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The Myanmar-China dilemma

Myanmar is sandwiched between two very large neighbours – China and India. Relations with China are not currently cordial, especially among the Myanmar people, who retain memories of numerous undue political and economic interactions and incidents.

By Phyo Wai

Yangon, Myanmar, March 16, 2017

Eleven Myanmar

Myanmar is sandwiched between two very large neighbours – China and India. Relations with China are not currently cordial, especially among the Myanmar people, who retain memories of numerous undue political and economic interactions and incidents.

Historically, China is seen as an intruder rather than an equal partner, and even investments from China have unfair terms. In addition, regular border conflicts add to the already growing suspicion and negative image of China. India, on the other hand, plays a much smaller role. Its biggest investment in Myanmar is through the Kalaton project which is worth just US$ 8.5 million. The previous government tried a two-prong strategy – one prong to develop ties with pro-west India and another to facilitate China’s goal of having access to the Indian Ocean.

China is implementing the One Belt, One Road  initiative. Three interesting observations can be made about the current geopolitical situation here:

First, China’s One Belt, One Road appears to exclude Myanmar. Secondly, United Wa State Army (UWSA) is taking a lead over other seven Ethnic Armed Organisations (EAOs), and is trying to replace the Myanmar government-sponsored Nationwide Ceasefire Agreement with another ceasefire agreement. Thirdly, the UWSA’s Pangsang Summit declared that the One Belt, One Road  strategy of China might have positive direct impacts on Myanmar’s ethnic regions.

The Pangsang Summit was held on February 22, organised by UWSA and Mongla Army/ National Democratic Alliance Army (NDAA). NCA non-signatory groups – Arakan Army, Kachin Independence Army, Myanmar National Democratic Alliance Army, Ta’ang National Liberation Army, Shan State Army and two special guests – also attended the summit.

Some attendees to Pangsang Summit are also members of United Nationalities Federal Council (UNFC). The UNFC is currently negotiating with the government in order to sign the NCA. Meanwhile, the Wa group and its partners have demanded a new ceasefire agreement instead of the NCA.

The Pangsang statement says that China’s  One Belt, One Road  can assist with the economic development of Myanmar. The  One Belt, One Road  is identical to the needs of the Ethnic Armed Organisations . The Wa group has accused the NCA as being the government’s attempt to replace the Panglong Agreement. The Ethnic Armed Organisations demand a fair and just ceasefire agreement instead of the NCA. The Wa group also demanded the United Nations and China to become involved as moderators in the peace process of Myanmar with minority groups.

The State Counselor, Aung San Suu Kyi, has showed her appreciation of the Belt and Road Initiative and BCIM implementation in her latest visit to China. However, the Wa group’s declaration on the One Belt and One Road has raised several questions.

Political analyst Kyaw Lin Oo said: “China government does not consider Myanmar to be involved in the One Belt and One Road policy. Meanwhile, the Wa group has released a statement favouring the initiative. That is a consolidation – however, as far as I know, Myanmar and China have not agreed anything yet.” Bertil Litner, a political analyst who is a specialist on Myanmar- China relations noted: “China uses carrots and sticks in Myanmar.”

Political writer Thiha Thwe said: “The Pangsang statement is as oxygen to the fire as the internal peace process is stalled. Two big issues on agenda are at stake and that’s why the Pangsang welcome the One Belt and One Road. First, Pangsang wants to show its goodwill to China that China needs not worry about the instability of Myanmar borders, and about China’s interests. Second, it is important to have good relationships with the EAOs in order to make the One Belt and One Road a success. Both governments of China and Myanmar understand that. It is a message to ensure the One Belt and One Road is a success.”

However, China does not entirely neglect Myanmar in the One Belt and One Road policy plan. In fact, China is continuing the projects with Myanmar. Myanmar is also constructing infrastructure which is needed for China’s One Belt and One Road.

“It isn’t clear yet what the One Belt and One Road is exactly. China’s main export markets are America and Europe, and currently US’s trade policy on China under the new government is being changed. China needs to consider maintaining its economy, deal with air pollution and handle some internal issues in self-administrative regions, according to an expert who was involved in drafting the NLD’s declaration on election.”

Ultimately however, Myanmar is of great strategic importance for China as it is very involved in its “One Belt and One Road policy to be successful. Therefore, China has to develop Myanmar as a good neighbor rather than using it as a stepping stone.

China’s Projects

China introduced the Silk Road strategy in an effort to connect with the middle Asia and Arab regions as it was 2000 years ago. The One Belt and One Road was launched in 2013 and consists of two projects – the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

The Silk Road Economic Belt involves linking China and Europe, West Asia, Persian Gulf and Mediterranean, and South Asia to the Indian Ocean.  The 21st Century Maritime Silk Road concerns the maritime channels. The  One Belt and One Road contains approximately 60 countries, with Myanmar in a strategic position.

Kyaw Lin Oo said: “The One Belt and One Road is key for China’s influence in Asia. It is a good policy. Next to it, together with the fact that Chinese economy is growing, it tries to lead the world by the One Belt and One Road. It is true that Myanmar is involved as a part of that strategy. However, China’s railway systems in Myanmar are still subject to ongoing negotiations.”

China’s dreams for Myanmar

China appears to see Myanmar as a “puppet country: in its strategic thinking rather than an equal state or partner. That is the fundamental reason for Myanmar’s dislike of China. China’s projects in Myanmar are seen as negative since almost all those projects are manipulated together with the authorities and exploit the locals. Whenever a Chinese project is introduced in the ethnic region, conflicts often arose.

However, China has already implemented the Kyaukphyu-Kumming Railway project which is the vein for the One Belt and One Road.

CITIC Construction Company won the tender for Kyaukphyu-Kumming Railway project. With a deep sea port, Kyuakphyu-Kumming petroleum and Shwe natural gas pipeline have already been planted in Myanmar and are generating profits.

The former president Thein Sein requested the former Union Assembly Speaker Thura Shwe Mann to declare Kyaukphyu as Special Economic Zone. Parliamentarians agreed Kyaukphyu as a SEZ, but demanded transparency. The former Parliament approved the motion on 29th December 2015 to operate Kyaukphyu SEZ in the upcoming government term.  A total of 4289.37 acres of land is involved in the plan of Kyaukphyu SEZ operations.

In addition, a deep sea port project of Kyaukphyu SEZ is going to be operated by CITIC Consortium 1 and industrial zone is going to be operated by CITIC Consortium 2. The total investment will be US$9 billion.

However, Kyuakphyu-Kumming Railway project has been halted without progress. In fact, the Memorandum of Understanding for the railway project has expired. What is more, local people object to the project since it damages the ancient heritage of the country and undermines Myanmar sovereignty.

However, China is continuing the project in its own border areas. With the dream to have an exit channel via the India Ocean, China has a great chance to operate the Kyaukphyu-Kumming railway since China invests in Kyaukphyu SEZ. Residents demand transparency of every step of the SEZ operations, responsibility and accountability for the operations, and raising living standards for the locals. Residents also demanded the government to release side effects of the project. However, Kyaukphyu based Sky Youth civic organization said the project still lacks much transparency.

On the other hand, land disputes with Shwe natural gas pipeline have not been solved yet. Residents are unhappy with both of Kyaukphyu SEZ and Kyaukphyu-Kumming Railway project.

The railway project was signed MoU in April 2011 by the former minister of railway transportation Aung Min, former Vice-President Thiha Thura Tin Aung Myint Oo and China Railway Engineering Corporation (CREC). A total of US$ 20 billion is to be invested in the project. In the MoU, China has to complete the project within three years. The railway is 868 kilometers (539 miles) long parallel to the Shwe natural gas pipeline. The railway project is the core for strategies of military, political and economic importance to China.

This is the reason that China makes such considerable efforts for the Kyaukphyu SEZ project and has tried to control it via the China government-owned CITIC Company.

According to the 7 Day newspaper, Chinese Ambassador Hong Liang said China is ready to continue the project. He doesn’t understand why the project was stopped. He said: “I’ve been to where the projects of railway and highways are going to be constructed. I didn’t see any opposition.”

On the contrary, Myanmar people do not want those projects. It reduces the sovereignty power for Myanmar. What is more, it’s ruining the ancient heritages of Rakhine State. Last but not least, Chinese companies have a habit of colluding together with the Myanmar authorities, neglecting to give compensations for land confiscation, and the lack of accountability for environmental conservation. That is why Myanmar people do not want China to undertake such projects.

China requires Myanmar to flourish

If the railway plans for Kyaukphyu – Kumming stops for good, the future of China looks much bleaker as it will be that network of trains that will bring Western and Middle Eastern goods to and from China.It goes without saying that China will not lose its grasp on it – if the railroads never come to fruition, China’s trade will take a big hit in the future.

The other factor is the benefits it will bring to Myanmar; the linking of a more direct trade route between places like Kyaukphyu, Magway, Meiktila, Mandalay, PyinOoLwin, Lashio, Muse and so on which means a great deal of benefit for Myanmar.

There is another project that are in the hands of the Chinese, Myanmar’s main trading partner, and that is the industrial port at Kyaukphyu SEZ (also operated by China) that will allow access for ships from Indian and Pacific Oceans  which means that more trade via sea will pour in from Europe, Africa and West-Asian countries.

These projects, while brimming with potential for both Myanmar and China, hold several high risk factors for Myanmar and mistakes would mean that China would reap all the benefit from those projects.

It might even escalate to a point where Myanmar’s sovereignty is threatened. One must remember that China had tried to gain permission for employees of Myanmar Wanbao Mining Copper Limited in Letpadaungto bear arms through a draft of their ESIA.

It is a likely possibility that if the 50-year long Kyaukphyu-Kuming project gets finished, history will repeat itself. Political Scientist Dr Min Nyo said previously that China must abide by five principles of peaceful coexistence agreed upon at the Bandung Conference.

The Bandung Conference, which was a meeting of Asian and African States, received its name as it was hosted in the city of Bandung in Indonesia. It was attended by our then Prime Minister U Nu, India’s Prime Minister Nehru and China’s Prime Minister Zhou Enlai. The five principles are 1) Mutual respect for each other’s territorial integrity and sovereignty, 2) Mutual non-aggression, 3) mutual non-interference in each other’s affairs, 4) equality and cooperation for mutual benefit and 5) peaceful co-existence.

The aforementioned five principles of peaceful coexistence was first brought to the table by Myanmar and while that is something to take pride in, it seems pointless considering how Myanmar’s citizens have lost all faith in the unethical and immoral behavior of the Chinese companies here. China, as the economic super power, main trader partner and the primary investor that also shares a large swath of border lands with Myanmar must take better responsibility regarding the five principles of co-existence despite China’s continuing actions such as confiscating legal Myanmar exports as illegal goods or stealing timber from Myanmar’s forests.

Foreign Minister and State Counselor Aung San Suu Kyi had stated before that Myanmar’s relationship with China will continue in line with the Bandung principles and if that were to actually happen, it would mean putting both nations on a fast track towards more peace, growth and stability.

Chinese Ambassador for Myanmar Hong Liang stated at the 66th Myanmar-China PaukPhaw Friendship ceremony, that China exists in a mutually beneficial relationship with Myanmar and that they will be steadfast brother-nation seeking to help develop Myanmar on top of being the biggest trade partner and investor already.

For such words to be true, both ends of the relationship must exist in balance. China must be willing to exercise greater caution and adherence to the Bandung principles.

Dr Min Nyo had stated before that “China’s grand strategy involves going through us all the way until Kyaukphyu. We don’t need to think about how it will benefit China. We need to know how it will benefit us. If it is beneficial, then its good but the go-ahead cannot be decided only by one or two people like it was in the past. There is the parliament. Experts and other citizens also must be involved. The no.1 issue we need to ascertain is how much of a benefit it will be for us. When it came to deals with China, it used to involve a lot of under table money and nothing was transparent. We share so many miles of our borders with China but we cannot allow the big China to do whatever they want unfairly. Government must consider the benefits it will bring to both nations. But we can never accept anything that will threaten our sovereignty. The five Bandung principles says each other’s sovereignty were to be left untouched. It is also signed by a Chinese leader. We must be ready to both deny China with good reasons and/or to tell our citizens exactly why we will agree to it.”

Within China’s One Belt, One Road plan, there are also railroads that will be built in access to major cities such as Yangon, Mandalay, Lashio, Mawlamyine and more. The rail roads, if completed, will be able to accommodate express trains going as fast as 200 miles per hour. The rail roads will also lead into Thailand.

A long term benefit to Myanmar?

It has been 66 years of friendly relations between Myanmar and China. Years and years of being taken advantageof has deepened Myanmar citizens’ negative attitude of the Chinese and their investments here.

On top of the distrust, interference in Myanmar’s military affairs concerning border states, human trafficking of Myanmar “wives for sale”, discrimination of Myanmar nationals in Chinese companies, bribing of immigration officials for national identification cards and other assorted injustices are compounding day by day.

China had invested around US$ 10 billion under Myanmar’s military dictatorship up until 2009. After that, it had invested around US$ 12.5 billion dollars more until 2012.

A multitude of problems regarding the presence of Chinese companies and their operations here is a testament to the fact that those investments were in no way transparent or responsible.  Ultimately, it will be years, perhaps decades, before Chinese companies can be seen in a good light by the locals.

Myanmar’s government also has responsibility in this as well. It must strive to reduce unnecessary hate and prejudice that might exist towards the Chinese while in the meantime maintain the balance of catering to our biggest neighboring country while looking out for our own.

It must succeed in making the point that Myanmar is not a bridge to be trampled on by China on its road to success but rather a partner willing to team up for mutual benefits of both parties. For that, they must start by cracking down on those that are corrupt, those that do away with laws as they see fit.

“Myanmar is geographically placed in a very strategic position; on one side we have India and on another is the rest of South East Asia. I believe that the country’s economy will flourish if Myanmar can take full advantage of that fact. But the wearisome fact to keep careful note of is the anti-China sentiment that we have to go against anything that is Chinese whether it is infrastructure or investments,” said Kyaw Lin Oo.

Business between America, China and Myanmar

Myanmar currently holds a policy of non-bias towards either country, along the wise words of Henry John Temple that “We have no eternal allies, and we have not perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.”

The situation between China and Myanmar is that Myanmar still relies on China heavily for economic, political and military purposes while China, particularly with the One Belt, One Road plan, sees Myanmar as a bridge that will gap China to the Indian and Pacific Oceans.

Myanmar had already lost the economic war long ago to China. One doesn’t need to look far for the evidence; while China’s poultry livestock was struck by a bad case of avian flu which caused many to die, poultry and other consumable products kept pouring unchecked into Myanmar.

Myanmar’s SMEs have also been stomped into the ground time and time again by cheap, low quality (and usually illegal) heavily mass produced Chinese products.

Amongst the CMLV (Cambodia, Myanmar, Laos, Vietnam), Vietnam had graduated. Myanmar is the one now being given the emerging country treatment yet due to lack of important foundations such as intellectual property laws, rampant corruption and cronyism, overpriced property prices as well as on-going civil wars had turned away many would be investors.

The only thing that Myanmar had going was its cheap labor force but for many, that sole saving grace was simply not worth the trouble to plant their roots here. Ultimately, China is a partner Myanmar and simply must participate for the sake of national interest in China’s OBOR plans for both geo-economical and geo-political reasons.

“The five Bandung principles of co-existence come to mind. It is important to think in terms of our national interest and how it will keep benefiting us year after year. National security is also important. Just like Aung San SuuKyi said, we’re neighboring countries. It’s not like we can just up and move away. Since nature put us here, we have to think in terms of mutual respect when we talk about national interest. If both mutual respect and understanding is there, any two countries can be friends. We have to worry about fencing up our own territories and for that to happen, the economy must be robust. A good economy will lead to security,” said Dr Aung KoKo.

Myanmar, despite the majority of the population being in the agricultural industry, will not find success through it due to issues of land grabs by corrupt authorities and their cronies. There are no signs that Myanmar will become a technological powerhouse. Myanmar will also not become a world renowned manufacturer as we are situated right beside China, a country that sends consumer products daily everywhere around the world at cheap rates. Myanmar will not find its place in the limelight through its natural resources as after around fifty years of rampant abuse, what likely remains is a husk.

The only hope is to play our geo-economical cards right and become the strategic partner that will benefit greatly from China’s trade routes. If that were to happen, Aung San SuuKyi’s and many other’s dream of surpassing Singapore’s economy in 20 years might actually come to pass.

On a side note, Myanmar’s current fledgling democratic political landscape, weak economy and heavy dependence on extraction of natural resources are several of the reasons why civil wars had continued for long as it is.

After the National Ceasefire Act had been signed, next comes the sharing of resources. From the way the current government is drafting its new laws regarding minerals and such, it still looks as if the central government will keep tight control over major sources while only giving smaller ones to states and regions.

It will not be a policy that works in the long run. Although there are starting to be policies aimed specifically at directing foreign investment towards least developed regions in Myanmar, the bad infrastructure or the lack thereof is a huge caveat for investors.

The importance of basic infrastructure such as roads must be highlighted because it is a crucial key in Myanmar’s quest to become a flourishing trade nation. There are roads that interconnect to the rest of the world but they are cut off when it reaches Myanmar.

Myanmar would require around US$60 billion to reconnect all those routes and build all required amenities.

“In One Belt and One Road, Myanmar’s basic infrastructure is key since Myanmar holds the potential to build five mega routes called Asia Highways. And while it might be possible in other ASEAN countries, it tends to just stop and disappear when it reaches Myanmar. Our existing infrastructure is also very weak which means a great deal of difficulty in transportation. China’s investments into our infrastructures are to be depended on if we really want to facilitate trade here,” said a political expert involved in the peace process.

Such amounts of investment in basic infrastructure will likely never come from the Americans; at most Myanmar would get special trade GSP and other economic help, especially with the new leadership.

“There are very little we can benefit from the Americans at this time. Their strategy and current leadership are both focusing inward. Western nations are at a phase where they are reassessing things so we will most likely not get the help we need from them. Nevertheless, we must be on friendly terms with every team while striving to be better ourselves,” Chit TunPe, Tun Group Asia’s consultant that has years of experience in both Myanmar and International politics.

So, Myanmar’s much needed answers to the problems of road infrastructure and electricity must be found within China. But loans from China are too expensive to be viable. China must also cease taking advantage of Myanmar.

Whatever the case, Myanmar needs new comprehensive policies for the sake of national security and interest in handling China more so than what was agreed on in Bandung so many years ago.

China must also start to treat Myanmar as the strategic ally that will bring great mutual benefits to each other: “no other country’s armed forces may enter without the express permission of the host. There is no reason to invade us. The new age battlefields belong to economic and trade wars. Traditional wars are in limited supply while the rest of the world’s leaders keep things mostly in balance. It is important we strengthen ourselves in terms of boosting our economy, training our workforce, become technologically adept and to preserve our culture. The last but not the least, is that we need security forces strong enough to counteract threats to our country. If we can get to realize the abovementioned five points, we do not need to worry about any other countries or enemies. This is why countries like Sweden and Israel are still going strong to this day. They have all five qualities,” said DrAungKoKo.

Right now, Aung San Suu Kyi had spelt out her vision of catching up to Singapore’s economy in 20 years. Singapore is a country that reformed around 1970 as a strategic trade hub and one that managed to reach first world developed country status around 2000. If Myanmar manages to be a key point in China’s Silk Road, surpassing or at least catching up to Singapore’s economy will not be a far off dream. A win-win strategy must be devised between Myanmar’s government and military and China for the next 20 years in order to achieve peace and stability.

In summary, China must place more value, pay more respect and generally behave better in its relationship with Myanmar, and thereby allow the latter’s government to reduce the negative attitude currently held among its citizens.

Photo credit: Today Online


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