China paves way to Myanmar
riches By David Fullbrook
RUILI, China, and BANGKOK, Thailand - If
you've ever had a seafood dinner in Kunming or a
number of other inland southern Chinese cities,
the catch may have taken a tortuous trip across
the mountains from the Myanmar coast along a route
that Chinese investment aims to make a thriving
trade artery if Beijing's touch-and-go relations
with Yangon stay on track.
Often caught at
night in nets made in China, fish are brought
ashore at harbors along Myanmar's Andaman Sea
coast. There
they
are packed into boxes filled with ice and wrapped
in thick blankets to ward off the tropical heat
and stacked on to heavy-duty three-axle Korean or
Chinese trucks, driving up to the central Myanmar
city of Mandalay, then the remote Shan state, and
finally across the China-Myanmar border.
At the goods yards of the Chinese border
town of Ruili, sweating workers quickly unload the
boxes to smaller trucks taking the fish to markets
and restaurants around Yunnan province and beyond.
Myanmar-owned trucks returning to the Andaman
coast often carry equipment such as nets sourced
by Myanmar-national fishing-company agents in the
southern Chinese city of Xiamen. Merchants running
the trade expect at least 20% of fish to spoil
before reaching Kunming, capital of Yunnan
province, which borders Myanmar. If trucks are
held up at any of the numerous checkpoints along
the Mandalay-Ruili road, even more are lost.
Fisheries are a typical example of an
investment-starved industry in Myanmar presenting
significant opportunities for Chinese investors.
For an idea of what Myanmar's fishing industry
could look like were money and know-how available,
look no further than Thailand, one of the world's
largest seafood exporters. Apart from the
occasional anti-dumping complaint and concerns
over unhealthy additives, Thai seafood faces few
hurdles reaching its markets, whereas Western
trade sanctions often block Myanmar-produced goods
from competing in European and North American
markets.
Unlike Western countries, China
is not ruffled by the ruling Myanmar junta's utter
disdain for democracy and human rights. There are
no embargoes preventing exports such as seafood,
minerals and staple crops from entering China from
Myanmar. Unshackled by sanctions, Chinese
investors and traders are increasingly making a
beeline for Myanmar's underdeveloped industries
and unexploited markets.
Despite the sorry
state of transport between China and Myanmar,
trade is rising fast. In 1989, Myanmar-China trade
was worth US$313.7 million, with a Chinese surplus
of $61.6 million. In 2004 it nearly reached $1.2
billion, with China enjoying a surplus of $731.5
million, according to Chinese government
statistics. Offsetting the Chinese surplus are
Myanmar's illicit exports of narcotics, timber,
gems and gambling.
Paving the trade
way Trade would be easier were transport
fast and reliable, something the Chinese are
planning to fix with roads, railways and pipelines
linking Myanmar's deepwater ports of Sittwe or
Kyaukphyu via Shan state to Ruili. Myanmar's
military has eliminated the threat once posed by
insurgents to transport along the route through
Shan state, buying off some groups with truce
deals and battling others back toward the Thai
border. Beijing and Yangon are still, however,
arguing over who pays for what infrastructure
inside Myanmar and transit fees for Chinese trade.
Chinese Vice Premier Wu Yi, who oversees
economic affairs, visited Myanmar in March 2004
offering more aid and loans, and discussed laying
a railway from the Myanmar town of Lashio in Shan
state to connect with the railway being built from
Kunming to Ruili. "We are also interested in
building infrastructure and industrial parks in
Myanmar," Gao Yan, vice chair of the China Council
for the Promotion of International Trade, told the
state-controlled Myanmar Times newspaper while
accompanying Vice Premier Wu.
Early this
year, the partly state-owned Shanghai Jinqiao
Export Processing Zone Development Co proposed a
special economic zone next to Yangon's Thilawa
port, according to media reports. In July 2004,
General Khin Nyunt, then prime minister and now in
jail on economic-crime charges, visited the
company's Shanghai project. Chinese funds routed
via Hong Kong helped finance the deepwater port at
Tilowa, says Australian National University's
Helen James, who authored a study about Myanmar's
security strategy. China is also helping out with
a large port at Rakhain, according to a May report
in Bangladesh's The Independent.
Meanwhile, Chinese engineers are preparing
to begin a $2 billion gas pipeline from Sittwe,
which supports oil and gas platforms in the
Andaman Sea, to Kunming this year for completion
in 2009, according to an April China Daily report.
Industry analysts speculate that those
Myanmar-situated pipelines will be designed to
transport oil and gas arriving by tanker from the
Middle East and Africa to inland China,
potentially saving Beijing time and money now
spent sailing through the choked, pirate-infested
and vulnerable Malacca Strait to China's
east-coast ports.
Geologists and drillers
from China's big three oil-and-gas firms are busy
tapping into 11 Myanmar exploration blocks.
Myanmar's reserves are believed to be some of
Asia's largest; the US Central Intelligence Agency
estimates gas reserves second only to Indonesia's.
China National Petrochemical Corp and China
National Offshore Oil Corp both have onshore
production-sharing deals with Myanma Oil and Gas
Enterprise. PetroChina reached an understanding
with the Myanmar government in December 2005 to
pipe gas from block A1 to Kunming for 30 years.
Despite sitting on all this untapped
energy, power cuts and brownouts are common in
Myanmar, underscoring the years of military-led
poor governance. Until now, that has badly hobbled
the country's ability to industrialize and kick
the economy into a higher gear. But the lights may
soon stay on more regularly, as Chinese loans and
engineers aim to bring more hydropower dams into
service across Myanmar.
In 2003, China
lent $200 million for the 700-megawatt Yeywa
hydropower plant near Mandalay, and agreed to the
$150 million Shweli scheme. Beijing usually
demands that borrowers use the money to buy
services and equipment from Chinese firms, and
Yunnan Machinery and Equipment Import and Export
Co is the supplier for the Paunglaung hydropower
plant. An undisclosed Chinese firm has signed up
for the Electricity Generating Authority of
Thailand's 1,000MW Hutgyi hydro-dam in Myanmar,
one of five planned for the Salween River, where
construction is scheduled to begin in November
2007.
With so many big-ticket projects
being drawn up, Chinese traders have spread
throughout upper Myanmar, opening stores and even
small factories and farms around Mandalay, a
popular place for enterprising Chinese. That marks
the continuation of a strong migratory trend. Mya
Maung, a finance professor at Boston College,
suggested in a paper as long ago as 1994 that
about a quarter of Mandalay's estimated million or
so residents could be accounted for by recent
Chinese migrants who bought bogus national
registration cards on the black market.
Still, hard figures are difficult to come
by today. Chinese direct investment in Myanmar was
less than $1 million annually between 1999 and
2003, apart from the $4.84 million committed in
2002, according to data from the Association of
Southeast Asian Nations Secretariat. Yet Chinese
official figures record 800 projects worth a total
of $2.1 billion as of late 2002. Meanwhile,
Myanmar's government officially counted 22 Chinese
projects valued at $130.92 million by February
2005.
Myanmar's official statistics in
particular should be taken with a pinch of salt.
Civil servants spend much of their official time,
when they might be collecting data, doing other
jobs to make ends meet because official salaries
are paltry. Their job is made even harder by basic
equipment shortages. Moreover the junta is
obsessed with secrecy, especially regarding
investment, money and business deals made by the
military. Investment figures from China's
better-paid and -funded statisticians are probably
closer to reality. Whatever the number, it is
clearly rising, and fast.
(Copyright 2006
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