After securing control of at least 20 percent of northern Shan State, the Kokang armed group (the Myanmar National Democratic Alliance Army, or MNDAA) is aiming to reopen key economic routes. As part of its broader economic vision, the group has begun issuing policy statements and publicly articulating its economic positions—to both China and local communities in the region.
Issued by the Kokang administration committee in Chinese in March 2025, the policy outlines priorities for economic development, technological and financial advancement, and principles of economic governance. The emphasis on legal trade, infrastructure and technology suggests a long-term plan for stability and legitimacy, while its focus on border trade and financial liberalization reflects a strong China-centric economic model.
Among the ethnic armed groups (EAOs) that gained territorial control following Operation 1027, the Kokang group was the first to publicly unveil an economic policy. The MNDAA—one of the key actors behind Operation 1027—has introduced a distinct economic strategy, setting itself apart from other EAOs in northern Shan State along the China-Myanmar border that have long relied on illicit economies.
The Kokang region was once known for activities such as drug trafficking, casinos, black market trade, unregulated smuggling, and, more recently, online scam networks—all of which historically funded and sustained the Kokang armed group’s operations. The newly introduced economic framework marks a significant departure from this legacy, signaling a shift toward formal economic governance and deeper integration with China.
Economic development as political strategy
Kokang’s shift from an illicit to a more formalized economic model—likely shaped under Chinese influence—reflects a long-term vision for stability and political legitimacy. Border trade facilitation and financial liberalization further reinforce a China-centric economic orientation.
While presented in the language of “economic development,” the policy serves a broader political agenda: consolidating de facto sovereignty, establishing proto-state institutions, and positioning the Kokang region as a legitimate economic and political actor along the China-Myanmar frontier.
Under its economic development priorities, the policy emphasizes cracking down on illegal industries, including online fraud, black markets, and illicit operations. Through state and private funding, it promotes infrastructure investment in transportation, energy, urban development, medical services, and digital infrastructure.
A major focus is the transformation of traditional agriculture through science and technology, shifting toward a more industrialized, large-scale, and intensive economy. Industrial development is geared toward environmentally friendly and labor-intensive sectors such as pharmaceuticals, jade processing, tobacco, and the assembly and mass production of machinery, electric vehicles, clothing, and footwear.
Emerging trade corridors
More importantly, the MNDAA has not overlooked the border economic cooperation zones, a key component of the China-Myanmar Economic Corridor (CMEC), which is a part of China’s Belt and Road Initiative (BRI). This policy aims to enhance the trade environment by establishing fast and efficient channels, bulk commodity storage and transfer facilities, and developing “border economic cooperation zones” and bonded (free) zones. It seeks to expand import-export trade, improve cold chain logistics, and implement preferential policies to stimulate diverse and innovative forms of cross-border trade.
Additionally, Kokang sits at a strategic crossroads of newly emerging international trade routes, including the International Land-Sea Trade Corridor (ILSTC) and the China-Myanmar–Indian Ocean Rail-Road connectivity initiative under the Lancang-Mekong Cooperation framework. These routes pass directly through Chinshwehaw—now under MNDAA control—positioning it as a central hub along the China-Myanmar frontier.
These infrastructure and trade initiatives aim to connect the western regions of China, including Yunnan Province and its autonomous zone, to Southeast Asian markets via maritime trade routes like the Indian Ocean. As such, Kokang’s geographic position offers strategic value for China’s broader regional ambitions. The group now seeks to integrate the Kokang region into China’s geopolitical and regional development strategies, aiming to capitalize on these mega-projects for economic and political leverage.
MNDAA’s current leadership not only actively supports the implementation of the CMEC but also appears to emulate China’s development model. Since Operation 1027, the group has taken steps to strengthen its control over key border checkpoints such as Chinshwehaw, not just as a gateway for trade but also as a point of influence over cross-border infrastructure and logistics. Control over these strategic trade routes and checkpoints is therefore not merely an economic move—it also carries significant geopolitical and political weight, reinforcing MNDAA’s ambitions toward greater autonomy and regional influence.
During his Chinese New Year speech, MNDAA leader Peng Deren stated that the group would abide by China’s favorable policy of promoting peace and dialogue in Myanmar. He emphasized that the MNDAA would seize the opportunities presented by the Belt and Road Initiative (BRI), including supporting the implementation of major projects, expanding import and export trade, and accelerating the development of mineral resources.
He stated that the Kokang Special Administrative Region (SAR) would fully implement an open-door economic policy.
Currently in Kokang, in areas such as Laukkai and Chinshwehaw, efforts have also focused on highway expansion projects and overall infrastructure improvements. Meanwhile, China has reopened some border gates, permitting limited exports and imports between the two sides. Currently, Laukkai is gradually returning to normalcy under the administration of the MNDAA. Recently, they also completed the renovating of Konlong Bridge, which is vital to China-Myanmar trade routes.
Resource exploitation
Regarding mining, the group adopts a dual approach of utilization and integrated exploration, prioritizing actors with strong financial, technical and managerial capacity to secure mining rights.
They list a range of non-metallic minerals, such as limestone, silica, barite, mountain sand, and river sand, and metallic minerals, including lead, zinc, copper, gold, silver and antimony.
What is particularly striking is the explicit mention that antimony—a globally recognized “critical mineral”—is found in the Kokang region, highlighting its strategic importance.
This list of minerals is included in the Kokang economic policy and highlights their importance to China, based on data from the General Administration of Customs of the People’s Republic of China and relevant research papers.
Under its technological and financial development agenda, the Kokang administration is prioritizing investment in advanced digital infrastructure, including 5G networks, data centers, artificial intelligence and cloud computing. This is coupled with a push toward smart manufacturing and automation, signaling an ambition to modernize the local economy through high-tech industries. In the financial and insurance sectors, the policy encourages foreign investment in banking and insurance services, alongside efforts to establish a transparent and legally sound financial ecosystem.
Deepening ties with China
The MNDAA’s economic blueprint reflects more than mere administrative planning; it is a calculated move to institutionalize governance and gain political legitimacy. The group is repositioning itself as a proto-state authority by reclaiming the Kokang region. This shift represents a potential template for other northern EAOs, who may emulate Kokang’s model to solidify their autonomy. In doing so, these groups collectively reinforce the political fragmentation of Myanmar, creating a network of semi-autonomous zones with independent economic and administrative systems.
And the MNDAA’s policy shows clear alignment with China’s cross-border economic strategy, particularly its Yunnan-centric vision of border integration. This not only enhances Kokang’s appeal to Chinese investors—both private and state-backed—but also consolidates its role as a stable, investment-friendly gateway into Myanmar. While this deepens Kokang’s dependency on China for infrastructure, trade and capital, it also enhances its leverage. Control over key trade corridors and access to critical minerals, like antimony, make Kokang an indispensable actor in China’s regional ambitions, particularly its efforts to secure strategic supply chains and trade routes to the Indian Ocean.
Another key element of the MNDAA’s policy is its focus on economic diversification, promoting sectors like high-tech agriculture, labor-intensive manufacturing and electric vehicle assembly to create civilian employment and reduce dependence on armed conflict. However, the rapid expansion of mining and industry without environmental safeguards risks ecological degradation and community displacement, which could provoke local resistance and undermine the MNDAA’s legitimacy.
Political ambitions
Since Operation 1027, the MNDAA’s ambitions appear to be expanding beyond traditional territorial control. Group leaders are now seeking formal political recognition—particularly in the realm of international relations—that goes beyond what Myanmar’s 2008 Constitution provides for self-administered zones. They see the previous framework of limited autonomy and ceasefire-based arrangements as no longer sufficient.
Prior to the operation, the Kokang group controlled just over 3 percent of northern Shan State. Today, its expanded presence—now covering at least 20 percent of the region—has strengthened its demands for a broader political settlement. Observers warn that without formal recognition, the MNDAA risks ending up like other powerful ethnic armed groups such as the United Wa State Army (UWSA) or Mong La—economically influential but politically marginalized. For example, the UWSA’s long-standing ambition to be recognized as a “state”, rather than merely a region, has been consistently ignored by the central government. If the military junta offers only profit-sharing arrangements without meaningful political agreements, the MNDAA may be limited to a role focused solely on trade, lacking the legitimacy it currently seeks.
The coming months will reveal whether Myanmar’s military rulers are willing to engage in deeper political negotiations—or whether Kokang’s territorial gains will translate into little more than an expanded footprint in an unrecognized and fragile economy.
If successful, Kokang’s model could deliver significant economic benefits, improved transparency, and greater connectivity, attracting businesses that prioritize efficiency over political alignment. For instance, Hsenwi has recently seen a surge of Chinese businesses seeking to invest along the China-Myanmar corridor. If Kokang succeeds in securing the type of political agreement it seeks with the military regime—while fully integrating into China’s economic system—it could gain the level of recognition it desires from the Chinese side. Notably, unlike the Wa and Mong La, the MNDAA appears positioned to attain a higher degree of political recognition. This trend could further fragment the already divided Myanmar-China border region into a patchwork of economically autonomous zones, each increasingly integrated with neighboring countries, especially China.
However, growing dependence on Chinese investment and political support poses strategic risks. Any shift in Beijing’s priorities could destabilize these emerging governance models. The MNDAA’s push for economic federalism not only challenges the authority of the central state but also reflects Myanmar’s fragmented political landscape—offering both opportunities and risks for the country’s federal future.
Ultimately, Kokang’s economic transformation could trigger a strategic recalibration of power and sovereignty, reshaping conflict dynamics and redefining the contours of China-Myanmar relations.
Athena Awn Naw specializes in analyzing ethnic conflict dynamics in Myanmar, focusing on China’s expanding influence across economic sectors. Her expertise includes the socioeconomic impacts of China’s involvement, its role in Myanmar’s armed conflicts and peace processes, and its participation in regional initiatives.
