Interview

‘China Doesn’t Want to be Perceived as an Enemy’

By Nan Lwin 24 April 2019

From the Myitsone Dam in the country’s northern Kachin State, to the Muse-Mandalay railway project running through northern Shan State into the Irrawaddy valley, to the Kyaukphyu deep sea port on the country’s western coast at the Bay of Bengal, Myanmar is one of China’s most important strategic partners in its ambitious Belt and Road Initiative (BRI). While some BRI projects here are still in the planning stages, others are already underway and some of these are surrounded by intense controversy, including the stalled Myitsone hydropower project. With Myanmar State Counselor Daw Aung San Suu Kyi’s arrival in Beijing on Wednesday to attend the second Belt and Road Forum, Chinese projects in Myanmar will surely be on the agenda when she meets Chinese President Xi Jinping.

Ahead of the meeting, The Irrawaddy’s Nan Lwin talks to Yun Sun, co-director of the East Asia program and director of the China program at the Stimson Center, about issues surrounding Belt and Road projects in Myanmar and the future of China-Myanmar relations.

Myanmar State Counselor Daw Aung San Suu Kyi is scheduled to attend the second Belt and Road Forum. As BRI projects face rising resistance in many countries due to “debt trap” fears, Myanmar is expected to sign agreements on a number of megaprojects, including the Muse-Mandalay high-speed railway, during the trip. Do you think Myanmar is the latest victim of China’s “debt-trap diplomacy”?

Myanmar has been highly alert and sensitive toward Chinese projects that could have major potential financial security implications. The [downsizing] of the Kyaukpyau deep sea port is a good example at hand. Without seeing the terms of the new projects, it is very hard to speculate as to whether they are going to put Myanmar in “debt traps.”

I also personally do not agree with the “debt trap” narrative. “Trap” by itself suggests intention—that China intentionally set up traps for others to jump in. I don’t think it is the case here. And if they are indeed traps, why would Myanmar even consider them knowing that it will be trapped. Myanmar also has a well-developed civil society and media monitoring these types of projects. It is difficult to imagine that these megaprojects will escape public question and scrutiny.

The previous Thein Sein administration was the rockiest period for China-Myanmar relations, particularly due to the suspension of the Myitsone hydropower project. What is your opinion on China-Myanmar relations under the National League for Democracy (NLD) administration?

The relationship has been quite good since the NLD took over. China believes that it has regained influence in Myanmar, maybe not to the level during the junta years, but at least China is once again the most influential player in Myanmar. [Daw] Aung San Suu Kyi has been trying to build good ties with China, attested by her many visits to Beijing, her participation in the BRI forums and other high-profile events. China is also able to maintain good ties and strong influence over the Burmese military.

Looking at current Chinese involvement in Myanmar’s peace process and its economy, what is the future of China’s role in Myanmar economics and politics? 

It depends on what role Myanmar is willing to let China play. For example, if the Burmese people believe that Chinese projects bring them economic development, they will be more receptive to a bigger role for China. As for domestic politics, I don’t think China aims at dominating or determining the future of Myanmar’s politics. As long as China’s interests are covered, I don’t think Beijing really cares about who is in power in the country.

Yun Sun, co-director of the East Asia program and director of the China program at the Stimson Center. / Brookings.edu

Myanmar successfully renegotiated the Kyaukphyu SEZ (special economic zone) agreement. Government officials claim there is no risk of a debt trap under the new agreement terms. The deep-sea port at Kyaukphyu is a potential hub for China that would give it direct access to the Indian Ocean and allow its oil imports to bypass the Strait of Malacca. Apart from debt risks, what are the other problematic issues when it comes to Kyaukphyu?

What has surprised me is how long the negotiation has taken. At this rate, any projects signed between China and Myanmar will take an exceedingly long time to implement. It decreases the appeal of Myanmar as a destination for foreign investors. This doesn’t mean that Myanmar should rush into any project without understanding and/or eliminating the potentially harmful elements. But it does mean that Myanmar will need to have a better calculation between what it is willing to give and what it wants to take before it goes into the negotiation.

Recently, China has become more aggressive in pressuring Kachin leaders and the Myanmar government into reviving the Myitsone hydropower project. Chinese officials have claimed that it is part of the BRI under the China-Myanmar Economic Corridor agreement, a claim that’s never been heard before now. What are the reasons for China holding the Myitsone project under the BRI umbrella at this time?

There are a lot of projects signed [for] before 2013 that were later categorized under BRI, but Myitsone is a special case. Making it a BRI project ostensibly enhances its importance in the Chinese system, implying that China has to push for its resumption because of how important it is. However, anyone who understands the history of the anti-Myitsone sentiment should tread carefully about its resumption. In fact, there have been revised plans to build smaller dams to replace the original mega-dam design. If it is a new design, there is no need to associate the new project with the social stigma of the previous design, hence no need to deem it as a “resumption” of the Myitsone [dam].

Experts speculate that Daw Aung San Suu Kyi is going to discuss the most controversial Chinese projects, particularly the Myitsone dam, during her Beijing trip. In your opinion, what solution is most likely to solve the Myitsone issue?

[As well as the aforementioned revised plan,] the most face-saving way out for everyone is to transform the project into a new project, better-designed, better serving Myanmar’s power needs and with less environmental impact. The disbursed investment from China will be transformed into shares of the new project. If China is interested in moving away from this thorny issue, and moving the bilateral relations forward, which I believe it does, it will be interested in a mutual compromise.

China has always stood up for Myanmar on the international stage, especially when it comes to the Rakhine issue, including with its vote against the UN Human Rights Council’s move to establish a body to investigate possible genocide in Myanmar. Given that kind of Chinese support, is it difficult for the Myanmar government to turn down controversial Chinese projects in the country at the public’s will?

I don’t think it is hard. China stood [up] for Myanmar during and after the 2017 Rakhine crisis. [Yet] the agreement over Kyaukphyu signed in 2018 still cut the size of the project by 90%. Myanmar still will defend its interests coming to investment projects. That is determined by the democratic system and public supervision of the government.

Myanmar is a developing country and half of its existing foreign debt is held by China. Does Myanmar need to impose a certain type of policy for BRI projects and other Chinese investments to avoid an unsustainable debt trap in the country? 

There is a reason why China holds the largest amount of Burmese debt. Debt traps and lending trap are two sides of the same coin. Lending too much money to Myanmar, which cannot repay the debt, is not a sound financial decision for China either. My suggestion would be for Myanmar to diversify its inward FDI. With competition, the Chinese will have to improve their terms.

Myanmar’s Commander-in-Chief, Senior General Min Aung Hlaing, visited Beijing last week. He told Chinese President Xi that China’s ambitious Belt and Road Initiative includes a host of projects that could benefit Myanmar and that Myanmar’s military is ready to cooperate on implementing them. What is your opinion on this?

The Tatmadaw (Myanmar’s military) wants a good relationship with China. There is nothing new to it. In the context that Daw Aung San Suu Kyi is sweetening ties with China, the Tatmadaw feels the need to catch up and match the civilian government’s level of efforts at least.

International Growth Center’s 2018 report said there is an explicit bias against Chinese investment in Myanmar due to past experiences. The Myitsone issue has again sparked anti-Chinese sentiment among Myanmar citizens even though China said they are changing their policies on the ground, including on public engagement. However, China’s new efforts are unsuccessful as the people are still suffering from what they have done in the past. Myanmar people even complain about the NLD government when it comes to considering Chinese investment.  What is your opinion on this?

Chinese investments in the past did have some negative impacts on the country, but it doesn’t mean that China cannot make positive contributions to Myanmar’s development down the road. The key is how to monitor and manage the Chinese projects, not how to shut them out. This is particularly true when international investors are deterred by things including the Rakhine crisis.

Does the Chinese government need to adopt a new policy when approaching Chinese investments and megaprojects in Myanmar?

I think Beijing has. The fact that there have been no new megaprojects signed or implemented in the past several years suggests that China has adopted a new policy of caution and restraint. The Chinese don’t want to run into the situation again where China becomes the perceived enemy of Myanmar for its mere commercial interests. That serves nobody’s interests.

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