Guest Column

In Burma, a Neglected Battleground for China and Japan

By Fangyue Diana Bao 13 April 2013

Burma’s President Thein Sein went to China earlier this month to meet China’s new President Xi Jinping and attend the Boao Forum, hoping to boost lagging Chinese ties. Meanwhile, Aung San Suu Kyi, Burma’s democracy icon and leader of the opposition National League for Democracy party, traveled to Japan on Friday for the first time in 27 years. These two diplomatic trips illustrate the evolving and heightened role of Burma in the Sino-Japanese rivalry.

Relations between China and Japan have long been strained by historical antagonism from the World War II period and more recently by the widely publicized dispute over sovereignty of uninhabited islands in the East China Sea. Tension over the Senkaku/Diaoyu Islands has attracted international attention, particularly since Shinzo Abe was re-elected as Japan’s prime minister, and some observers say the confrontation presents important challenges to East Asia stability.

While this island dispute has made a splash in the international media, a quieter but increasingly important story is being played out: Burma’s growing role in the rivalry.

Burma’s natural resources, strategic location and economic market have been targets of competition between China and Japan for decades. During World War II, the Japanese army cut China’s military supply line through the Burma Road, which links to southwest China, and Burma was transformed into a battlefield. Since the war, Japan has continued providing economic and diplomatic support to Burma. Before 1988, half of all foreign economic assistance came from Japan. Even during the 1990s, when Western powers imposed sanctions, Japan was Burma’s largest annual aid provider until China surpassed it in that role. Today China is also Burma’s biggest foreign trade partner after Thailand, while Japan remains the largest creditor.

China is increasingly concerned about a loss of prominence in Burma and the diminution of a strategic economic cooperative partnership signed by both countries in 2011. Dai Xu, a Chinese military expert and director of the Chinese Marine Security and Cooperation Research Institution, expressed these concerns in China’s government-controlled nationalistic newspaper, The Global Times, in January: “For China, the importance of Senkaku Islands and Myanmar [Burma] are not on the same level: the former is an issue of national dignity, while the latter is a matter of life and death.”

China has taken clear steps to enhance engagement in Burma. The Chinese government appointed Wang Yingfan, the former deputy foreign minister, as its first special envoy for Asian affairs in February, and his top priority will be Burma.
Wang is working with the newly appointed Chinese ambassador to Burma, Yang Houlan, to resolve long-standing problems of ethnic conflict and crime along the Sino-Burmese border. This effort involves renewing peace talks between Burma’s national army and ethnic minority rebels from the Kachin Independence Army (KIA).

Despite this engagement, however, previous investment deals between the Chinese and Burmese governments have faced recent hurdles. The Chinese-backed Myitsone dam project in north Burma was suspended following severe opposition from local residents and the Burmese public, while the Letpadaung copper mine and Chinese oil and gas pipelines have also come under fire. Critical civil society groups have been backed by the NLD, which is supported by Japan and the United States. In Chinese circles, this is seen as an element of a US policy to “contain” China and pivot toward Asia.

Japan is usually considered part of the US containment strategy, and China has noticed as Japan’s government tries to boost ties with Burma. In late January during Abe’s first overseas trip to Southeast Asia, the Japanese prime minister pledged to waive 300 billion yen (US $3.4 billion) of Burma’s debt and provided a 50 billion yen loan to the country’s infrastructure development.

Japan worries that too strong a Chinese presence in Burma will undercut Japanese security interests, and has thus boosted its economic footprint in the country. The Japanese government plans to build a major industrial zone near Rangoon, including a port and industrial park, that will be up and running in 2015. Japan also plans to invest in the Dawei special economic zone in south Burma and has encouraged Japanese corporations to start businesses in the country to compete with the influential Chinese businesspeople, who have traditionally been wealth-holders in Burmese society.

As a result, many Japanese companies have shifted their attention from the Chinese market to the Burmese one; more than 300 Japanese businesspeople visited Burma last year. Internationally, Burma cleared about $1 billion of overdue debt with the Asian Development Bank and the World Bank thanks to a bridging loan through Japan. These international financial groups have agreed to provide more foreign aid to Burma since last year.

Recent Sino-Japanese tension over Burma was not recognizable until Thein Sein began rolling out a platform of economic and political reforms in 2011, offering greater opportunities for foreign investment and cooperation. Both China and Japan have noticed the potential for further competition in Burma’s market, and the ongoing push-pull between them illustrates Burma’s strategic significance. As a newly opened state, Burma has become the subject of international attention, and the Sino-Japanese rivalry is a serious aspect of the country’s newly recognized importance.

Fangyue Diana Bao is a student in the Edmund A. Walsh School of Foreign Service, Georgetown University, in the United States.