Analysis: Under Pressure, Aung San Suu Kyi to Seek Chinese Investment

By The Irrawaddy 5 December 2017

Myanmar is in China’s embrace today. Facing political pressure and the threat of sanctions over the situation in Rakhine State, the government is seeking China’s diplomatic and economic support.

It seems China will not hesitate to assist Myanmar. However, Myanmar’s approach will be cautious and calculated as it also fosters other friendships in the region.

The government of Myanmar and its powerful military consider China an important and strategic partner but don’t want to be seen as relying heavily on China alone.

The government is expanding its economic cooperation with other countries including Singapore, Vietnam, Thailand, South Korea, India and Japan. Singapore remains the top investor, having invested more than US$4 billion this fiscal year, followed by Vietnam with $1.3 billion. However, while important regional allies, they are not political heavyweights in the international arena with the clout to protect Myanmar.

Even so, Myanmar’s armed forces will be cautious with China, given that it has provided arms and logistical support to rebel groups in the north for decades. It’s not clear just how much trust and confidence Myanmar’s generals have in Beijing.

In the 1990s, when the regime was desperately looking for jet fighters and ammunition, China sold low-grade jet fighters, weapons and ammunition to Myanmar’s junta. The generals have diversified since then, purchasing jet fighters and military hardware from others including Russia, India, Pakistan, Israel and some Eastern European countries. Today, Myanmar is expanding military and defense cooperation with India, Russia, Japan and Thailand.

Nevertheless, one can see more military cooperation between the People’s Liberation Army of China and Myanmar’s armed forces. The China North Industries Corporation (NORINCO) and the Myanmar Army have pledged to expand collaboration with a view to growing defense trade and related technologies.

NORINCO announced the plans in a press release on Nov. 28, although the agreement was reached a few days earlier, the company said, in meetings between NORINCO President Wen Gang and Myanmar Army chief Senior General Min Aung Hlaing.

In its press release, NORINCO said it had a “long history of cooperation” with Myanmar and that it was looking to continue to provide the country’s army with defense products and services and to continue to “expand and enhance areas of cooperation.”

The US was preparing to help train Myanmar’s army officers and expand military-to-military engagement, but violence and allegations of human rights violations in Rakhine State have shut down the contacts while the US Congress considers imposing sanctions.

State Counselor Daw Aung San Suu Kyi’s recent visit to China indicates that the two countries will strengthen economic ties. In a meeting with Suu Kyi, Chinese President Xi Jinping urged her to further expand bilateral cooperation.

The China-Myanmar economic corridor is new, proposed in November when Chinese Foreign Minister Wang Yi paid a visit to Naypyitaw.

The corridor will arrive in three phases, expanding to Mandalay, Yangon and the Kyaukphyu Special Economic Zone in troubled Rakhine State. It is part of a grand plan to boost connectivity between four countries: Bangladesh, China, India and Myanmar.

The project will connect Kunming in China with Kolkata in India, then add Mandalay, Dhaka and Chittagong. It is part of China’s grand geopolitical and economic strategy, connecting Beijing straight to the Indian Ocean.

Neither is India being left out of Myanmar’s own geopolitical rebalancing. Suu Kyi wants her country to continue strengthening economic and political ties with India too. She studied in India, where her mother served as ambassador in the 1950s.

Indian Prime Minister Narendra Modi visited Myanmar in September, when he backed Suu Kyi’s government and offered assistance and development initiatives for Rakhine State.

Mandalay Region Chief Minister Zaw Myint Maung has been to Kolkata seeking Indian investments in central Myanmar (he has also accompanied Suu Kyi’s on her latest visit to China).

India shares a 1,600-km border with Myanmar along four northeastern states. Some Indian militants seeking separation and autonomy are based in Myanmar. Myanmar’s army leaders have promised to push them out, but neither the region nor the Indian rebels are priorities for the government or the military.

Beijing Looks to Restive Rakhine

During her visit to Beijing and meetings with Chinese leaders, Suu Kyi is believed to have discussed several economic projects and existing contracts signed under previous governments, including the regime that ruled the country until 2010. They include the controversial Myintsone project suspended under President Thein Sein, the Letpadaung mining project, and the Kyaukphyu deep-sea port and related pipeline and railway projects in the area.

The China-Myanmar corridor will no doubt boost China’s trade and political influence. Moreover, planned highways, railroads and pipelines will give China direct access to the Indian Ocean. It will be interesting to see what the government can renegotiate with China to benefit its impoverished country, Rakhine State and the people.

The contracts are under review and it is believed that the current government has been trying to renegotiate them with China.

Unsurprisingly, China has backed Myanmar over the crisis in Rakhine State from the start; it has even offered to mediate.

In the first week of November, a Chinese delegation visited Rakhine State to assess the situation. The delegation, from China’s Asean Economic and Cultural Association, was accompanied by Myanmar’s Hintha Akari Co and seen meeting several key leaders.

Interestingly, during the trip the Chinese delegates said one planned project was to help Myanmar extend and strengthen fencing along the state’s border with Bangladesh.

It seems China is shifting its attention to Rakhine State.

So, while the West — the US in particular — considers imposing targeted sanctions on Myanmar’s generals and scaling back ties with the military, China is thinking of building highways and railroads.