CHINA’S MYANMAR DILEMMA Asia Report N°177 – 14 September 2009 TABLE OF CONTENTS EXECUTIVE SUMMARY ...................................................................................................... i I. INTRODUCTION ............................................................................................................. 1 II. BEIJING NAVIGATES MYANMAR’S POLITICS ..................................................... 2 A. BILATERAL RELATIONS ...............................................................................................................2 B. UNITED NATIONS.........................................................................................................................4 1. The Security Council veto ...........................................................................................................4 2. Beijing’s reaction to the Saffron Revolution ...............................................................................6 3. Ensuring aid after Cyclone Nargis...............................................................................................8 4. Detention and trial of Aung San Suu Kyi ....................................................................................9 C. CHINA AND THE OPPOSITION........................................................................................................9 D. CHINA AND THE ETHNIC GROUPS...............................................................................................10 III. DRIVERS OF CHINESE POLICY............................................................................... 14 A. BORDER STABILITY ...................................................................................................................14 1. Narcotics ....................................................................................................................................14 2. HIV/AIDS..................................................................................................................................15 3. Gambling ...................................................................................................................................16 B. ECONOMIC CALCULATIONS........................................................................................................17 1. Chinese investment and economic assistance............................................................................17 2. Yunnan and the “Go West” campaign .......................................................................................18 C. STRATEGIC INTERESTS...............................................................................................................19 1. The “Malacca dilemma” and the Indian Ocean .........................................................................19 2. Arms sales and technical assistance...........................................................................................21 IV. RISKS OF CHINESE POLICY..................................................................................... 22 A. WEAK GOVERNANCE IN MYANMAR...........................................................................................22 B. THE COST OF INVOLVEMENT IN EXTRACTIVE RESOURCES .........................................................23 C. RESENTMENT TOWARDS CHINA .................................................................................................24 D. BEIJING POLICY UNDERCUT BY LOCAL ACTORS ........................................................................25 V. LIMITS TO CHINESE INFLUENCE .......................................................................... 26 A. HISTORICAL DISTRUST...............................................................................................................26 B. EXPLOITING BILATERAL COMPETITION......................................................................................28 C. CHARACTERISTICS OF THE MYANMAR GOVERNMENT ................................................................30 D. ASEAN.....................................................................................................................................31 VI. IMPLICATIONS FOR INTERNATIONAL APPROACHES.................................... 33 VII.CONCLUSION ............................................................................................................... 35 APPENDICES A. MAP OF MYANMAR .........................................................................................................................37 B. HIGH-LEVEL OFFICIAL VISITS BETWEEN MYANMAR AND CHINA .....................................................38 C. FOREIGN DIRECT INVESTMENT FLOWS ............................................................................................39 D. LOCAL INTERESTS: LOGGING AND CROP SUBSTITUTION ..................................................................40 Asia Report N°177 14 September 2009 CHINA’S MYANMAR DILEMMA EXECUTIVE SUMMARY Each time global attention is focused on events in Myan- and, recently, tens of thousands of refugees. Chinese mar, concerned stakeholders turn to China to influence companies have been cited for environmental and eco- the military government to undertake reforms. Yet sim- logical destruction as well as forced relocation and human ply calling on Beijing to apply more pressure is unlikely rights abuses carried out by the Myanmar military. These to result in change. While China has substantial political, problems are aggravated by differences in approach be- economic and strategic stakes in Myanmar, its influence tween Beijing and the provincial government in Yunnan’s is overstated. The insular and nationalistic leaders in the capital Kunming, which implements policies towards military government do not take orders from anyone, the ethnic ceasefire groups. including Beijing. China also diverges from the West in the goals for which it is prepared to use its influence. At the same time, resentment towards China, rooted in By continuing to simply expect China to take the lead past invasions and prior Chinese support to the Commu- in solving the problem, a workable international approach nist Party of Burma, is growing. Myanmar’s leaders fear will remain elusive as Myanmar continues to play China domination by their larger neighbour, and have tradi- and the West against each other. After two decades of tionally pursued policies of non-alignment and multilat- failed international approaches to Myanmar, Western eralism to balance Chinese influence. Increasing compe- countries and Beijing must find better ways to work to- tition among regional actors for access to resources and gether to pursue a wide array of issues that reflect the economic relationships has allowed Myanmar to counter- concerns of both sides. balance China by strengthening cooperation with other countries such as India, Russia, Thailand, Singapore, The relationship between China and Myanmar is best North Korea and Malaysia. The military government is characterised as a marriage of convenience rather than intensely nationalistic, unpredictable and resistant to ex- a love match. The dependence is asymmetric – Myan- ternal criticism, making it often impervious to outside mar has more to lose should the relationship sour: a influence. protector in the Security Council, support from a large neighbour amid international isolation, a key economic While China shares the aspiration for a stable and pros- partner and a source of investment. While China sees perous Myanmar, it differs from the West on how to major problems with the status quo, particularly with re- achieve such goals. China will not engage with Myan- gards to Myanmar’s economic policy and ethnic relations, mar on terms dictated by the West. To bring Beijing on its preferred solution is gradual adjustment of policy by board, the wider international community will need to a strong central government, not federalism or liberal pursue a plausible strategy that takes advantage of areas democracy and certainly not regime change. In this way, of common interest. This strategy must be based on a it can continue to protect its economic and strategic inter- realistic assessment of China’s engagement with Myan- ests in the country. In addition to energy and other invest- mar, its actual influence, and its economic and strategic ments, Myanmar’s strategic location allows China access interests. The West could better engage China to encour- to the Indian Ocean and South East Asia. age Myanmar’s government to commit to a truly inclu- sive dialogue with the opposition and ethnic groups. In But Beijing’s policy might ultimately have an adverse addition to talks on national reconciliation, dialogue effect on Myanmar’s stability and on China’s ability to should also address the economic and humanitarian cri- leverage the advantages it holds. Political instability sis that hampers reconciliation at all levels of society. and uncertainty have resulted in a lack of confidence in At the same time, China should act both directly and in Myanmar’s investment environment, and weak govern- close cooperation with ASEAN member countries to ance and widespread corruption have made it difficult continue support for the good offices of the United Na- for even strong Chinese companies to operate there. tions as well as to persuade the military to open up. Myanmar’s borders continue to leak all sorts of prob- lems – not just insurgency, but also drugs, HIV/AIDS China’s Myanmar Dilemma Crisis Group Asia Report N°177, 14 September 2009 Page ii Myanmar