Myanmar-China Relations: 2020 Review
By Nan Lwin 29 December 2020
YANGON—2020 began with an event of major significance to Myanmar-China relations—Chinese President Xi Jinping’s visit to Naypyitaw in early January. During Xi’s visit, the two sides inked nearly three dozen agreements, the most Myanmar has signed with its powerful neighbor at one time since 2000.
Though Myanmar is grappling with the COVID-19 outbreak, China has repeatedly pushed the country hard to begin practical implementation of projects under the China-Myanmar Economic Corridor (CMEC), which is part of the Belt and Road Initiative (BRI).
This year, the Myanmar government has shown a markedly cautious approach to the BRI projects despite the pressure from China. It has sought third parties’ help to review whether BRI projects are commercially viable and whether the proposals submitted by China are reasonable, including their cost. Moreover, it has reduced the size of the initial phase of the China-backed New Yangon City and opened tenders to other parties to invest in it.
In a bold move, the government also launched an investigation into irregularities surrounding a controversial city backed by a Chinese investor and a local Border Guard Force in Karen State.
The Irrawaddy looks back at the major events and issues between Myanmar and China in 2020.
Chinese president visits
In early January, Xi made a two-day visit to Naypyitaw, becoming the first Chinese president to visit China’s southern neighbor in nearly two decades.
During his trip, Myanmar and China signed a total of 33 memorandums of understanding (MoUs) and agreements, and exchanged letters and protocol agreements calling for cooperation in sectors including infrastructure mega-project development, railways, industrial and power projects, trade, investment and human resources, among others.
Among the agreements, the two sides signed a concession agreement and shareholders’ agreement for the Kyaukphyu Special Economic Zone (SEZ) deep seaport project, which will boost China’s presence in the Indian Ocean. The development of the SEZ is part of Beijing’s wider plan to expand its footprint in South Asia, which has seen it invest heavily in Indian Ocean ports through the BRI.
Border business park agreed
The Kachin State government signed an MoU with a Chinese-backed company to develop a business park project at Kanpiketi, a border town in northern Myanmar, as a part of the BRI.
The Kanpiketi Business Park will cover nearly 70 acres (28 hectares) in the border town in northern Kachin State’s Special Region 1 with an estimated cost of US$22.4 million (about 30 billion kyats). The area is controlled by the New Democratic Army-Kachin (NDAK) militia, which is allied with the Myanmar military. The business park is one of three cross-border economic cooperation zones under the CMEC agreement.
Outpouring of COVID-19 aid
Since Myanmar reported its first COVID-19 cases in late March, the Chinese government and many Chinese companies have poured a massive amount of COVID-19-related medical supplies into Myanmar, ranging from mobile toilets and surgical masks to test kits and ventilators.
China also dispatched a team of experts to offer technical assistance and share China’s experiences fighting COVID-19 with Myanmar medical experts.
Chinese provincial governments made donations to Myanmar states and regions that lie on the CMEC. Moreover, Chinese companies—from giant construction and energy companies to agriculture firms with business concessions in Myanmar—poured millions of dollars’ worth of medical supplies such as surgical masks, hand sanitizers and ventilators to Myanmar. Most have experienced local resistance to their projects due the social and environmental damage they cause.
The Chinese Embassy said the Chinese government dispatched medical aid four times. It has donated more than 4 billion kyats for COVID-19 aid in Myanmar, including 65 million kyats for surgical masks, 300,000 test kits, ambulances and other equipment. The total value does not include donations from companies or individual provinces.
China put propaganda articles in Myanmar’s popular daily newspapers claiming that the COVID-19 pandemic would not deter China from proceeding with the BRI.
China links Myanmar’s recovery with BRI
One week after Myanmar launched its COVID-19 Economic Relief Plan (CERP),
China sought to move forward on the development of its BRI projects in Myanmar based on the plan.
Chinese Ambassador to Myanmar Chen Hai and Myanmar’s Deputy Minister for Planning, Finance and Industry U Set Aung met for “in-depth discussions” on the implementation of projects based on CERP, including New Yangon City, Kyaukphyu SEZ and the China-Myanmar Border Economic Cooperation Zone, according to the Chinese Embassy.
CERP seeks to mitigate the economic impact of the pandemic by implementing new measures and response plans. Moreover, the plan is considered a roadmap for the country both during outbreak and in the post-COVID-19 period. If the projects are added to the CERP, they could be considered priority projects to implement.
Commercial viability and CMEC
Amid added pressure on Myanmar from China to step up practical cooperation on BRI projects, Myanmar’s deputy minister for planning, finance and industry (MOPFI), U Set Aung, told the media that CMEC projects would be added to the Myanmar Project Bank once they had been determined to be commercially viable and to have strategic significance to Myanmar.
The project bank lists only priority investment projects that fall under the country’s sustainable development plan. So far, Xi’s most ambitious infrastructure projects, the Kyaukphyu SEZ, China-Myanmar Economic Cooperation Zone and New Yangon City, have not yet been added to it.
Xi pushes BRI amid COVID-19 crisis
Xi again expressed hope that Myanmar would speed up cooperation with China on implement its ambitious infrastructure projects in the country during a telephone conversation in May with Myanmar President U Win Myint.
Even as Myanmar was experiencing its first wave of the COVID-19 crisis, Xi said he expected the two sides to cooperate closely and speed up implementation of the CMEC projects that were agreed to during his visit to Myanmar in January.
Xi said that as both countries implement COVID-19 prevention and control measures, the two sides should advance exchanges and cooperation and push for positive progress on CMEC projects.
Swiss firm scrutinizes rail project
In June, the Myanmar government revealed that it has been receiving help from a Swiss company to scrutinize a feasibility study for an ambitious Chinese railway project submitted by China Railway Eryuan Engineering Group (CREEG).
The project is envisioned as a railway link between Mandalay and Kunming, the capital of Yunnan Province in southwestern China.
Myanma Railways managing director U Ba Myint said the Swiss company would check the details of the feasibility study, including railway routes, alignments and specifications. Moreover, the company would analyze whether the cost calculated by the Chinese side makes sense.
The $8.9 billion Muse-Mandalay Railway project is part of the backbone of the CMEC and an initial part of the strategic China-Myanmar High Speed Railway, which aims to connect Kyaukphyu in western Myanmar’s Rakhine State with Kunming via Muse in Shan State.
U Ba Myint said the Swiss company would also examine the project to identify any potential negative impacts on Myanmar. He offered the first official assurance that “We have no plan to implement it at all if the project will be bad for our country.”
Four BRI projects unveiled
Myanmar’s Ministry of Construction in June unveiled four additional projects to be implemented under the BRI, including expressways, a bridge and a tunnel, which will form crucial links in trade routes with China.
Deputy Construction Minister U Kyaw Lin said the plans call for the construction of an expressway connecting Shan State’s Muse—Myanmar’s largest trade portal with China—with Mandalay, central Myanmar’s commercial center, via Tigyaing in eastern Sagaing Region. The expressway is envisioned as another lifeline for China-Myanmar border trade.
Moreover, the government agreed to implement a highway connecting Naypyitaw with Kyaukphyu via Thayet and Aung Lan in Magwe Region. It also revealed plans to construct a new bridge over the Salween River in Kunlong, and an outer ring road in Chinshwehaw, both in the Kokang Self-Administered Zone (SAZ) in northern Shan State.
Included in the list is the Watalone Tunnel project on the Taunggyi-Loilin Road in Shan State, which is part of the Shan Highway project. The project aims to create a safer and faster route for travelers, as the current route is prone to accidents due to its many curves and steep slopes.
Chinese development on Thai border probed
The Myanmar government in June formed a tribunal to investigate irregularities surrounding a controversial China-backed city development project near the Thai border in Karen State.
The planned mega resort and city expansion project is controlled by the Karen State Border Guard Force, a Myanmar military-backed armed group led by Colonel Chit Thu and formerly known as the Democratic Karen Buddhist Army (DKBA). The project is a collaboration between a Hong Kong-based company called Yatai International Holding Group (IHG) and Col. Chit Thu, officially dubbed the “Myanmar Yatai Shwe Kokko Special Economic Zone.”
The project has sparked criticism due to a lack of transparency, land confiscations, confusion over the scale of construction and the growing influx of Chinese money as well as suspected illicit activity and local concerns about the social impacts of casino businesses.
Cross-border e-commerce boost
Myanmar and China agreed to promote cooperation on digital economy and cross-border e-commerce systems in July to allow trade and economic activity to proceed smoothly during times of pandemic.
According to a press release from the Chinese Embassy, Yunnan province will provide training for cross-border e-commerce operators from Mandalay Region to help export agricultural products such as rice, beef, bananas and pineapples to Yunnan, or to China’s domestic market through Yunnan.
The two sides also agreed to enhance the exchange of ideas and practical cooperation, such as strengthening agriculture through e-commerce, and the speedy implementation of relevant cooperation on agreements between Yunnan and Mandalay, and supporting the socioeconomic recovery of the two countries, the press release said.
In late July, a war of words on social media between the US and Chinese embassies pulled Myanmar into a diplomatic dispute between the two powers. An op-ed by a US diplomat first alleged that China’s actions in the South China Sea and its aggressive crackdown on Hong Kong are part of a larger plan to undermine the sovereignty of its neighbors, including Myanmar.
The US diplomat warned that China has threatened and undermined Myanmar’s sovereignty in the form of unregulated banana plantations in Kachin State, questionable investments and corruption in the mining and forestry sectors, and infrastructure projects and special economic zones that pile on debt and require that Myanmar cede regulatory control. He also pointed to rapid environmental destruction, which he said was a result of corruption and poorly regulated investment from China.
The Chinese Embassy responded aggressively, accusing the US diplomat of “outrageously smearing China” and attempting to sow discord between China and Myanmar, damaging the countries’ relations and bilateral cooperation. It said the article not only reflected the “sour grapes” mindset of the US toward China-Myanmar relations, but also a global effort by the US to shift attention away from its domestic problems and seek selfish political gain.
Beijing backs Shwe Kokko probe
In August, China announced its support for Myanmar’s move to investigate irregularities surrounding a controversial city development project near the Thai border in Karen State run by Chinese investors accused of illegal casino activities in Cambodia and the Philippines.
The developer of the project claims that the project is a part of China’s BRI and that the goal of the project is to make a significant contribution to the huge infrastructure scheme. However, the Chinese Embassy said the project is a third-country investment and has nothing to do with the BRI. It stressed that the Chinese and Myanmar governments have a clear consensus on this.
High-level pressure on BRI
As COVID-19 cases surged in Myanmar in September, Yang Jiechi, a member of the Political Bureau of the Communist Party of China (CPC)’s Central Committee and director of the committee’s Office of the Foreign Affairs Commission, made a stop in Naypyitaw, before heading to Europe.
Yang, who is widely considered the highest-ranking diplomat within the CPC, met separately with Myanmar State Counselor Daw Aung San Suu Kyi and President U Win Myint.
In his meetings with the leaders, Yang urged Myanmar to maintain its efforts to implement BRI projects, for which agreements were reached during Chinese President’s visit to Myanmar in early January.
Yang also announced the provision of a 200-million-yuan grant to the Myanmar government for uplifting the livelihoods of people in Rakhine State.
German firm to oversee New Yangon City bid
The Myanmar government in September announced it had awarded a contract to German consulting firm Roland Berger to oversee a “Swiss challenge” tendering process for the initial phase of the New Yangon City project in Myanmar’s commercial capital, Yangon.
New Yangon City is one of the local backbone projects of the BRI in Myanmar. The Ministry of Industry and Foreign Economic Relations (MIFER) said Roland Berger’s consultancy services would cover end-to-end preparation and execution of the Swiss challenge process, including support for communicating the outcome of the process to external stakeholders, and for the negotiation, preparation, revision and signing of the concession agreement.
In November, MIFER said nine firms including firms based in India, Singapore, France and Taiwan are qualified to submit rival plans to compete against the initial development proposal put forward by Beijing-based China Communications Construction Co. Ltd. (CCCC).
Border trade hit by China’s COVID-19 rules
This year, Myanmar’s exporters, farmers and those involved in related businesses faced severe losses due to the impact of the strict COVID-19 prevention measures imposed by China, Myanmar’s largest trading partner.
According to Ministry of Commerce data Myanmar’s exports through Muse to China dropped by about $140 million between Oct. 1, 2019 and Sept. 4 this year compared with the same period a year earlier.
Since late March, Myanmar and China’s border gates have been closed to people not involved in transporting goods, and trucks exporting goods have to follow COVID-19-related procedures. In September, Myanmar traders faced another serious blow after China shut down for more than a week crucial customs gate in China’s Ruili to curb the spread of COVID-19.
Congratulations!… and yet another BRI reminder
In his congratulatory message on the NLD’s landslide victory in the Nov. 8 election, President Xi said used the opportunity to express his readiness to make joint efforts with Daw Aung San Suu Kyi to boost practical cooperation on BRI projects.
In the congratulatory statement, Xi, in his capacity as general secretary of the Chinese Communist Party (CCP), said he would make joint efforts with Daw Aung San Suu Kyi in pushing various fields under the BRI.
Border agreement breached
Throughout the year, China’s construction of fences along the China-Myanmar border in Kachin and Shan states drew criticism from citizens and authorities alike in Myanmar.
In October, China started erecting the fence along the border in Kachin and Shan states, saying the move was needed to prevent unregistered migrants from spreading COVID-19.
The boundary director of the Consular and Legal Affairs Department at the Ministry of Foreign Affairs, U Thein Min Tun, said that China had infringed upon the officially demarcated border in eight places in Shan State.
The Myanmar military and authorities also sent complaint letters after China allegedly violated the border agreement in Laukkai in the Kokang Self-Administered Zone in northeastern Shan State.
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