privileged position
there. Certainly China has used its veto power in the UN Security Council to
block criticism and sanctions against Myanmar.
In the past year, Chinese statements on Myanmar have taken a slightly critical
edge, indicating to some either that Chinese patience with Myanmar's generals
is waning, or a concern that stability be maintained to protect Beijing's
economic and strategic interests. After the junta's violent crackdown on
demonstrators last year resulted in widespread international condemnation,
Chinese diplomat Tang Jiaxuan was reported to have told Myanmar Foreign
Minister Nyan Win in September 2007, "China wholeheartedly hopes that Myanmar
will push forward a democracy process that is appropriate for the country."
That veiled criticism went further the following month, when China joined with
Russia and India in a call for the Myanmar's ruling generals to meet with the
opposition.
A UN Security Council resolution in October last year condemning the Myanmar
government for its use of violence against protestors and demanding the release
of political prisoners was supported by the Chinese government. Yet China is
clearly most concerned about a possible international intervention or sudden
regime change in Myanmar that nullifies its commercial concessions and
privileges.
Earlier this year, Beijing expressed strong opposition to the idea that US,
France and Great Britain should use military means to force Myanmar's generals
to accept foreign aid after the Cyclone Nargis disaster displaced as many as
two million people in the country. At the height of the standoff, the US and
France had warships near the coastal region worst hit by the storm, while
Western diplomats pushed to invoke a UN "right to protect" provision to help
the stranded victims.
China has instead advocated Myanmar change from within, in line with the ruling
junta's stated plans to move towards a managed form of electoral democracy by
2010. At the same time, the democratic opposition has made few attempts to
convince China that should they take power, Chinese strategic interests and
investments would be preserved and guaranteed.
At least outwardly, there appears at present to be no contact between the
opposition and the Chinese government. China's ability to provide low-cost
machinery, technical know-how and long-term, low-interest loans would
presumably make it an attractive strategic partner regardless of who holds
power in Myanmar.
But from Beijing's point of view, its growing and more visible commercial
interests are for now better served by the devil it knows.
Brian McCartan is a Chiang Mai-based freelance journalist.
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