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Trends in China-Myanmar relations: 2018 Year in Review

15 Minutes To Read

Myat Myat Mon looks at where China-Myanmar relations have been in 2018 and where they’re heading.

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This post features significant timelines created by the author on Timeline JS that are incompatible for proper display on the WordPress platform. In lieu of this, we have highlighted the links in full where relevant. 

Against the backdrop of intensifying diplomatic and economic pressures from the West mainly due to the humanitarian crisis in Rakhine State, Nay Pyi Taw’s engagement with Beijing improved significantly in the year 2018, reaching dramatic milestones that have not been achieved since Myanmar’s democratic transition began in 2010: an MoU on the China-Myanmar Economic Corridor (CMEC) was signed as part of the Belt and Road Initiative (BRI); three ‘economic cooperation zones’ in Muse, Chinshwehaw and Kanpiketi were agreed to, with implementation of the Muse zone already in progress; an agreement on a feasibility study of the Muse–Mandalay Railway Project was signed; a framework agreement for the development of Kyauk Phyu Special Economic Zone was signed; the tender for the New Yangon City Project led by the Yangon Regional Government and the China Communication Construction Company will be open for invitation soon; and the State Counsellor formed and leads the One Belt One Road Implementation Committee.

Under the label of BRI Projects, 2018 saw China-Myanmar engagement becoming closer, deeper and wider. This piece is a summary of China-Myanmar relations in 2018, distilled into political aspects (including bilateral visits and issues that dominated the meetings), economic cooperation, China’s public diplomacy and development assistance. The data and information are based on the news covered by the state-run Global New Light of Myanmar, as well as other major news sources published in Myanmar and English languages.

To and Fro: Beijing-Nay Pyi Taw

In 2018, visits of Chinese delegations to Nay Pyi Taw were more frequent than the Myanmar representatives visiting China. Mr. Sun Guoxiang, Special Envoy for Asian Affairs of the Ministry of Foreign Affairs of the People’s Republic of China paid 4 visits to Myanmar: in February, May, July (during the third 21st Century Panglong Conference), and November. During his visit, Mr. Sun met with the State Counsellor, Senior General, and Peace Commission Chair Dr. Tin Myo Win, and repeatedly discussed China’s assistance in the peace process, the Rakhine issue, and border stability.

Mr. Song Tao, Minister of the International Department of the Communist Party of China (CPC) has made 2 visits, in April and November. His visit in April made him the first foreign diplomat to meet new President U Win Myint, who was inaugurated at the end of March. China also opened discussions at the party-to-party level. Mr. Song met the NLD’s Vice-President (2) Dr. Zaw Myint Maung and other CEC (Central Executive Committee) members during his April visit, and at a special dinner hosted by State Counsellor herself at her residence in November. Again, on invitation of the CPC, Dr. Zaw Myint Maung went on a nine-day visit to China along with other NLD members.

Several CPC delegations and diplomatic teams flooded Nay Pyi Taw’s meeting halls, particularly in May, June and July – the same period before the CMEC and other major BRI projects were signed. It seems clear that China’s visits in the first half of 2018 had an influence on formal agreements between Myanmar and China – although due to little information on the details of the meetings, no clear assessments can be made. At the same time, there were pressures from the West with regard to the Rakhine crisis, as well as the government’s rush to hold the next Panglong Conference (after one year of postponement) and include non-NCA (Nationwide Ceasefire Agreement) groups in the negotiations. Both of these conditions provided a conducive opportunity for China to negotiate BRI projects in Myanmar, and actively forward peace intervention and international diplomatic protection for Myanmar.

The timeline below charts the Chinese diplomatic and CPC delegations’ visits to Myanmar as well as BRI-branded projects signed in 2018.

The visits of Myanmar diplomats are not as frequent compared to the number of Chinese delegations to Nay Pyi Taw. Only some Myanmar Ministers, such as Vice President U Myint Swe and Amyothar Hluttaw Speaker Mahn Win Khaing Than visited China.

The following timeline displays Myanmar officials’ visits to China in 2018:

Trends in Myanmar-China Bilateral Relations: The Peace Process and the Rakhine State Crisis: Hot Topics in Bilateral Meetings

 As said above, two of Beijing’s most significant arms in Myanmar, Mr. Sun and Mr. Song travelled frequently between Beijing and Nay Pyi Taw. In addition to their visits, several ministerial level delegations have also been in Nay Pyi Taw. What is significant about these visits by high-level visits Chinese diplomats in meetings with the State Counsellor and Senior General are their contribution towards China’s constructive efforts to support Myanmar’s peace process, as well as assist with the agenda of the Myanmar government and the Tatmadaw in solving the Rakhine State crisis.

Despite its non-interventionist low-profile foreign policy, China was heavily involved in brokering peace between the government, Tatmadaw and the Ethnic Armed Organizations (EAOs). In July, all seven members of the Federal Political Negotiation and Consultative Committee (FPNCC), led by the United Wa State Army (UWSA), joined the Third Session of the 21st Century Panglong Conference through facilitation by China.

Not only did China intervene with the FPNCC to reach the negotiation table in Nay Pyi Taw, it also provided a space for negotiations in its territory. In August, a Tatmadaw delegation and KIO delegation held discussions in Dali, in the Yunnan Province of China. In October, the Chinese Special Envoy Mr. Sun met three Northern Alliance members, the Ta’ang National Liberation Army, the Myanmar National Democratic Alliance Army, and the Arakan Army in Kunming, urging the armed groups to sign the NCA a day before the three groups met the government peace commission in Kunming. The same three groups also met the government peace commission in Kunming again on December 12, through Chinese facilitation.

On the same day of the Kunming meeting, the December 12 Statement by the MNDAA, TNLA, and AA expressed enthusiasm for ending the conflict by political means and joining the peace process. It was surprisingly followed by the Tatmadaw’s announcement of a four-month unilateral ceasefire and a suspension in troop mobilization in five regional Commands in Shan State and Kachin State. The Chinese Embassy welcomed both statements and reaffirmed its support for the peace process and maintaining border stability.

When it comes to China’s involvement in the Rakhine crisis, China facilitated informal meeting with the United Nations, Myanmar and Bangladesh to create a roadmap and timeline for the repatriation of the Rohingya refugees on the sidelines of the United Nations General Assembly in October. China has reportedly said that exerting pressure was not helpful in resolving the Rakhine State crisis and that the issue should not be internationalized. As the Myanmar government and military hoped, China has defended Myanmar against international intervention by blocking a U.N. Security Council resolution and resisting the ‘credible and transparent investigations’ pushed by Britain. The State Counsellor’s meeting with Chinese Premier Li Keqiang at the the 33rd ASEAN Summit in Singapore reaffirmed China’s continued support for the Myanmar peace process and northern Rakhine issue.

Yet stability seems to be a minor concern for China compared to other major economic and strategic interests. China has put much effort in strengthening defence and security relations with Myanmar because each interest is mutually dependent. In other words, China’s economic and strategic visions will not be realized without a stable China-Myanmar border.

Two prominent Chinese ministers, the Public Security Minister and the Defence Minister visited Nay Pyi Taw in May and June respectively and met the State Counsellor, President U Win Myint and the Senior General. Bilateral meetings on security were held both in China and in Myanmar: Myanmar-China bilateral security and rule of law ministerial-level meeting in May; Third and Fourth Myanmar-China (2+2) High Level Consultations in January and December; Sixth Ministerial Meeting on Law Enforcement and Security Cooperation in July.

That being said, the China-Tatmadaw relation is also seen as being equally strong as its relation with the NLD-led government, which means that China still wants to diversify its partnership with both sides in Myanmar. The Senior General is still a focal point of meetings for major Chinese delegations. For the Tatmadaw, China is a shield against action from the international community for its brutal military operation in Rakhine State, and sometimes, as a means to pressure the northern armed groups. Though the BRI projects’ documents can be finalised within the space controlled by the NLD-led administration, the Tatmadaw’s legitimate right to ‘participate in national political leadership’ enshrined in the Constitution makes China reluctant to completely abandon direct engagement with the military.

Expanded Engagement with the Parliament and Yangon Chief Minister

China’s program of engagement with Myanmar is also extended to parliament and other government institutions. In addition to Chinese delegation meetings with the Hluttaw Speakers, there is the increasing pattern of bilateral visits by parliament Speakers. Amyothar Hluttaw Speaker Mahn Win Khaing Than visited China in June. Vice Chairperson of the Standing Committee of the National People’s Congress visited Myanmar in September and met Hluttaw Speakers, including Vice-President U Myint Swe and the Yangon Regional Chief Minister U Phyo Min Thein.

At the State/Region level, Yangon Region Chief Minister U Phyo Min Thein, who gave speeches at spectacular Chinese New Year openings in 2017 and 2018, frequently and actively engaged with Chinese delegation visits more than other Chief Ministers. Being a key driver for the New Yangon City Development Project, of which the tendering process would soon be carried out, it is no wonder that the Yangon Chief is on the Chinese delegations’ radar. To put it bluntly, the Chief Minister was also questioned by Yangon lawmakers in 2017 over transparency and accountability for the purchase of 2,000 new buses from China for his signature public transportation in Yangon. With the tendering process called ‘Swiss Challenge’ coming in 2019 for the New Yangon City Development Project, it is in the best interest of the Yangon Parliament to scrutinize this procurement in order to make the process transparent and competitive. 

Closer Relations with Yunnan

Relations with Yunnan Province have gotten closer, particularly at the ministerial level. In a forthcoming report written by Ma Khin Khin Kyaw Kyee, she describes the situation as follows:

Beijing and Yunnan continue to both play important, yet different, roles on Myanmar issues. Beijing makes national and foreign policies regarding Myanmar that the Yunnan provincial government is expected to implement. Yunnan officials remain a part of decision making on issues related to trade, investments, transnational crime, and other issues that have socioeconomic impact in Yunnan.[1]

News in 2018 reinforced what was emphasized in the report. Yunnan-Nay Pyi Taw relations focused on trade, investment, border stability, as well as establishing a hub for peace brokering. The Fifth Myanmar-China Yunnan Cooperation Forum was attended by the Ministry of Foreign Affairs Permanent Secretary in which cooperation on trade, investment, agriculture, livestock, tourism, education and health were broadly discussed.

The CPC wing of Yunnan province is active, particularly after the signing of the China-Myanmar Economic Corridor. In this way, Yunnan has been designated as the implementer of CMEC projects envisioned by the CPC in Beijing. That being said, as more roads of BRI project implementation are ahead for the landlocked Yunnan province, relations will surely become closer in the coming year. However, disputes such as the border demarcation and border trade (to be discussed below) are also of importance for Myanmar. This means that the negotiation tables should not be dominated only by BRI projects, and that issues affecting the people in the border should also be solved.

Yunnan stands in a critical position for negotiations on border trade and investment, which accounts for 70 percent of Myanmar’s combined border trade, particularly agricultural and livestock products. Taking a look at the level of engagement by Yunnan and Beijing with Myanmar, three circles of relations can be seen: Yunnan’s independent talks with Myanmar officials when it comes to border trade, immediate border disputes, and development in the border areas. Beijing in return, directly promotes BRI projects in Myanmar and issues concerning security cooperation (particularly on anti-terrorism). A shared circle of interest between Yunnan and Beijing lies in peace and stability in the border, drugs and anti-trafficking.

As Yunnan is responsible for handling border trade as well as the implementation of the BRI projects (see the USIP report quote above) has seen the development of the Yunnan-Nay Pyi Taw relationship after September with the signing of the CMEC. Yunnan has actively engaged with Myanmar, whereas Myanmar is still slow in resolving practical border issues. It is highly likely that 2019 will see closer relations with Yunnan – not just with Nay Pyi Taw – but also with the State/Region governments and other actors in Myanmar. The Secretary of Yunnan’s Provincial Party Committee, in November, met the State Counsellor and Senior General and had dinner with key Union Ministers involved in the implementation of the CMEC. Several Yunnan officials have visited Myanmar. Nonetheless, no concrete agreement has been reached.

The below timeline details the Yunnan-Myanmar bilateral exchanges and significant border issues:

Border Trade: An Immediate Concern

The issue of illegal exports to China remains an unresolved trade concern in 2018. Beginning in October, border trade via Muse was slow, especially with the export of rice, maize and livestock, which have been legalized for export by the Myanmar government, but not by the Chinese side. Though China has allowed for a certain legal quota of rice export, taxes were excessively high upon exceeding this quota, leading to illegal export of some agricultural and livestock products to China. Since October, news outlets have reported that security was tight and confiscation was high in China; rice and livestock were dumped in the border trade zones, particularly in towns like Muse. This led to soaring illegal trade, domestic price fluctuations and an unpredictable environment for large-scale merchants in Myanmar. A GNLM figure from December 31st shows that the registered trade volume in Muse faced a drastic fall by US$387.58 million in the current fiscal year compared with last year’s figures (accounted for between 1 October and 21 December).

The closure of the informal trading gate for fruits during the Christmas and New Year season resulted in thousands of fruit trucks trapped and dumped, leading to millions of kyats loss for individual fruit growers. Some media questioned the government’s priority, while the Vice-Chair of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI)  criticized the Commerce Ministry for lacking the capacity to lead discussions in the bilateral trade agreement.

Since June, the Myanmar Trade Promotion Organization, the Yunnan Provincial government and the Kunming People’s Government are reportedly preparing to sign an MoU for the legal export of rice, sugar, corn and other agricultural products to China, but have not yet reached a government-to-government agreement at the time as of this writing. Only a business-to-business contract for the purchase of 15,000 tons of rice and 10,000 tons of corn was signed in December.

In fact, Chinese trade policy has received global criticism for being too protectionist and for its export-driven economy. It is no wonder that Yunnan Province has firmly held on to the border trade with Myanmar. Recently, the overall policy in Beijing is shifting to increase exports for common development, as said by President Xi at the China International Import Expo in Shanghai. The Myanmar Deputy Minister of Commerce personally attended the CIIE in Shanghai. This is likely to be an open door for Myanmar to use Beijing’s new policy to get a trade deal with Yunnan.

Air Travel Soars, but …

Upon the introduction of on-arrival visa for mainland Chinese tourists in October, several new airlines from China have expanded their wings to Yangon and Mandalay. Five new direct flights came into operation in 2018: The Guangzhou-Mandalay flight in October; the Xian-Yangon flight in November; the first Yangon-Hangzhou direct flight in December; the Mandalay-Mangshi flight in December; Myanmar National Airlines’ Yangon-Chengdu flight in December; Mandalay-Shanghai direct flight to be operated in early January 2019.

However, increasing the number of airlines from China and Chinese tourists does not necessarily mean achieving the Myanmar government’s ultimate aim of developing the economic value of the tourism industry. Concerns have emerged in the last few months over what is termed the ‘zero dollar’ tours. News outlets have reported that the zero-budget travel agencies and businesses are often linked to or owned by a single entity linked to China-based company, which means that much of the profit returns to China, leaving no returns in Myanmar’s tourism industry. Some have reported that transactions have been made with Chinese currency or WeChat Pay. Additionally, ‘zero dollar tours’ are operated in a secretive environment with security guards that allow no Myanmar nationals, with some agencies bringing their own Chinese national tour guides.

Where did Chinese Development Assistance go?

A notable sum of Chinese aid went towards supporting the peace process, particularly to government-related peace institutions – though some part of assistance was reported to have been contributed to the internally displaced persons (IDPs) in Kachin State. Special Envoy Mr. Sun’s November visit brought about US$ 900,000 for financing Myanmar’s peace process: US$ 300,000 each to the Peace Commission, National Reconciliation and Peace Centre (NRPC), and Joint Monitoring Committee (JMC). The donation of 10 Volvo cars to the JMC in July saw the Chinese Ambassador to Myanmar answering the media that the BRI is the way to peace, and China, as a Paukphaw friend and neighbour will continue to support Myanmar.

According to state media reports, humanitarian assistance from China to the IDPs in Kachin State amounted to 212 million kyats under two separate donations in June and in November. A package of 80 million kyats for IDPs and disaster victims by the Myanmar-China Paukphaw Friendship Fund was also donated in June.

China has contributed 1000 units of Assembled Board Houses for refugees and 200 million kyats as part of its humanitarian assistance to the Rakhine State crisis. Clearly, China has prioritized Kachin State and Rakhine State by allocating its assistance mainly through government channels. Kachin and Rakhine, both conflict-torn States, are of strategic interest for China because of the Myitsone Dam and Kyauk Phyu Special Economic Zone, and that China seeks to gain face in the the areas and in the local communities where China’s strategic and economic interests are situated.

Notably, some Chinese donations have gone to the police sector. The visit of Chinese Public Security Minister donated 5 million RMB worth of police equipment, 18.9 million RMB worth of police vehicles and two laptops to the Latha police station.

Public Diplomacy Effort

report by ISP Myanmar in February mentioned that China’s engagement with Myanmar has become multi-faceted, now including cultural exchange programs, art exhibitions, charitable and social welfare initiatives, media campaigns, and the provision of scholarships for Myanmar students and civil servants. 2018 leveraged China’s massive emphasis on public diplomacy as part of overall Chinese foreign policy in Myanmar.

What is notable in 2018 is the newly opened Chinese Cultural Centre in Yangon, the first ever public space for promoting cultural exchanges and cooperation, and an obvious step for China’s public diplomacy influence in Myanmar.

Since 2017, the celebration of Chinese New Year has received increasing media attention and public participation. Roads in Yangon’s Chinatown lit up with New Years decorations, music and street vendors selling Chinese food.

Unlike other foreign film festivals held in Myanmar, the Chinese Film Festival in 2018 was extended to cinemas in nearly all 14 States and Regions of Myanmar, including Nay Pyi Taw (and only leaving out Chin State, Rakhine State and Kayah State). In the case of TV programs, Guangxi People’s Broadcasting Station (GPBS) and MRTV agreed to broadcast a Chinese cartoon series with Myanmar dubbings starting from August 2018. November saw a public art show in Yangon titled ‘Myanmar: Through the Dragon’s Brush.’

Much emphasis was also seen under the umbrella of translating Chinese literature and writing new books, including a translation of President Xi’s ‘The Governance of China.’ The Chinese Embassy Facebook page in July announced the translation and publishing of 12 books, costing approximately US$ 38,000.

Looking ahead…

2018 was a significant year that brought Myanmar even closer to China’s Belt and Road trajectory. 2017 was “the year of foundational vision” to officially embrace the BRI through the State Counsellor’s attendance at the first Belt and Road Forum for International Cooperation and the signing of five agreements that covered cooperation within the BRI framework. 2018 became “the year of signing MoUs.” Those initial agreements were further expanded into detailed projects and coded in agreements by bilateral implementation bodies. To wrap up, in 2018, three major projects were signed: the China-Myanmar Economic Corridor, the Kyauk Phyu Special Economic Zone, and the Mandalay-Muse Railway feasibility study, the New Yangon City Project to be finalized soon. 2019 will be “the year of implementation,” when signed ink will turn to concrete.

Parallel to these long-term Belt and Road projects, the on-the-ground realities in border trade between Myanmar and China, especially with Yunnan Province, should not be ignored. The second half of 2018 has seen a substantial downturn in border trade. Despite ongoing negotiations for border trade MoU between the Myanmar Ministry of Commerce and the Yunnan Provincial government since the middle of 2018, no formal agreement has materialized. This has resulted in losses for traders and farmers, an increase in illegal trading routes and domestic price instability. In 2019, a Myanmar-Yunnan border trade agreement should urgently come into enforcement as the top priority for the new year’s resolution as well as stability of border trade gates.

The Myitsone nightmare has re-gained attention in early 2019. The Chinese Ambassador’s visit to Kachin State has increased speculation on the possible resumption of the Myitsone Dam. Misleading press statements from the Chinese Embassy claimed that Kachin locals supported the Myitsone Dam. In protest, Kachin political parties and civil society groups issued a statement to counter the Chinese Embassy’s statement and emphasize their stance against the Myitsone Dam.

Already, the possible resumption of Myitsone has received much media attention, spurred on by debates among Myanmar Facebook users. Bertil Linter recently noted that “the Myitsone dam would represent a gamble, and one that could ignite the popular anti-China movement that swept the country in 2011.” Moreover, it is certain that the public will not hesitate to protest against Myitsone. Yet, China’s push has only become more persistent in 2019. The NLD government will be stuck between the hopes of voters from the 2015 election, and the northern neighbour that has gained increasing influence in Nay Pyi Taw politics since 2018.

It is also reported that the State Counsellor might attend the Second Belt and Road Cooperation Forum in Beijing this coming April. It is obvious that China wants to settle Myitsone’s destiny soon, ideally bringing the Myitsone topic back to the negotiating table before her visit. Her visit to China would be critical for the future of the Myitsone dam, as well as to further leverage the pace of project implementation and other projects proposed by China (China has proposed 40 projects for the CMEC, but Myanmar has so far only agreed to 9 of them).

China is also gaining face and momentum by intervening in the peace process. The Tatmadaw’s four-month ceasefire declaration in December, as well as seeming progress in the peace process would not have been realized without intervention by China. In the light of a stable environment for Chinese-financed projects, plus an expectation of a green light for Myitsone and the expansion of other proposed projects, China inclines to utilize its utmost potential and bargaining chips to get the non-NCA groups signed before the State Counsellor’s April visit to Beijing.

So, what should we look ahead to in 2019? And what should we pay attention to? First and foremost, it is inevitable that Chinese intervention will be influential in the peace process and Rakhine crisis. Including the Myitsone hot spot, other major signed projects and the 40 proposed projects by China should be tracked. Access to information on project documents and the progress of projects should be made publicly available. The tendering process of the New Yangon City Project should be closely scrutinized and followed. And finally, the border trade agreement with Yunnan should be on the priority list of the government’s major campaign on economic development in 2019.

Myat Myat Mon is currently a UNESCO-China Great Wall Programme fellow in International Economics and Trade at Zhejiang University of Science and Technology. She thanks Tea Circle editors, Siew Han Yeo and Matthew J. Walton, for their insightful edits and comments in the first draft.

Notes
[1] This quote was originally cited in a USIP report. See United States Institute of Peace (USIP), “China’s Role in Myanmar’s Internal Conflicts”, September 14, 2018. https://www.usip.org/publications/2018/09/chinas-role-myanmars-internal-conflicts