Talking about China in Myanmar

Talking about China in Myanmar

Report

As a direct neighbour to China, Myanmar plays a strategic role in the “Belt and Road Initiative”. In order to make this work in Myanmar’s highly fractured society, government needs to be more transparent, and parliamentarians and civil society need a greater say in the planning.

Truck on the streets of Myanmar
"Smooth Sailing" (一帆风顺) on the Myanmar-China Road. Seen in Hseni, Northern Shan State, Myanmar, 19.06 2019. — Image Credits

The Belt and Road Initiative (BRI) promoted by China is the single largest infrastructure investment scheme in human history. There is a lot of discussion about the BRI all over the world, involving expectations as well as fears.

As a direct neighbour to China, Myanmar is right in the focus of the BRI. In September 2018, Myanmar’s government signed a Memorandum of Understanding for creating a China-Myanmar Economic Corridor (CMEC).

Not much detail is known as yet – but this is the outline:

The CMEC involves a central road and rail transport infrastructure leading from Southern China’s Yunnan Province through Muse and Mandalay to Khaukphyu in Myanmar’s Rakhine State, where a major port and Special Economic Zone is planned. Pipelines for gas and oil (operating since 2013 and 2017, respectively) are already operational along this route, transporting Myanmar gas and Middle Eastern oil directly to China without the need to pass a potentially strategically difficult sea route along the Malakka strait.

The CMEC concept also involves a connection to the existing economic capital Yangon, the establishment of special commercial areas in locations along the China-Myanmar border, as well as cooperation in areas such as scientific and educational exchange; in fact, many more classical forms of cooperation are often subsumed today under the BRI and/or CMEC label.

From China’s perspective, the CMEC provides strategic advantages and connectivity to the Indian Ocean, and is seen as an important tool to bring forward the economic development of the land-locked and long-underdeveloped Yunnan Province.

Myanmar’s government under State Councillor Aung San Suu Kyi views the CMEC as an important contribution to the country’s development, providing support for the modernization of its basic infrastructure and creating many opportunities – especially so in a time when Western investment, due to the unsolved Rohingya refugee crisis, is not coming forward as expected. Myanmar signed three more cooperation agreements within the CMEC framework during the most recent Belt and Road Forum in Beijing in April 2019.

As it stands, the negotiation process between China and Myanmar has been highly centralized on the governmental level. While the government clearly sees the CMEC as advantageous for Myanmar, it has released preciously little information about details. Beyond official announcements, a few reports based on research have appeared mostly in English language media.1

The only broader public debate about details of the CMEC investment plans took place in mid-2018, when a senior economic advisor to the State Councillor, Sean Turnell, publicly worried about a possible “debt trap” risk resulting from the planned Kyaukphyu port that had been originally billed at more than 7 billion USD. This led to a renegotiation (or perhaps it was even a part of that very process), with a much smaller version of the project being contracted as its first phase, at about 1.3 billion USD.2

Strengthening Information and Negotiating Capacity

While the Kyaukphyu port episode shows that Myanmar does indeed have expertise and capacity when it comes to negotiating deals with China, many fear that the country’s grown international political isolation structurally strengthens China’s hand in such deals. Recent public pressure by the Chinese ambassador to Myanmar to revive the Myitsone large-scale hydroelectric dam project that had been suspended in 2011 after much protest and resistance, appear to point into that direction.

Such fears, to be sure, come on the background of a long history of investments and commercial activities by (not only, but in many cases) Chinese companies in Myanmar that are involved in illegal logging, environmentally destructive mining, land acquisition for commercial agriculture etc. The implementation of environmental law and the protection of community rights in Myanmar is notoriously weak. Projects especially in border areas carry the risk of exacerbating armed conflicts.

Experiences of this kind, and the current lack of information and transparency by government as regards the details of the CPEC plans, led the Heinrich Böll Stiftung’s Yangon office and its partner Good Governance Support Association to start a programme designed to contribute to widening the policy dialogue about BRI and CMEC in Myanmar.

We did this on the premise that, while the country clearly needs investment in its infrastructure, it will be decisive to strengthen the capacity of governmental, parliamentary and non-governmental actors in Myanmar to negotiate the details of CMEC (and other) investments in an inclusive manner to achieve results that are in the best interests of Myanmar’s people.

The dialogue series since early 2019 has taken the form of a series of workshops for Members of State and Regional Parliaments, as well as civil society actors. The Members of State and Regional Parliaments have the right to raise questions directly towards the national ministers with respect to any projects being implemented in their respective areas. Up to now, little use has been made of this right regarding CMEC investments. In order to promote a more inclusive policy preparation and discussions around BRI and CMEC in Myanmar and to assure the best possible outcomes in economic, social and environmental terms, publicly available information and a broad public dialogue are necessary.

The dialogue series was directed to participants from states and regions along or close to the planned corridor, namely Rakhine, Magwe, Sagaing, Mandalay, Kachin and Shan.  Even parts of the country not directly located along the planned corridor are likely to experience relevant impacts of CMEC investments, be it in the form of labour migration or through additional indirect connectivity (for example by linking the China-Myanmar connection to India through the Sagaing Region). Thus, a strong interest in the topic and the widely-felt lack of information about the shape of things to come made sure the workshops were well attended, and participants even came from neighbouring states and regions.

Given the state of knowledge of details – or rather, the lack of it – the demand for better information turned out to be driving attendance; the series of events sent a core message to government about the need to be more open and provide information and platform for debate.

Pakistan and Sri Lanka Examples

The workshops presented expertise from Myanmar on issues as diverse as the basics of development financing to the question of how to negotiate plans with a partner like China that has so much more resources and technical capacity. Some of the speakers advised Myanmar negotiators to be as well prepared as possible; others warned not to let Myanmar be rushed into signing agreements.

Beyond bringing in expertise from Myanmar, a special feature of the workshop series was the involvement of experts who reflected the situation of other countries who have already experienced BRI-related investment, often for much longer periods and on a much larger scale than Myanmar. Pakistan and Sri Lanka provide prime examples from which Myanmar participants were able to draw lessons.

In Pakistan, China is often regarded as an “all weather friend” in the country’s its perennial conflict with India. At the same time, Pakistan provides access to the Indian Ocean and connectivity to China’s Xinjiang Province in much the same way as Myanmar does for Yunnan. Rail and road transport and the Gwadar Port infrastructure stand at the heart of the cooperation within the China-Pakistan Economic Corridor; competition between different regions within Pakistan has even helped to create an outcome where separate eastern and western routes are built within the corridor. It is widely acknowledged that China helped Pakistan to solve its severe energy crisis, even though it was largely done by means of coal power plants; in Myanmar, China’s focus is more on hydropower (“clean coal” plants are promoted in the National Energy Policy, developed with the kind support of the Japan Agency for International Development). As at current, for Pakistan the costs of financing are not high, while only a minor part of the total 100 bn USD bill for the overall costs of BRI projects in Pakistan consists of loans (the remainder being grants and private investment). But over time, of course, the issue of loan repayment is going to become more pressing.

Sri Lanka – not a direct neighbour of China but strategically located in the Indian Ocean – has seen much Chinese BRI-related investment, and a detailed analysis of individual projects reveals a somewhat ambivalent picture. This is especially true for the Hambantota Port which especially Western and Indian media described as a prototypical case of Chinese “debt trap” policy leading to China taking control over the port. But the risk of souvereignty loss involved appears exaggerated;3 the port continues to stand quite at the centre of Sri Lanka’s own maritime strategy and it may still provide successful in the long run. While an airport project has become the proverbial white elephant, much larger energy and road projects successfully solved manifest infrastructure deficits and turned out commercially viable. A lesson for Myanmar to draw would be to always ask whether a particular project offered in the course of BRI would conform with national development priorities, and whether they would make economic sense so that the necessary finance necessary could also be provided from other (commercial or international development finance) sources.

Debating China in Myanmar

Even though the cooperation between China and Myanmar under the BRI/CMEC title started only recently, Chinese engagement in Myanmar of course is not new.

While Myanmar opened its economy since 1988, the country was soon put under Western economic sanctions; besides Thailand, Korea and Japan, China emerged as a major investor in that time. Much of this investment has gone into natural resources (for example, copper and jade mining) and hydroelectric dams. More recently, a good number of Chinese investments have also gone manufacturing, such as the garment sector that employs hundreds of thousands of mostly female workers; here, Myanmar’s status as a “Least Developed Country” allows exports to Europe under the trade preferences of the “Everything But Arms” scheme.

As a result of these engagements, it would be wrong to assume that people and political actors in Myanmar would be naïve in their perceptions of China. In fact, as it turned out during the series of workshops, worries abound largely because of a wide array of past experiences.

Community-based and non-governmental organisations in various parts of the country openly address negative experiences with the impact of Chinese investments and business interests. They complain, for example, about land that was taken without sufficient compensation for existing pipelines or agricultural investments, or about local environmental problems.

Many regional and state-level parliamentarians who participated in the workshop series expressed similar worries, often combined with demands for proper consultation within a federal political system that does still not yet fully exist in Myanmar. Some individual Members of Parliament offered to put issues brought forward by civil society on the parliamentary agenda.

Many fears and criticisms exist about labour issues, resulting from past experiences where Chinese investments and projects were pursued primarily employing workers from China, leaving few little opportunities for local workers or subcontracting businesses. There is a widespread perception that such projects may lead to a permanent migration of workers from China – while Myanmar citizens continue to find it difficult even to get visitors’ visa for China. On the local level, furthermore, community activists in Shan State report conflicts arising from the presence of large numbers of male Chinese workers who do not easily comply fit into local customary practices and are sometimes perceived as harassing or exploiting local women.

According to Myanmar’s 2008 constitution, representatives of Myanmar’s national military (Tatmadaw) have a 25% quota of seats reserved for them in the state and regional parliaments. Tatmadaw representatives participated in some of our dialogue workshop. While they usually did not express specific views very openly, they clearly were interested in gathering information and a better understanding of the issues at hand. The Tatmadaw is traditionally much worried about anything perceived as a threat to national sovereignty. Over decades, it has fought and continues to fight armed underground actors supported by China while, at the same time, maintaining many cooperative connections with China since the late 1980s. Thus, the Tatmadaw is likely to be ambivalent about many aspects of the CMEC, especially in so far as they may have security implications in volatile border areas and could impact on the balance between themselves and various ethnic armed organisations.

Need for Information, Transparency and Debate

The few opinion poll data available suggest that China has an image problem throughout Southeast Asia, including Myanmar, where China is perceived clearly as the dominant economic and political power which governments will have to be careful to negotiate with.4 The series of workshops confirms this picture, providing numerous example that ordinary people in Myanmar and their local representatives are skeptical or fearful about China’s growing engagement – apparently rather more so than their government. Official China seems to perceive this as an issue as well, judging from the considerable number of visiting programmes offered to government officers, businesses and academics from Myanmar.

Obviously, there is are huge structural asymmetries between China and Myanmar, regarding political and economic power as well as information and human capacity. They are going to impact upon the negotiations and outcomes of the planned corridor.

One frequently-mentioned point in this debate is the necessity to align projects considered under CMEC with national development priorities. Myanmar’s government says that each project pursued should fit into the National Sustainable Development Plan. Currently, the government establishes a “project bank” to identify necessities and priorities. If and once this becomes publicly available (as the government has announced), this could do much to strengthen the quality of public debate about development in the country, by providing useful criteria and perhaps alternative options by which to judge concrete CMEC projects within the framework of Myanmar’s development policy objectives.

Another decisive issue is finance – especially given the worldwide concern about the “debt trap” risks resulting from BRI-related investments that has frequently been raised over the last year or so. Specific projects, it could be argued, should be judged by their financial viability; and if they are viable, it should also be possible to get finance from development banks such as the World Bank that offer concessionary loans at same or even better conditions than China. While it may be true that nowadays, there is no dearth of finance but rather a dearth of viable projects, in reality financing and politics often are not independent from each other. For countries like Pakistan and Myanmar that are China’s direct neighbours with a closely connected economy, it is unrealistic to expect that purely financial criteria can be applied to projects that have political implications as well, or may be very important from China’s global strategy (as is the issue of access to the Indian Ocean). Thus, the intertwined financial and political consideration put limits on negotiation space, and the Myanmar public rightly perceives this as a risk.

In such a situation, transparency is the way forward, creating the basis for trust and informed debate. Beyond the traditional culture of secrecy in the Burmese post-colonial state, the political sensitivity of the relationship to China makes the government reluctant to release more information about the CMEC. But – as the experience of the recent workshop series and the widespread public distrust clearly show – not providing information about investment plans and projects to people and their representatives is creating ever more distrust.

Myanmar’s government should go transparent about the details of the CMEC plans, in the interest of public consideration and debate. Different stakeholders in Myanmar in Myanmar’s fractured society – civilian government, civil society, business, Tatmadaw and ethnic armed organisations – need to get involved, to make sure that CMEC investments will provide positive economic and social outcomes, become environmentally sustainable, and contribute to the peace-building process in the country, rather than creating further divisions.


[1]"The grand plan for the China-Myanmar Economic Corridor"; "Belt and Road forum marks subtle shift in China-Myanmar ties"

[2] For details see "Myanmar cuts cost of China-funded port project by 80%" 

[3] "The truth about Sri Lanka’s Hambantota port, Chinese ‘debt traps’ and ‘asset seizures’"

[4] Thuzar, Tang Siew Mun Moe; Ha, Hoang Thi; Chalermpalanupap, Termsak; Thao, Pham Thi Phuong; Qian, Anuthida Saelaow. 2019. The State of Southeast Asia: 2019 Survey Report

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