China bides its time in Myanmar

September 19, 2013 by Helene Franchineau

Every day along 86th Street in Mandalay, a bustling merchant city in central Myanmar, hundreds of merchants cut, polish and trade one of Myanmar’s most sought-after resources – jade. The entire neighbourhood is dedicated to the green gemstone, with dozens of shops selling jade bracelets, jewellery and various other objects. Most of the traders and shopkeepers are Myanmar-Chinese and have been in the country for generations.

Recently though, tensions between locals and newly arrived Chinese traders have simmered, as many Burmese resent what they feel is the looting of their country’s resources by their richer, bigger and more powerful neighbour. “Many Chinese people come to Mandalay only to buy jade; the government gives them Myanmar passports just because they have money,” said a Buddhist monk from Yangon during a recent visit to the city. (He refused to be identified.)

In another instance, in October 2012 hundreds of villagers near Monywa staged sit-ins against a controversial copper mine partly owned by a Chinese company, for which they said they had to give up their land without proper compensation.

Such remarks or events would have been unthinkable three years ago, before Myanmar began its slow process of opening up and coming back into the international arena. As emerges from the long years of isolation, Myanmar is also moving closer to the United States and other Asian countries, in the process forcing China to reassess the way it has dealt with Myanmar – a country it has always considered as in its own “backyard,”. Now it will have to engage not only with political parties, but also with civil society.

The key moment when China felt Myanmar was definitely slipping away from its sphere of influence was the announcement last September of the suspension of the prestigious Myitsone Dam hydroelectric project on the Irrawady River, according Josh Gordon, PhD candidate at Yale University whose research focuses on Chinese identity in the China-Myanmar borderlands.

However China is too important to Myanmar on all levels to be completely written off. “The situation is a bit uncomfortable for China but the Chinese are very resourceful,” said Professor Ian Holliday, a specialist of the politics of Myanmar who teaches at the University of Hong Kong. He notes that the Chinese are responding in a pragmatic way to the negative image they have in Myanmar and the many setbacks Chinese projects have encountered recently.

In May China Mobile and Vodafone dropped a joint bid to help expand the country’s backward mobile phone network. The Chinese embassy in Myanmar has a Facebook page (whereas Facebook is banned in China) where one can see pictures of the latest summits between officials of the two countries. One of the latest posts shows Myanmar officials receiving agricultural machinery donated by Yulin, a city in China’s Guangxi Zhuang autonomous region.

Chinese State-owned companies are now also trying their best to win the hearts of the Burmese population. They are engaging in corporate social responsibility campaigns, something far more associated with Western-style management. China National Petroleum Corporation, a key investor in the newly opened natural gas pipeline running from Myanmar’s west coast to China’s Yunnan province, recently outlined a US$20m plan to build schools and clinics.

However, the process will take years to yield effects. “I am not sure China has realized that there is no magic bullet,” said Professor Holliday. “It will require a sustained campaign showing that China will always be there for the Burmese.”

As for the doomed Myitsone dam – projected, on completion to be the 15th largest in the world and the first to span the Irrawaddy – China will wait for the right moment to lobby for a resumption of work. The suspension of the controversial dam, which would have flooded an area the size of Singapore, is only valid until 2015, when the current government will step down and general elections will take place.

China is taking a more careful approach regarding the 2015 elections. “They learnt a lesson in 2004 when Khin Nyunt was purged,” said Professor Holliday, referring to the former prime minister and head of military intelligence who was seen as a close Chinese ally before he was arrested and thrown into prison. “They are engaging with all parties,” he added, including Aung San Suu Kyi’s National League for Democracy (NLD). Last May, the Chinese Communist Party invited NLD policymakers on a 10-day trip to the capital.

Since China is seeing its relations with Myanmar as a zero sum game –any deterioration in their bilateral relationship is beneficial to the United States – China is worried that if the NLD wins the presidential elections, Myanmar will slip away even more and get even closer to Washington.

China’s effort to diversify its contacts and engage with all political groups in Myanmar is also an effort to help stabilize its smaller, unstable neighbour, whose unity is being jeopardized by various ethnic conflicts in its border states -between Rakhine Buddhists and Rohingya Muslims in Rakhine state and the long lasting Kachin conflict on the border with China’s Yunnan province.

“A stable Myanmar is a positive thing for China. Having the conflict in Kachin State spill over into China is not in their best interests,” said Niklas Swanström, Director of the Institute for Security and Development Policy in Sweden and author of a paper on Sino-Myanmar relations. For once, China, whose cardinal tenet in international politics is to not get involved in other countries’ internal affairs, appears actually to be doing just that. However, interests within China are not uniform: “Beijing has its interests, Yunnan province has its interests and locally, people along the border, who have deep connections with people on the other side, have their own set of interests too,” said Josh Gordon.

On the international stage, Myanmar will be able to use the fact that it is chairing the ASEAN organization in 2014 to solidify its re-emergence as a normal country, a process that started in 2010. “It will put Myanmar in the spotlight. It will be under pressure to move forward with the democratization,” said Gordon. Around Asia, many countries have shown an eagerness to get access to the Myanmar market and win contracts that would probably have, in the past, been awarded to China. Japan, for example, has been successful in gaining ground: the country cancelled US$2bn in debt last May and is jointly developing a special economic zone in Thilawa, a port south of Yangon.

The ball is in Myanmar’s court. So many countries are knocking at its door that Naypyidaw has clearly grown reluctant to put all its eggs in the China basket and will be looking at other alternatives in the coming months and years. However, with close to US$15bn cumulative investment, China is and will remain Myanmar’s largest trading partner. Myanmar’s opening up has forced China to realize that it can no longer take its relationship with Myanmar for granted and will have to adapt. Myanmar’s democratization may actually have a positive impact on China too. Time will tell.

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