Chinese President Xi Jinping likes to travel big. His visit to Myanmar in January this year, the first for a Chinese Leader in almost two decades was no exception, capped off with no less than 33 bilateral agreements.
However, the number alone overstates things. Some of the “agreements” merely saw President Xi’s entourage hand over feasibility studies for proposed projects. Many are not new.
The number does, however, underscore the ever-tighter orbit Myanmar has been tracing around its giant neighbour since a detente with the West hit reverse over a massacre of the country’s Muslim Rohingya minority in 2017.
Crucially, a few of the deals advance China’s plans to turn Myanmar into a secure new route to the Indian Ocean, valuable to Beijing for strategic and economic reasons.
Whether China’s coming spending splurge spells boom or bust for threadbare Myanmar and peace or more war for its restive fringes remains a worry.
A pair of Chinese built oil and gas pipelines already bisect Myanmar, from Kyaukphyu on the country’s Bay of Bengal coastline to its border with China’s landlocked Yunnan province.
As part of Xi’s signature Belt & Road Initiative, the China-Myanmar Economic Corridor would add a rail link to the route, an industrial park along their shared border and most critically, and controversially a deep Sea Port at Kyaukphyu to anchor it all.
“For China I think it’s very important. This plays into their need to build new economic corridors that can sustain the landlocked Chinese interior … Yunnan province being quite a sort of backward province in terms of its development,” said Hervé Lemahieu, Director of the Asian Power and Diplomacy Program at Australia’s Lowy Institute, a research group.
“And it’s important as well in terms of the fact that they want access, direct access to the Bay of Bengal and the Indian Ocean via a route that bypasses the choke point of the Malacca Strait. So that’s another kind of key strategic concern.”
Nearly a third of the world’s seaborne trade passes through the strait connecting the Indian Ocean to the hotly contested South China Sea, including some 80% of China’s energy imports. The narrow waterway, which the U.S. Navy regularly patrols, would be easy to cut off in the event of a fight.
“The other big objective is to try to get neighbouring Southeast Asian economies more closely integrated into the Chinese economy, particularly that of the less developed Chinese interior. That’s what they’re doing in Laos and Thailand with an extended rail network. In Myanmar, that is being done with the corridor projects and deep sea port,” Lemahieu said.
Jonathan Hillman, who heads the Reconnecting Asia Project at the U.S.- based Center for Strategic and International Studies, said the billions of investment dollars the corridor projects come with will inevitably ratchet up China’s political influence in Myanmar.
He’s more sceptical of predictions that the corridor will solve China’s so-called Malacca Strait dilemma.
“When you look at the volumes of energy the corridor could carry, it doesn’t really do much to reduce China’s dependence on energy supplies through the Malacca Strait.
A lot of analysts have rushed to conclude this is a brilliant geo-strategic undertaking without looking closely at whether it will actually impact energy flows,” he said.
However, Kyaukphyu will complement the other deep sea ports China is developing elsewhere around the Indian Ocean to go along with its growing commercial and military presence there.
A military base in Djibouti on the Horn of Africa is well placed to defend China’s energy shipments from the Middle East. Other Indian Ocean powers are also eyeing its commercial ports in Pakistan and Sri Lanka with growing suspicion for their potential as additional outposts for China’s navy.
Analysts see little similar potential for Kyaukphyu for now.
Like a growing number of other countries wrapped up in China’s grand Belt & Road Initiative plans, Myanmar has been pushing back against projects that risk drowning it in debt.
Lemahieu said much of Xi’s visit in January was “damage control” for China’s past missteps and that his trip “sets things back on track.”
China, Myanmar Past Relations
The Kyaukphyu port project had stalled after Myanmar’s 2015 elections saw the military relinquish some power to a quasi-civilian government effectively under former opposition leader Aung San Suu Kyi.
Receptive to growing fears that the $7.2 billion price tag could land Myanmar in a debt trap, Myanmar’s government convinced China to keep the cost of the port’s first phase to $1.3 billion and double Myanmar’s stake in the project to 30%. Some of the deals Xi signed on his visit make the new term’s official.
In 2010, even Myanmar’s military regime was pressured by popular protest to suspend Beijing’s plans for a massive hydropower dam at Myitsone, the poster child of local fears of China’s growing influence in Myanmar. China is keen to start work, but the dam remains a touchy subject for Myanmar and conspicuously missed mention in all official accounts of Xi’s visit.
Myanmar’s success scaling back the cost of the Kyaukphyu port has eased fears of a debt trap. However, Hillman said a persistent shroud of secrecy around Belt & Road Initiative projects and myopic thinking about their viability mean debt risks remain real.
China already holds nearly half of the roughly $10 billion Myanmar currently owes other countries; its share is only expected to grow as Belt & Road Initiative projects progress.
Decades of Chinese investment in Myanmar under the military regime have made most of the country wary of Beijing’s intentions, said Khin Khin Kyaw Kyee, who heads the China desk at the Institute of Strategy and Policy, a research group in Myanmar.
“Local communities, they are not the beneficiaries,” she said. “They have to bear all the burdens of these investments, such as land confiscations or the loss of livelihoods. So we usually associate this kinds of big Chinese investment with negative impact on them.”
China has also undercut promises of a windfall of new Belt & Road Initiative jobs for locals by having imported its own labour force for past projects, she added.
What worries some just as much or more is the impact the projects may have on Myanmar’s fragile peace process.
Myanmar’s military has been waging war with an ever-evolving cast of ethnic armed groups on the country’s edges for six decades. Some operate as little more than armed gangs. Others, vying for autonomy from a central government they accuse of ignoring minority rights, have carved out pockets of self-rule. The corridor cuts straight through a swath of northeastern Myanmar just across from China where ethnic Kachin, Shan and Ta’ang rebels are all active.
Illicit border trade in timber, gems and much else has helped sustain the strongest of these rebel armies, giving China substantial sway over which way the peace talks turn.
Lemahieu said China’s growing involvement in Myanmar’s peace process at the same time as its economic clout in the country is once again growing is raising concerns that Beijing wants to monopolise the role of broker, shutting other countries out.
“That’s obviously a domestic matter for Myanmar, but it’s also a real vulnerability for Myanmar and for the central government,” he said.
Kyaw Kyee said many in Myanmar are hoping that China’s interests in protecting its corridor through the country will convince it to use its leverage to tamp down the violence, if not necessarily end it. She worries about a scenario wherein Chinese companies working on different Belt & Road Initiative projects hire competing local armies for security, keeping them armed and dangerous.
“Overall I think China would maintain some kind of stability along the border,” she said. “But stability does not equal to peace.”