Triple Catch-22 with Myanmar

Uwe Hoering www.beltandroad.blog January 26, 2022

One year after the coup in Myanmar, the brutality of the military regime is growing, but so is armed resistance. And civilian protests are also still going on. For Beijing, the situation is becoming increasingly uncomfortable: comments and assessments on the anniversary show that the Gordian knot has, if anything, become even more tangled.

The Chinese government continues to manoeuvre. It has avoided an unequivocal condemnation of the coup and recognition of the National Unity Government (NUG), which is working underground. At the same time, it maintains its relations with Aung San Suu Kyi’s National League for Democracy, which it has carefully nurtured over the past decade. Among other things, the NLD was invited by the Chinese Communist Party to a meeting of Asian parties. Beijing’s next move will depend on which side holds out better prospects for stability. But any positioning is also complicated by conflicting economic and regional political interests.

Economic entanglements

In addition to the internal dilemma, Beijing finds itself in an economic quandary. There are significant economic interests at stake in Myanmar:

– The strategic importance of the deep-sea port of Kyaukphuy on the Indian Ocean and the pipelines that supply southwest China with oil and gas has, if anything, increased in light of the power struggles in Kazakhstan.

– Chinese companies, including many state-controlled corporations, are the biggest players in the mining sector, sometimes working closely with corporations owned by the military.

– More than half of the textile factories have Chinese owners. Textiles account for 30 per cent of Myanmar’s exports, 60 per cent of which go to Europe.

– The Chinese community, which is not particularly popular, controls significant parts of the legal and illegal economy.

The intensified fighting of the Tatmadaw, the Myanmar army, with armed organisations of several ethnic groups and the repression against the civilian population endanger Chinese investments worth billions and bilateral trade. As the main economic pillar of the regime, Beijing has come under international criticism. With the so far unresolved torching of textile factories shortly after the coup and threats against pipelines being warning signals, the Chinese side is responding with requests for better protection and security from the regime. But while companies from other Asian countries have already withdrawn from Myanmar, announced their withdrawal like the energy companies Total and Chevron, or are taking a wait-and-see attitude, again Beijing is buying time.

Wooing Beijing

In some areas, there are signs of cautious moves. Border crossings with Myanmar were closed last summer, justified with the Corona pandemic. Export losses for Myanmar run into millions. In the textile industry, there are signs of relocations to neighbouring countries. In contrast, mining operations are continuing as normal for the time being, according to local observers. A withdrawal of Chinese investors from the mining sector, which human rights groups are demanding, would hit the military-industrial complex hard: Publish What You Pay Australia, a global network that advocates for transparency in the extractive sector, estimates that in the last financial year 725 million US dollars made its way into the pockets of the military from Chinese mining companies only. But a withdrawal would also be a bitter blow for China.

The junta is wooing China with promises to implement controversial projects such as the 2.5 billion US dollar Mee Lin Gyiang gas-fired power plant to supply electricity to a huge industrial zone. Further development of the Kyaukphyu port and an adjacent special economic zone was also announced. As an additional financial treat, it is offering to accept the Chinese currency renminbi as an official medium of exchange in trade with China. And it has taken control of the implementation of the China Myanmar Economic Corridor and thereby of Belt&Road economic projects. An agreement concluded in August for 6.1 million US dollars for development projects is also seen as a ‘sign of largely normal cooperation’.

Hoping for ASEAN

A third quandary arises in relations with the Southeast Asian regional organisation ASEAN: Officially, the Chinese government supports the 5-point consensus, which is the basis for talks of the Alliance with the junta and which demands, for instance, an immediate end to the violence and a dialogue mediated by an ASEAN representative. ASEAN is not only important for its geopolitical standing, but with the RCEP economic agreement it also became an important pillar for large-scale economic integration under Chinese control.

It would be a relief for Beijing if ASEAN could find a pragmatic, face-saving solution for dealing with its member Myanmar. But the Alliance is deeply divided: Some governments, such as Singapore, Malaysia and the Philippines, insist that contacts with Myanmar will only be at the administrative and not at the political level as long as the military does not accept the 5-point consensus.

However, Beijing has a close ally in the current ASEAN chair, Cambodian Prime Minister Hun Sen, in a key position for dealing with the junta. He is widely regarded as Beijing’s stooge in ASEAN and has sided with Beijing in conflicts on several occasions. In the first week of January, he travelled to Naypyidaw, the capital of Myanmar, for a meeting with the head of the junta, General Min Aung Hlaing. Observers call this ”cowboy diplomacy” and consider it a unilateral recognition of the military junta. In contrast, Hun Sen hypocritically declared that Myanmar was, after all, “a family member”. However, he had to postpone a meeting of foreign ministers scheduled for mid-January, to which he had invited the minister of the junta, after cancellations by government representatives of other ASEAN countries.

Considering Plan B?

Beijing would be in a better position than almost any other actor to bring about momentum into the rigid positions. However, the military is also used to riding out problems. Not very optimistically, Bertil Lindner, an expert on the region, pointed out that neither isolation nor relations have in the past been effective in shifting the military’s political perceptions.

Reportedly, a Plan B is now being considered more or less aloud in Think Tanks in China: the South China Morning Post of December 11, 2021 mentions “increased talk” of examining interventions to protect China’s ‘national interests’. Which of the various Chinese interests will ultimately be decisive in view of the complicated situation is not yet predictable, nor the possible nature of such an intervention.

Translated with www.DeepL.com/Translator (free version)

See also: Xue Gong, Chinese Mining Companies and Local Mobilization in Myanmar. Carnegie Endowment, China local/global, January 25, 2022

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