China's Engagement in Myanmar

MYANMAR POLICY BRIEFING | 19 | July 2016 China’s Engagement in Myanmar: From Malacca Dilemma to Transition Dilemma KEY POINTS • The changing socio-political landscape in Myanmar since the advent of a new system of government in March 2011 has brought significant challenges to China’s political and economic relations with the country. From a previous position of international dominance, China now has to engage in a diversified national landscape where different sectors of society have impact on socio-political life and other foreign actors, including the USA and Japan, are seeking to gain political and economic influence. • China has made important steps in recognising these changes. In contrast to reliance on “government-to-government” relations under military rule, Chinese interests have begun to interact with Myanmar politics and society more broadly. A “landbridge” strategy connecting China to the Bay of Bengal has also been superseded by the aspiring, but still uncertain, “One Belt, One Road” initiative of President Xi Jinping to connect China westwards by land and sea with Eurasia and Africa.1 • Many challenges remain. Government change, ethnic conflict and the 2015 Kokang crisis raise questions over political relations, border stability, communal tensions, and the security of Chinese nationals and property in Myanmar, while Chinese investments have been subject to criticism and protest. Mega-projects agreed with the previous military government are subject to particular objection, and resentment is widespread over unbridled trade in such natural resources as timber and jade that provides no local benefit and is harmful to local communities and the environment. • Chinese interests prioritize stability in Myanmar. While keen to develop good relations in the country and support ethnic peace, Chinese officials are concerned about the sustainability of the present system of governance and what this will mean for China. A continuing preoccupation is the USA, which often dominates strategic thinking in China to the detriment of informed understanding of other countries and issues. These uncertainties have been heightened by the advent to government of the civilian-led National League for Democracy in March. • Given their proximity and troubled histories, it is essential that good relations are developed between the two countries on the basis of equality and mutual respect. Initiatives to engage with public opinion, communities and interest groups in both countries should be encouraged. Based upon its own experiences, economic change, rather than political change, is China’s primary focus. Chinese officials, however, need to understand that Myanmar’s challenges are political at root. Criticisms should not be put down to a lack of knowledge or “anti-Chinese” sentiment. Good projects that will benefit the local population will be welcomed: bad projects that ignore their priorities and vision for development will not. ideas into movement Introduction economic relations that are in the interest of the peoples of Myanmar, developed by proper As neighbours on a strategic crossroads in Asia, consultation and democratic acceptance, and the relationship between China and Myanmar is not by initiatives or interventions that reflect today one of the most important in international economic self-advantage and superpower geo-politics and regional development. After dominance. Myanmar’s independence, tensions with China were often deep as conflict and political turmoil swept both countries. In recent decades, ties have Background become closer due to social and political changes on both sides of the Yunnan frontier. Under Throughout history, China’s relationship with previous military governments in Myanmar, this Burma/Myanmar and its peoples has frequently witnessed China becoming the largest foreign been troubled. In the post-colonial era, investor and dominant international influence in Kuomintang (KMT) remnants invaded the Shan the country. state from Yunnan province during 1949-50 and, with US assistance and nationalist backing from Since political transition began in 2011, many Taiwan, remained active around the Sino-Thai aspects of China’s engagement in Myanmar have frontiers for many years. Subsequently, the Mao come under challenge. Fundamental difficulties Zedong government provided full-scale support remain that can destabilise Myanmar-China to the armed opposition Communist Party of relations at any time. These include ethnic Burma (CPB) following anti-Chinese violence conflict, Chinese investments, communal in Yangon and, from 1968, the CPB was able to tensions, political reform and international power take control of large swathes of territory along struggles. With the advent of a National League the Yunnan border where a diversity of ethnic for Democracy (NLD) government this year, a nationality groups contest Myanmar government new “Great Game” is underway that could have authority (see “Malacca Dilemma” below). consequences for both the country and region for many decades to come. Two events during 1988-89 reframed the political landscape: first, a new military government, the This briefing examines the changing political State Law and Order Restoration Council (SLORC: and economic landscape, outlining the key subsequently State Peace and Development histories, developments and strategies in Council [SPDC]), assumed power after recent Myanmar-China relations. A particular suppressing pro-democracy protests against concern is the continuing conflict in the ethnic Gen. Ne Win’s “Burmese Way to Socialism”; and borderlands in Myanmar, which are in the second, the CPB collapsed amid a wave of ethnic front-line of contention and where many of the mutinies that swept its “liberated zones” along country’s most valuable natural resources are the China border. located. History has long warned that instability and political failure will continue until there is For leaders in both countries, these dramatic inclusive peace and reform in these territories. events provided the opportunity to re-set their political relationships, and during the military In its race for economic growth and international government of the SLORC-SPDC China developed influence, the Beijing government has major a close strategic relationship with Myanmar’s ambitions for Myanmar and the trans-Asian ruling generals. Political transition in Myanmar region in the 21st century. In the South China remained uncertain, and China was also Sea, this has become a source of tension. On the undergoing significant change in the post-Mao Yunnan border, in contrast, Chinese interests Zedong era. But from the turn of the century, have made some important policy adjustments China’s policy objective became trade, investment to socio-political change in Myanmar during the and large-scale infrastructure projects which, it past five years. The Beijing government has also was anticipated, would provide China with a new unveiled an ambitious “One Belt, One Road” regional ally and help the development of China’s vision linking China to Eurasia and beyond. But adjoining Yunnan province, which is one of the there is still a long way to go before equitable and least developed regions of the country. stable relations are established to the benefit of the peoples of both Myanmar and China. In making these decisions, China’s leaders Progress will depend on political solutions and assumed that, based upon post-colonial 2 | China’s Engagement in Myanmar: From Malacca Dilemma to Transition Dilemma transnationalinstitute precedent, the Myanmar national armed forces, New Challenges known as the Tatmadaw, would remain in power and that there was therefore no need to consult For China, as for all international actors, the new closely with other segments of society, including political landscape in Myanmar has presented democratic opposition parties, ethnic nationality increasing challenges during the past five years. groups and local communities. Chinese officials Despite the Tatmadaw’s continued dominance recognised that Myanmar’s border regions are in many aspects of political and economic life, dominated by ethnic armed organisations among the day-to-day situation has become much more the local populations, but they were encouraged complex in the field. In post-SPDC Myanmar, that, from 1989 onwards, most began to agree China cannot safeguard its interests by dealing ceasefires with the SLORC-SPDC government in with the central government and military the northeast of the country. In the post-Ne Win authorities alone. era of China-Myanmar relations, China’s priority was to promote security and stability, and New challenges are emerging on many fronts. Chinese private investment was encouraged in From China’s perspective, six main areas stand border regions because it was thought to further out: civil society, economics and investment, contribute to national stability and economic internal politics, ethnic peace, international development.2 relations and foreign policy. On all issues, the situation has become acute. Since the SPDC stepped down in 2011, many of the key assumptions upon which China’s policy • The Thein Sein government’s easing of towards Myanmar was based have changed. restrictions on the media and people’s Following the adoption of a new constitution in rights to organise has led to increased news 2008, the first general election in twenty years reporting and protests by communities across was held, leading to the inauguration of a new the country against Chinese investment military-backed

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