Myanmar’s Cross-Border Trade with China Halted by Clashes

By Aung Thiha 19 August 2019

YANGON—Myanmar’s border trade with China through Muse in northern Shan State has come to a complete halt due to the destruction of bridges by rebel forces on the Mandalay-Muse Road, and ongoing clashes.

Through the Muse border trade zone, Myanmar mainly exports rice, corn, sugar, other agricultural produce and marine products, and imports building materials, machinery, electronics and other raw materials from China. The total value of bilateral trade shipped through Muse is around US$3 million (4.57 billion kyats) per day, according to the Commerce Ministry.

Trade via Muse has completely halted as the route to the border has become inaccessible due to ongoing clashes. Chinese traders are staying away from the town, said U Aung Kyaw Moe, chief executive officer of Muse-based public company North Eastern Gate.

“The road was off limits till this morning due to security concerns. Yesterday, all vehicles had to return [to their points of origin]. So, both commercial and passenger transport has been halted,” he said.

The border trade dried up after clashes between the Myanmar military and a joint rebel force of the Myanmar National Democratic Alliance Army, Ta’ang National Liberation Army and Arakan Army on Aug. 15.

Though the Construction Ministry is currently repairing the bridges destroyed by rebel forces, it will still be difficult to resume trade given the lack of regional security, traders said.

“The halt in trade doesn’t just affect exports, it also poses difficulties for all those involved in [trade] circles. It also affects associated businesses like [owners and drivers of] cargo trucks and restaurants. If the road is closed for a week, then commodity prices will also increase in parts of the country to the south,” said U Aung Kyaw Moe.

Myanmar is not currently exporting seasonal fruits to China, but producers of value-added fishery products, to whom China has granted official permission to import from Myanmar, are suffering heavy losses, said U Soe Than, who exports eels to China.

“Yesterday, 10 trucks carrying eels bound for China were stuck in Kutkai, and the eels had to be given away or dumped there. And eel stocks in Mandalay and Yangon will have to be sold in the domestic market as they can’t be exported to China,” he said.

According to U Soe Than, a truckload of eels is worth around 26 million kyats.

“Rice exports to China stalled before the clashes broke out. The Myanmar government is working to facilitate official exports of rice to China on a government-to-government basis, but since this [the clashes] happened, the whole process has stalled,” said Mandalay-based rice merchant U Tin Hlaing Win.

Myanmar’s rice is mainly exported to China through border trade, and though the Myanmar government allows official exports of rice to China, Chinese authorities consider rice imports from Myanmar illegal. Whenever there is a crackdown on illegal rice imports, Myanmar’s rice trade with China stalls.

But even under such circumstances, at least 50,000 bags of rice are exported per day through illegal channels, said U Tin Hlaing Win. “But now, everything has stalled,” he said.

Rice exported from Myanmar to China sells for 100 yuan (21,619 kyats) per bag.

“Previous road closures were not this bad. And roads could be used for certain hours during the day. But now, the road to Naung Cho and Lashio is closed. This has severely disrupted trade,” said a Muse-based trader on condition of anonymity.

From Oct. 1, 2018 to Aug. 9, 2019, Myanmar’s exports to China through the Muse border trade zone earned a total of $2.75 billion, and imports were worth $1.53 billion, taking the combined value of trade to $4.28 billion, according to the Commerce Ministry.

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