The torching of Chinese-financed factories in an industrial township of Yangon, on 14 March, signaled the first outburst of violence, linked to the current anti-coup demonstrations, directly targeting Chinese economic interests in the country. In the immediate aftermath of the 1 February coup d'état, there had been a growing resentment among protesters against the non-committal official line of authorities in Beijing. Soon, this anger intensified due to the circulation of conspiracy theories, such as the one alleging that mysterious night flights that were taking place between Myanmar and China, possibly transporting “Chinese troops and cyber specialists to help the Tatmadaw control access to information and the internet”, or weapon supplies for the Tatmadaw.

Some key elements of China-Myanmar relations

Although Myanmar-China diplomatic relations date back to 1950, they moved into a higher gear in 1988, when the two countries signed a cross-border trade agreement, de facto ending the long isolation of Myanmar from the rest of the world. Ironically, the signing of that agreement took place just two days before the start of the 1988 pro-democracy uprising, which eventually left 3.000 protesters dead and thousands more jailed. At that time, China was actively looking for a strategic outlet to the Indian Ocean, especially for its landlocked provinces of Yunnan and Sichuan.

More than 30 years later, while maintaining the same strategic priority, China’s presence and weight on Myanmar’s economy and internal affairs has grown exponentially. In 2018 it was “the biggest foreign investor in Myanmar, with more than $15 billion of direct investment in 126 business projects”. A year later, China confirmed its position as Myanmar’s most important trading partner, accounting for almost double the value of the trade exchanged with the second trading partner, Thailand. China was Myanmar’s main supplier of weapons during the 1990s and early 2000s. More recently, the Tatmadaw has tried to change its dependency on China in terms of weapons supply, and while China still remains the most important supplier, accounting for about 50% of Myanmar arms imports, countries such as Russia, India, Israel and Ukraine have gained ground, with Russia in particular being very active in the supply of surface-to-air missiles and aircrafts.

Furthermore, being among the largest recipients of Belt and Road Initiative (BRI) funds, Myanmar has enjoyed China’s financial support for a series of infrastructural projects that are part of the China-Myanmar Economic Corridor (CMEC). The most significant are, among many, the construction of a deep-sea port and the establishment of a Special Economic Zone at Kyaukphyu, in Rakhine State; a railway line connecting that western town to Yunnan Province; and the twin oil and gas pipeline running parallel to the same railway. The CMEC initiative is meant to provide China with an alternative route for energy supplies currently passing through the Strait of Malacca, in order to reduce transportation times and costs, but also in case of increased volatility in the South China Sea. Several of these projects were already in the making before the establishment of the CMEC^[1], but they received an additional push after their incorporation to the project.

The 2017 Rohingya crisis, during which about 700.000 people belonging to this ethnic minority were forced to flee to neighboring Bangladesh, indirectly provided a new impetus to BRI-funded infrastructural projects in Myanmar. Since those events, in fact, Myanmar has inked more than three dozen deals with China. And in this case, it was then-State Counselor Aung San Suu Kyi, rather than the Tatmadaw leadership, who pushed the hardest for the strengthening of relations with China. Because the West had turned its back on Myanmar in condemnation of the state violence that had been unleashed in Rakhine State, she desperately needed foreign assistance to deliver on her electoral promise of economic progress.

Fissures in the relation

However, despite defining their bilateral relations as characterized by “special, familial ties”, they have also been fraught by the typical tensions that accompany relations between two neighboring countries of different size and weight. Myanmar, and especially the Tatmadaw, have always been weary of China’s bulky presence next door, and of its expansionist aims. For instance, in the 1950s China started supporting the Communist Party of Burma (CPB), which fought in the border areas against the central government in Yangon. Initially, this support was motivated by the objective of going after Kuomintang forces that had sought refuge in those areas. But these linkages remained also in the following decades, with China offering “military assistance, weapons and equipment” to the CPB throughout the 1960s and the 1970s. Chinese support continued even after the CPB split into four regional armies, along ethnic lines, in 1989. And even today there are allegations of Chinese support to one of those armies, the United Wa State Army (UWSA). Considered as the strongest and largest of the Ethnic Armed Organizations (EAOs), the UWSA has an estimated manpower of 30.000 thousand fighters.

China’s ambiguous relation with the EAOs has been further highlighted by its declared intention to facilitate the success of ongoing negotiations for an extended Nationwide Ceasefire Agreement (NCA), as well as the revival of the first Panglong Conference, which took place in 1947 between Aung San Suu Kyi’s father and ethnic leaders. The new initiative, launched by the State Counsellor herself in 2016, and known as the Union Peace Conference - 21st Century Panglong, saw the participation of eighteen EAOs during its first session. China has actively facilitated the participation of those EAOs falling under its sphere of influence. However, this “guided” participation has raised many questions around its real value, as representatives of these EAOs never appeared to be really committed to the negotiations and barely engaged in ceremonial participation.

In addition, along these same border areas there have been growing local tensions because of the cross-border relocation of “tens of thousands of illegal Chinese immigrants that have taken over local businesses in northern Myanmar”^[2] since the 1990s.

China’s conflicting interests along the border

Ethnic conflict along border areas has been an issue of concern for China. In 2017, for instance, fighting between the Tatmadaw and the Kachin Independence Army, one of the four EAOs of the Northern Alliance, caused the death of five people on the Chinese side of the border and the influx of thousands of refugees into Yunnan Province. Chinese authorities vehemently protested this spillover of the violence and called for an immediate halt to the fighting. It has not escaped Beijing that after the 2015 signing of the NCA, the border between Myanmar and Thailand has known a prolonged period of calm, in contrast with the slightly shorter 2,129 kilometers-long border with China.

At the same time, China has not refrained from contributing to the creation of tensions in these border areas, triggering speculations about its real intentions. One of the most controversial projects pursued by China has been the construction of the Myitsone mega dam in Kachin State. Opposed by the local population because of the huge relocation that it would involve, with an estimated 11.800 people having to move to newly built resettlement villages, and because of the threat to local livelihoods and biodiversity that it constituted, former President Thein Sein decided to suspend all the works in 2011. Since then, China has not ceased to exert pressure on central authorities in Myanmar to resume operations, dismissing additional arguments that the hydropower project would be mainly contributing to China’s electricity grid and it would clearly weaken Myanmar’s (and especially the Tatmadaw’s) “claim to independence and sovereignty over its natural resources”.

The same concerns about China’s real agenda in Myanmar have also emerged in relation to agricultural investments. As we have already seen in the case of general trade flows, China and Thailand are Myanmar’s two biggest foreign investors in agriculture. For proximity reasons, China concentrates much of its activity in the northern states of Kachin and Shan, both afflicted by long-running internal conflicts. Most of China’s agricultural investments in Myanmar are directed towards cash crops, including rubber. In their operations, Chinese companies do not seem to take into proper account the demands and interests of local communities, focusing rather on the development of relationships and the inking of deals with central, provincial, and even military authorities. In certain areas under the de facto control of EAOs, Chinese companies are said to have dealt directly with them. One alleged example is a joint venture with a division of the United Wa State Army, for the establishment of a rubber plantation. Such a top-down approach to agricultural investments, whether through state agencies or EAOs, has undoubtedly contributed to the rise of land disputes. The regulatory vacuum in which these investments are carried out, along with the existence in most of these areas of customary land tenure systems, which are not formally recognized by Myanmar, have further aggravated the situation, and made upland ethnic groups particularly vulnerable to land expropriation and conflict. Finally, most Chinese investments have shown a preference for large-scale agricultural projects, to the expense of smallholders, who have often fallen prey of these bigger operations.

Finally, to fully understand China’s multisided relation with Myanmar, and especially with its border areas, it is essential to highlight the hidden importance of transboundary illicit activities. The proximity of an insatiable, ever-growing consumption market, ready to tap into a largely unregulated market of natural resources, has represented a significant stimulus for all sorts of illicit trades. Goods transit both ways through a porous border. Natural resources, ranging from protected wildlife, illegal logging and jade, whose illicit trade from Myanmar “has been labelled the biggest natural resources heist in modern history”, are smuggled into China, while substandard goods, fake or unregistered medicines and dangerous goods travel the other way. Local Chinese entrepreneurs are not necessarily inclined to strictly follow Beijing’s formal directives for commercial transactions with their counterparts in Myanmar. They operate in a different environment, which is profoundly informal and determined primarily by relations of kin, ethnicity^[3], and often a common language. The reality on the ground, with the EAOs controlling vast swathes of border lands, further reinforces these close ties with local ethnic groups. On the surface, such peculiar local dynamics stand in contradiction with Beijing’s official policy of engagement with central authorities in Myanmar. However, it can be safely surmised that China may expect negotiations with an assertive Tatmadaw, whose raison d’être is to guarantee the country’s sovereignty, to be much more complex than with the fragmented and ethnically closer minorities of the border areas.

The final ingredient in this destabilizing mix of illegal transboundary interactions is represented by cross-border drug trafficking between Myanmar and China. Since the mid-1980s China has in fact become a major consumption market for illegal drugs, and the problem of drug addiction has ceased to be limited only to its border areas with Myanmar. In the late 1990s, the collapse of major drug trafficking networks along the Myanmar-Thailand border has further contributed to a strengthening of the China route. Moreover, this route enjoys the preference of most drug traffickers operating in the border areas, “because of geographical proximity, better road conditions”, and cultural and linguistic affinities. China’s harsh repression of heroin trafficking, combined with broader international efforts, significantly reduced the extent of opium cultivation in Myanmar by the early 2000s. However, it is also in this period that alternative illicit substances were brought to the market and started to rapidly replace heroin, such as amphetamine-type stimulants (ATS). By now, ATS produced in Myanmar have flooded South East Asia and beyond, with Yunnan Province becoming the central distribution hub for this illegal trade. As already discussed in the case of natural resources smuggling, central Chinese policies aimed at curtailing illegal trafficking have faced a different and contrary reality on the ground, made up of tightly knit criminal networks straddling across the border.

Is China ready to shift approach?

The observations above sketch a landscape of multi-layered and often conflicting intersections and interests that characterize the broad spectrum of China’s relations with Myanmar. Centrally formulated priorities and policies clash regularly with local interests and connections along border areas. At the same time, Beijing may appear to have allowed for such a blurred and at times confusing landscape on purpose. By sending out mixed signals, such as declaring its support to peace and stability in Myanmar while entertaining close relations with various actors operating in border areas and particularly with the EAOs, China guarantees a wide portfolio of policy and leverage options for itself vis-à-vis whoever holds the levers of power in Yangon.

With regards to the currently unfolding situation in Myanmar, China is left with two main policy options. To either continue with its formal adherence to the principle of non-interference in the country’s internal affairs, or to take a more proactive stand in an effort to foster political dialogue among the main actors, and eventually restore stability in the country.  However, such an effort should not be based on a cynical calculation of domestic power relations and how to lever them in order to maintain some kind of remote control over the various key actors. Without the need to go as far as to embrace Western-style democratic principles, China should take a realistic stand and accept the fact that its enormous geopolitical and economic weight obliges it to pursue more transparent policies when dealing with political instability along its borders. Its rise as a global superpower does no longer allow a hide-and-seek kind of behavior when dealing with strategic issues outside its frontiers. It rather requires that China finally faces up to its responsibilities and, also for its own long-term benefit, actively engages in the resolution of conflicts and political instability in other parts of the world, especially in its immediate neighborhood. Preferably, when doing so, it should try to apply the basic principles of peace facilitation and foster a genuine dialogue among a conflict’s parties, instead of living in the illusion that playing around with various power brokers as simple cards on a table will deliver that kind of political stability that is fundamental for its own quest for geo-strategic relevance and legitimacy.

In the recent past, China has actively approached countries with an established experience of peace facilitation and mediation, trying to learn from them the skills of the trade. Now, it is the time that it puts these instruments at the core of its toolbox when facing thorny issues in international relations. Such an approach would be essential for Myanmar, as well as for other countries in the immediate neighborhood of China that are facing deep internal fissures, such as Afghanistan and Pakistan. It would also fit magnificently with China’s strategic adoption of soft power as the main conduit to achieve global leadership.

NOTES:

[1] Ian Storey. “Burma and China: The Beginning of the End of Business as Usual?”; ChinaBrief, Volume XI, Issue 22, November 30, 2011.

[2] “China’s ambitions in Myanmar: India steps up countermoves”; IISS Strategic Comments, Volume 6, Issue 6, July 2000.

[3] There is an estimated one million ethnic Chinese in Myanmar.