China and Burma: Not Only Pauk-Phaw

By Bertil Lintner 7 June 2017

Part 3 of a 5-part series

1978 to 1988: Rapprochement and Stalemate

This decade was a period of gradual rapprochement between Burma and China—and a virtual standstill in the previously extremely heavy fighting between Burmese government forces and the CPB. Following Ne Win’s trips to China and Cambodia in 1977, Deng Xiaoping paid a politically important visit to Rangoon on January 26-31, 1978. Diplomatic relations on the ambassadorial level between China and Rangoon had been restored in 1970, but it was not until Deng’s visit that the hitherto strained relationship between the two countries could be described as reasonably normal. Aid to the CPB was downgraded, but not completely cut off. The official Chinese policy from 1979-88 was also characterized by the rather contradictory Chinese concept of differentiating between “party-to- party” relations and “government-to government” ties—a meaningless distinction in the Chinese context since the party in any case formed the government in Beijing.

Relations between Rangoon and Beijing were nevertheless improving noticeably. On July 9-13, 1979, Burmese Prime Minister Maung Maung Kha visited China and signed an agreement on economic and technical cooperation. Ne Win returned to China in October 1980 and again in May 1985. China’s President Li Xiannian visited Rangoon in March 1985. Meanwhile, the CPB forces in Burma’s northeast were becoming increasingly irrelevant and anachronistic. They neither advanced, nor were they defeated by the Burmese army.

A new facet of the CPB was also becoming important for the group. In their base area, a lucrative, cross-border contraband trade was beginning to become economically significant. When the Chinese in 1978-79 decided that the CPB had to become “self-sufficient,” illicit cross-border trade became its main source of income and the orthodox Burmese Maoists suddenly became freewheeling capitalists. Chinese consumer goods—textiles, plastic products, cigarettes, beer, bicycles, petrol and household utensils—were exchanged for Burmese timber, minerals, precious stones, and jade. The CPB survived by taxing this increasingly lucrative, but still illegal, cross-border trade. This became the foundation for an entirely new kind of relationship between China and Burma, both at the central level and along the border.

1988 to 2011: Pauk-Phaw or Patron-Client?

A seemingly insignificant event in the midst of the political turmoil that engulfed Burma during the summer of 1988 turned out to be an extremely important watershed in Sino-Burmese relations. On August 6, 1988, as mass demonstrations shook Rangoon almost daily and only two days before a general strike crippled the entire country, most observers were probably amused to read in the official media in Rangoon that China and Burma had signed an agreement, allowing official cross-border trade to take place between the two countries. While the rest of the world was watching what they thought were the last days of the old regime, Beijing was betting on its continued ability to play a double game that leveraged both its historic and cultural ties to cross-border ethnic rebels and its neutral approach to engagement with whatever government was in power in Rangoon.

The Chinese had expressed their intentions, almost unnoticed, in an article in the “Beijing Review” as early as September 2, 1985. Titled “Opening to the Southwest: An Expert Opinion,” this article by the former Vice Minister of Communications Pan Qi outlined the possibilities of finding an outlet for trade from China, through Burma, to the Indian Ocean. Pan mentioned the Burmese railheads of Myitkyina and Lashio in northeastern Burma as possible conduits for the export of Chinese goods but refrained from mentioning that all relevant border areas were not under central Burmese government control.

At that time, nearly the entire, 1,357-mile Sino-Burmese frontier was actually controlled by the CPB and other non-state armed groups who had ties—political, ethnic or both—to China. Following the 1960 border agreement, a joint Sino-Burmese team had marked the frontier with border stones that literally covered the full length of the common border. When these had crumbled more than two decades later, new stones were erected in 1985 in accordance with a new agreement. But this time, the Burmese border stones, the location of which the Chinese had decided, were conveniently located in open paddy fields and glades in the jungle, far from major rebel bases along the frontier.

By early 1987, the Burmese government had managed to recapture a few CPB strongholds along the frontier, including the booming border town of Panghsai, where the fabled Burma Road crosses into China. At the same time, the Chinese, whose policies had changed dramatically since the Cultural Revolution, began to penetrate the Burmese market through an extensive economic intelligence reporting system within Burma. This network monitored the availability of domestically manufactured Burmese products, as well as the nature and volume of illegal trade from other neighboring countries such as Thailand, Malaysia, Singapore and India. China could then respond to the market conditions by producing goods in its state sector factories. More than 2,000 carefully selected items were reported to be flooding the Burmese market. Chinese-made consumer goods were not only made deliberately cheaper than those from other neighboring countries, but were also less expensive than local Burmese products.

In March-April 1989, to the surprise of many, the hill tribe rank and file of the CPB’s army mutinied and drove the party’s Maoist leadership into exile in China.

The mutiny came after years of simmering discontent between the hill tribe cannon fodder, who had been forcibly recruited into the CPB’s army, and the ageing Burman intellectuals who were still clinging to their old ideals. The government in Rangoon quickly and shrewdly exploited the mutiny: the leaders of the new forces who emerged from the ashes of the old CPB were promised that they could engage in any kind of business, if they agreed to a ceasefire with the government and refrained from sharing their vast quantity of weaponry (acquired from the Chinese from 1968 to 1978) with other rebel groups. The most potent military threat to Rangoon was neutralized, at a time when the military government was facing a serious threat within the Burman heartlands. As a result the cross-border trade flourished.

However, diminution of the importance of the CPB would not irrevocably damage China’s influence in Burma. In the wake of the Rangoon massacre of 1988, and the Tiananmen Square massacre the following year, it was hardly surprising that the two isolated, internationally condemned neighbors would move closer to each other in the following years. This new, very special relationship between Burma and China was first articulated by Burma’s powerful intelligence chief, Lt-Gen Khin Nyunt, a leading member of the State Law and Order Restoration Council (SLORC), in an address to a group of Chinese engineers working on a project in Rangoon: “We sympathize with the People’s Republic of China as disturbances similar to those in Burma last year [i.e. 1988] broke out in the People’s Republic of China [in May-June 1989].”

A Beijing citizen stands in front of tanks on the Avenue of Eternal Peace on June 5, 1989 during the crushing of the Tiananmen Square uprising. (Photo: Arthur Tsang/ Reuters)

The importance of relations between these two bloodstained authoritarian regimes increased following a twelve-day visit to China in October 1989 by a twenty-four member military team from Burma. Gen. Than Shwe led the team, which also included Lt-Gen. Khin Nyunt, the director of procurement Brigadier Gen. David Abel, and the chiefs of the air force and navy. The visit resulted in a massive arms deal: China pledged to deliver US$1.4 billion worth of military hardware to Burma, including a squadron of F-7 jet fighters (the Chinese version of the Soviet MiG-21), at least four Hainan-class naval patrol boats, about 100 light tanks and armored personnel carriers, antiaircraft guns, rockets, a substantial quantity of small arms and ammunition, and radio equipment for military use.

By 1990, Burma had become China’s principal political and military ally in Southeast Asia. Chinese arms pouring across the border into Burma were crucial to the survival of the extremely unpopular military regime in Rangoon. After the signing of the border-trade agreement in August 1988, Burma became China’s chief foreign market for cheap consumer goods, and China became the major importer of Burmese timber, forestry products, minerals, seafood and agricultural produce. At the time, World Bank analysts estimated that nearly $1.5 billion worth of goods were exchanged along the Burma-China frontier, not including a flourishing trade in narcotics from the Burmese sector of the Golden Triangle.

In addition to trade, China soon became involved with upgrading Burma’s badly maintained roads and railways. By late 1991, Chinese experts were working on a series of infrastructure projects in Burma. That same year, Chinese military advisers arrived and were the first foreign military personnel to be stationed in Burma since the fifties. Burma, in effect, became a Chinese client state. What the CPB failed to achieve for the Chinese on the battlefield was accomplished by shrewd diplomacy and flourishing bilateral trade amidst a politically weak government.

Though there was Chinese interest and acquisition of Burmese resources, the real resource play came later, and in spades. In April 2007, China’s National Development and Resource Commission approved a plan to build oil and gas pipelines connecting China’s interior to Burma’s vast untapped on- and offshore petroleum resources. In November 2008, China and Burma agreed to build a $1.5 billion oil pipeline and $1.04 billion natural gas pipeline. In March 2009, China and Burma finally signed an agreement to build that natural gas pipeline, and in June 2009 an agreement to build the crude oil pipeline. The inauguration ceremony marking the start of construction was held on October 31, 2009, on Maday Island on Burma’s western coast. The gas pipeline from the Bay of Bengal to Kunming, in China’s Yunnan province, would be supplemented by an oil pipeline with a terminus in Kyaukphyu in Arakan State, designed to allow Chinese ships carrying fuel imports from the Middle East to skirt the congested Malacca Strait. And in September 2010, China agreed to provide Burma with $4.2 billion worth of interest-free loans over a 30-year period to help fund hydropower projects, road and railway construction, and information technology development.

This growing cooperation masked a deeper sense of unease within Burma’s nationalistic senior officer corps, many of who had fresh memories of fighting CPB troops armed by Beijing. These tensions often came to the surface in ways that looked like internal power struggles but in reality were often spurred by disputes over China’s influence. The first blow against China came in October 2004, when the then-prime minister and former intelligence chief Lt-Gen Khin Nyunt was ousted in an internal putsch. The Chinese at first refused to believe that their man in Burma had been pushed out—how dare Than Shwe and the other generals move against a figure so key to the relationship?

Nevertheless, both sides managed to smooth over the incident, and bilateral relations appeared to return to normal. Then, in 2009 without advanced warning to Beijing, Burmese troops moved against a non-state armed group in the Kokang area in the northeast, dislocating more than 30,000 people on both sides of the border, all of whom ended up seeking temporary shelter in China. Beijing expressed its unhappiness with the Burmese military’s tactics, but ultimately took no steps beyond demarches. China’s leaders were again unpleasantly surprised when the new Thein Sein government announced on September 30, 2011, that a China-sponsored, hydroelectric power mega-project at Myitsone, in the far north of the country, had been suspended. By this time, there were other signals that Beijing could no longer ignore regarding its loss of influence, including a budding relationship between Burma and the United States.

Read Part 2 of the series here. Tomorrow: Part 4. Burma-US Relations, It’s Complicated

This article was originally published here by The Project 2049 Institute, a policy group based in the US.