MYANMAR IN THE MIDDLE
China embrace too strong for Naypyidaw
By Bertil Lintner

This is the first article in a four-part series.
Tomorrow: India-Myanmar: a half-built gateway

JIEGAO, Yunnan province - This tiny enclave south of the Shweli river belongs to China but is completely surrounded on land by Myanmar. Its unique position has given rise to a boomtown like no other in western Yunnan province, a bustling exit point for Chinese goods destined for Myanmar and beyond.

Shops in Jiegao sell everything from electronic goods, household appliances, motorcycles, garments, medicines, fake DVDs and bizarre sex toys. One shop displays two huge, 12-wheel trucks in a glassed showroom facing one of the town's broad new boulevards. Jade and precious stones from Myanmar are on sale here as well.


Burmese jade sold in a Chinese market. All pictures by Bertil Lintner

The cross-border trade, however, weighs heavily in China's favor.

 
In 2009, the last year for which official statistics are available, Chinese exports to Myanmar amounted to US$2.3 billion while imports were a mere $646 million. Some projections put the current export figure closer to $4 billion. Jiegao's exports are not confined to Myanmar, with local markets in northeastern India and as far as Bangladesh flooded with cheap Chinese consumer goods.

Considering that only two decades ago Jiegao consisted of little more than a cluster of bamboo huts, this has been no mean achievement. A new, wide bridge connecting the enclave with the rest of Yunnan north of the river was first built in 1992. At the same time, before high-rise buildings and shopping complexes were built, a giant monument was erected near the bridge, showing three figures pushing what looks like a circular object between them with their determined faces pointing south.


The Chinese monument in Yunnan .

"Southeast Asia, here we come!" a local resident joked when this correspondent first visited Jiegao in late 1994.

Yet it hasn't been as easy to push that wheel south as the Chinese likely first expected. For more than two decades now, Chinese companies have plundered northern Myanmar of its natural resources, including timber, which has led to massive deforestation especially in the country's northern Kachin State. Rampant logging by Chinese companies in the area have led to floods, landslides and other natural disasters never before experienced in that part of the country.

According to a report by the international environmental watchdog Global Witness, this trade continues despite an official Chinese ban imposed in 2006 on the importation of timber from Myanmar. "Half of China's timber imports from all countries are probably illegal," the investigative report stated. Timber depots in western Yunnan and shops selling processed wood products are still widely available in China-Myanmar border areas. "They're buying everything, small trees, big trees, even the roots," laments a local Myanmar resident on the border referring to still active Chinese importers.


A truck carrying Chinese goods across the Myanmar-China border

Chinese ambitions for northern Myanmar have since grown. On June 16, 2009, Myanmar's Beijing ambassador Thein Lwin and the president of China Power Investment Corporation Lu Qizhou signed a Memorandum of Agreement for the joint "Development, Operation and Transfer of the hydropower Projects in Maykha, Malikha and Upstream of Irrawaddy-Myitsone River Basin". The biggest of these dams at Myitsone, or the confluence of the Maykha and Malikha rivers, which the local ethnic Kachins call N'Mai Hka and Mali Hka, was scheduled to cost $3.6 billion and flood more than 700 square kilometers of forestland. Around 90% of the electricity generated by the massive dam was to be exported to China.

The Burmanization of the names of the two main rivers in Kachin State was not the only insult to the local population. "Myitsone" is a new Burmese name which means "river junction", or the confluence of two rivers. Previously, a Kachin village known as Tanghpre was located there but its inhabitants were forcibly evicted before the Chinese construction crews moved in. It was renamed by the central Myanmar government and an entirely new settlement was built around a Buddhist pagoda in a predominantly Christian part of the country.

In April 2010, a series of bomb attacks were launched against the site. No culprits were caught but local sources say disgruntled local Kachin residents were behind the attacks. The Myitsone dam controversy later grew from a local to national issue, fuelling nationalistic sentiments even among the majority Burman population. This led to Myanmar President Thein Sein's stunning announcement on September 30 that the entire China-backed project would be suspended because it was against "the wishes of the people". Ten days prior, Myanmar police had arrested a lone protester who had demonstrated against the dam outside the Chinese Cultural Office in the old capital Yangon.

Diplomatic naivete
The Chinese were stunned by the official decision. If they had followed recent developments more carefully and had a better grasp of Myanmar history they wouldn't have been. Casual conversations with local residents in the border areas reveal a deep distrust of China - and anger at its designs for Myanmar. But Chinese officials have displayed an astounding naivete in their analyses of the situation.

A typical example of that shallow understanding is a paper titled "Sino-Myanmar Relation and its Prospect" (sic) by Wang Jun-fu, vice president of the Chinese military's International Liaison Department of the General Political Department, publicly known as the China Association for International Friendly Contacts. (The department prepares political and economic information for China's top leaders.)

Written and presented in May 1995, just as the Chinese had penetrated Myanmar to the extent that they believed the situation was irreversible, Wang writes about a fictitious "joint struggle" of the "two peoples" against "imperialism and colonialism". The writer lists numerous visits to Myanmar made by Chinese officials and states among much empty language that "two-thousand years" of history "proves that friendly cooperation is the melody of Sino-Myanmar ties".

What Wang conspicuously failed to mention was the vicious, anti-Chinese riots that rocked Yangon's Chinatown in 1967, which were followed by two decades of massive Chinese support for the insurgent Communist Party of Burma. He also failed to note that the Chinese government at that time branded Myanmar's then strongman military leader Ne Win as a fascist and Red Guards surrounded the Myanmar embassy in Beijing shouting anti-Myanmar (then known as Burma) slogans day and night over loudspeakers.

In more recent years, Myanmar has seen a huge influx of immigrant workers, black market traders and gamblers from China. According to Global Witness, 30% to 40% of the population of the northern Myanmar city of Mandalay is now Chinese. As early as 1988, a local author, Nyi Pu Lay, wrote a short critical story titled The Python which highlighted the influx of Chinese to Mandalay, the old royal capital of Myanmar. Nyi Pu Lay was subsequently arrested and released after spending several years in prison for his writings. Nyi Pu Lay is the youngest son of Mandalay's perhaps most famous literary couple, the late Ludu U Hla and Daw Ahma, lending local weight to his reputation and message.

Chinese economic penetration of Myanmar began in the early 1980s and was facilitated, but not caused, by Western isolation of the country after the military's brutal suppression of a nationwide pro-democracy uprising in 1988. But it should have been clear to observers that it was an uneasy relationship from the beginning. The recent turnaround, epitomized by the stoppage of the Myitsone dam, was not as assumed by many driven by the 2010 elections and the shift towards a nominally democratic government made up mainly of former military officers.

As one Myanmar observer put it, Myanmar's "new look" government was designed to give the regime a more friendly international face and provide a convenient opportunity to unveil policies that had been in store for several years - policies which ironically have been promoted by staunchly nationalistic, hard-line army officers. When asked if Myanmar army officers had simply changed their uniforms for civilian clothes, one local Yangon resident recently quipped: "No! They have put their suits on over their uniforms."

According to several sources, the first bilateral blow against China came in October 2004 when then prime minister and former intelligence chief Lt Gen Khin Nyunt was ousted, charged with corruption and given a stiff prison sentence which was later converted to house arrest. Khin Nyunt was considered "China's man" in Myanmar and a well-placed source with access to inside information says that the Chinese could not at first believe he had been ousted. Both sides managed to smooth things over and bilateral relations later appeared to return to normal after the internal purge.

The next big blow to bilateral ties came in August 2009 when the Myanmar Army moved into the Kokang area of northeastern Shan State. Populated mainly by local ethnic Chinese, Kokang had received a considerable influx of residents from across the border. Given the similarities between Kokang Chinese and Yunnanese Chinese, it was not difficult for the latter to obtain local Myanmar ID papers for a fee. While many began to do business in the area, others moved to cities such as Mandalay as legal Myanmar citizens.

The Myanmar Army offensive into Kokang drove more than 30,000 people across the border into China. Chinese authorities allowed only Kokang-based Chinese nationals to cross into China and many ethnic Kokang-Chinese refugees were stopped at the border.

On the Myanmar side, government soldiers beat up Chinese nationals, stole their property and an unknown number of people were killed in the melee. There were also reports of rape of Chinese women. Chinese authorities were outraged by the violence against their citizens but then did nothing, probably hoping that the situation would once again return to normal.

Anti-China promotions
The military operation in Kokang was masterminded by Lt Gen Min Aung Hlaing, then head of the Myanmar military's Bureau of Special Operations 2. The commander on the ground who ordered his soldiers to beat up the Chinese was the head of the 33rd Light Infantry Division, Brig-Gen Aung Kyaw Zaw. Both soldiers have since been promoted for their work.

Min Aung Hlaing has been elevated to joint chief of staff of the defense services - the army, navy and air force - replacing General Thura Shwe Mann, who is one of the top "civilians" in the new setup in Naypyidaw. Aung Kyaw Zaw, meanwhile, has been promoted to a major general and commander of the Northeastern Command of the Myanmar Army based in Lashio. In that new capacity, he is in charge of most of the border areas which are under the government's control, including the economically and strategically important trading post at Jiegao.

Myanmar's move towards a new China policy thus more clearly began in 2004, not after the 2010 election. An important internal document compiled by Lt Col Aung Kyaw Hla, a researcher at Myanmar's Defense Services Academy, seems to have set the stage for this policy shift. His 346-page confidential thesis, entitled "A Study of Myanmar-US Relations", outlines specifically many of the policies now being implemented, including strategies for improving relations with the US and how to mitigate Myanmar's dependence on China.

Sources with access to inside information about Myanmar's military leadership assert that there is no "power struggle" inside the new government between alleged "hardliners" and "moderates" over democracy and human rights, as suggested by many Western pundits. Many foreign news reports have presented Thein Sein as a reformist leader battling against entrenched forces linked to the previous ruling junta.

Rather, there is a consensus among the military top brass that Myanmar has become too dependent on China and that the country has deviated from its traditional, neutralist foreign policy - a cornerstone for survival for a country squeezed between Asia's two giants, China and India, and with Western-allied Thailand on its eastern flank.

To be sure, these new "democratic" policies seem to be working well. Myanmar has been able to leverage them to strengthen its position within the Association of Southeast Asian Nations (ASEAN), which recently agreed to allow it to chair the regional bloc in 2014. The country is also reaching out to new power players in the region in a bid to diversify its trade and investment reliance on China.

In particular, Myanmar has recently cemented important ties with Indonesia, seen by many as ASEAN's new anchor. In May, Indonesian President Susilo Bambang Yudhoyono held high-profile discussions with Thein Sein in Jakarta, while in June and July two Indonesian deputy ministers with economic portfolios, Mahendra Siregar and Edy Putra Irawady, visited Myanmar. They pledged to increase trade and investments in Myanmar's energy, food production and infrastructure sectors.

More significantly, Gen Min Aung Hlaing, who was appointed commander-in-chief of Myanmar's military in March, took his first foreign trip in mid-November to Vietnam - Beijing's traditional adversary - rather than China. Myanmar and Vietnam share similar fears of their powerful northern neighbor and so it is reasonable to assume that Min Aung Hlaing had much to discuss with his Vietnamese hosts.

Relations with the US are also improving. On December 1, Secretary of State Hillary Clinton will visit Myanmar, the first such visit by a high-ranking US official in decades. But, as cynics point out, while paying lip service to human rights and democracy, there is little doubt that the status of China-Myanmar relations will be high on Clinton's diplomatic agenda.

On a visit to Canberra in November, US President Barack Obama stated that "with my visit to the region, I am making it clear that the United States is stepping up its commitment to the entire Asia-Pacific region". The United States is a Pacific power, Obama said, and "we are here to stay". He added: "The notion that we fear China is mistaken. The notion that we are looking to exclude China is mistaken."

The last statement was as unconvincing as Thein Sein's claim that the Myitsone dam project was suspended because he was concerned about "the wishes of the people". Myanmar and the US, two long-time adversaries, may now be on the same side in the emerging regional power struggle with China.

Yet the monumental wheel at Jiegao - China's gateway to Southeast and South Asia - has certainly not stopped turning as Chinese trade and influence continue to grow in Myanmar and beyond. But more friction and perhaps even hostility could color future relations between China and Myanmar, an antagonism that could help the military regime shake its pariah status and isolation from the US.

Bertil Lintner is a former correspondent with the Far Eastern Economic Review and author of several books on Burma/Myanmar, including the forthcoming Great Game East: India, China and the Struggle for Asia’s Most Volatile Frontier. He is currently a writer with Asia-Pacific Media Services.

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