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GREAT POWERS AND THE CHANGING MYANMAR ISSUE BRIEF NO. 1 SEPTEMBER 2013
Chinese Investment in Myanmar: What Lies Ahead? By Yun Sun
This issue brief examines reasons for the sharp drop in Chinese investment in Myanmar since 2011, the impact of the reduced investment, and the prospects for future Chinese investment in the nation formerly known as Burma. KEY FINDINGS:
1 After a reformist government re-
3 China perceives that Myanmar
placed a military junta in Myanmar in 2011, Chinese investment in the nation plummeted – approximately $12 billion from 2008 to 2011 to just $407 million in the 2012/2013 fiscal year.
is now a more unfriendly and risky place to invest and is displeased that the Myanmar government is not doing more to protect Chinese interest in the country.
2 The three largest Chinese invest-
4 In a move to gain greater accep-
ments in Myanmar – the Myitsone Dam, the Letpadaung Copper Mine and the Sino-Myanmar oil and gas pipelines – have sparked local opposition and criticism in Myanmar to varying degrees, creating problems and uncertainties for Chinese investors.
tance of its investments in Myanmar, China is improving its profit-sharing, environmental and corporate social responsibility programs in the nation. 5 China has learned important les-
sons about investing in other countries from the problems it has encountered in Myanmar.
6 Reduced Chinese investment in
Myanmar could hurt Myanmar’s economy in unexpected ways. Greater foreign investment is needed in Myanmar, particularly in the nation’s underdeveloped and inadequate infrastructure that is acting as an obstacle to industrialization. 7 Chinese investors and the govern-
ment of Myanmar should work together to reduce distrust and hostility on both sides and increase responsible and mutually beneficial investment in Myanmar to benefit both nations.
This is the first of a series of four issue briefs on the changes and challenges that Myanmar faces in its domestic and foreign policies since the beginning of democratization in the nation in 2011. These briefs will explore how external factors and forces influence and shape various aspects of Myanmar’s internal development, including economic growth, ethnic conflicts and national reconciliation. This first brief focuses on the status and future of troubled Chinese investment projects in the country and their potential implications for Sino-Myanmar relations. Future briefs will explore the development of the Myanmar government’s peace negotiation with border ethnic groups in northern Myanmar as well as the external factors in the process, US-China dynamics inside the country, and the roles and policies of other regional players. YUN SUN
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Overview The drop in Chinese investment caused total foreign investment in Myanmar to fall to $1.42 billion in the past fiscal year – down from $4.64 billion and $20 billion in the two previous years, according to the Myanmar government.
Chinese investment in Myanmar has fallen dramatically since Myanmar’s current reformist government took office in March 2011, replacing a military government. From 2008 to 2011 the total Chinese cumulative investment in Myanmar jumped from the equivalent of $1 billion to the equivalent of nearly $13 billion (US).1 Most of these committed investments – perhaps $7.5 billion according to Chinese official Xinhua News2 -- were disbursed in 2011.3 However, political reforms since 2011 have substantially impacted Chinese projects, causing the rapid decline in Chinese investment. Myanmar reported that Chinese companies invested only $407 million in the country in fiscal year 2012/2013, a major decrease from the previous two years.4 Other than the continued disbursement of previously committed investment, few if any new major investment projects have been announced. Until about three years ago, China was not the largest investor in Myanmar, with smaller investments in the nation than ASEAN partners Thailand and Singapore. The boost came primarily in 2010, with the Myitsone Dam project, the Sino-Myanmar oil and gas pipelines and the Letpadaung Copper Mine project, collectively valued at more than $8 billion in terms of committed investments.5 The sharp reduction of Chinese investment in 2012 is the direct result of the perceived “China-unfriendly” moves by Myanmar, as China has warned its companies of the “rising political risk against Chinese investment” in the country.6 From Beijing’s vantage point, the local population turned hostile against Chinese projects and the Myanmar government has appeared reluctant to take actions to protect Chinese commercial interests. Despite the earlier expectation that Western investments will pour into Myanmar after the financial sanctions were lifted, non-Chinese investment in Myanmar in fiscal year 2012/2013 is far from being enough to make up for the steep drop in investments from China, which remains Myanmar’s largest trading partner. The drop in Chinese investment caused total foreign investment in Myanmar to fall to $1.42 billion in the past fiscal year – down from $4.64 billion and $20 billion in the two previous years, according to the Myanmar government.7 Domestic politics and public sentiment in Myanmar have introduced major uncertainties and problems for Chinese investors. Since the current government of President Thein Sein took office in 2011, each of the three largest Chinese investment projects in Myanmar – the Myitsone Dam, the Letpadaung Copper Mine and the Sino-Myanmar oil and gas pipelines – has encountered serious difficulties. Construction of the Myitsone Dam has been suspended since September 2011 and will remain so at least until the end of the current term of President Thein Sein in 2015. The prospects for its resumption after that are unclear at best. The operation of the Letpadaung Copper Mine has been suspended since November 2012, following mass local protests and demonstrations and is likely to resume in the near future. Meanwhile, the Sino-Myanmar pipeline project has proceeded relatively smoothly – the gas pipeline began serving China in late July, with the oil pipeline presumably to follow – despite vocal local criticism and opposition. These three projects symbolize China’s most important economic interests in the newly transformed Myanmar. What happens with the projects will have major impact on
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Bhutan China
Myitsone Dam
India
Bangladesh
Letpadaung Copper Mine
MYANMAR China-Burma Oil & Gas Pipelines
Laos
Thailand
Cambodia Vietnam
MYANMAR
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China’s current top priority in Myanmar is to protect its existing investments from further damage caused by domestic politics and social unrest in Myanmar.
Sino-Myanmar economic and political relations, the future of Myanmar’s economic development and even regional politics. China has already adapted its investment strategies in light of the perceived “deterioration” of the investment environment in Myanmar. In particular, the settlement recently reached on the Letpadaung Copper Mine between the Chinese investor and the Myanmar government will cast important light on the future of the troubled Chinese projects in the country.
Behind China’s Plummeting Investment While recognizing their cooperation with the previous military junta is a major source of local antagonism, many Chinese are displeased with the new Myanmar government for the difficulties they have encountered. Pointing out that a large number of current senior Myanmar government officials held high positions in the military junta that previously ruled the country and fully supported these projects in the past, Chinese stakeholders argue that these officials – including President Thein Sein – have now taken the opposite position. Thein Sein was Myanmar’s prime minister from 2007 to 2011 and endorsed all the Chinese investments inked during this period. Despite a lot of grumbling over the perception in China that the United States has promoted democratization in Myanmar in order to undercut China’s strategic interests, the Chinese government and involved state-owned enterprises were under no illusions about the underlying cause of their situation. China’s current top priority in Myanmar is to protect its existing investments from further damage caused by domestic politics and social unrest in Myanmar. Understanding these projects’ deficiencies in profit-sharing, environmental protection and corporate social responsibility programs, the Chinese appear willing to make concessions in these areas in exchange for consent by the local community and the government to allow the projects to move forward. This interpretation seems to be demonstrated by the renegotiation of the contract for the Letpadaung Copper Mine and the enhanced environmental protection efforts and corporate social responsibility projects in connection with the pipelines and the Myitsone Dam. For now, new large Chinese investment initiatives are generally being suspended. To reduce the negatives associated with Chinese investment, China’s investment authority advises Chinese businesses to seek joint ventures with other foreign companies to diversify their identity and reduce risks in Myanmar. The multinational nature of the SinoMyanmar gas pipeline is believed to have partially shielded the project from unfavorable pressure and government decisions. Following the example, China Mobile joined hands with the British firm Vodafone in the bidding for telecom service license in Myanmar early this year. (However, China Mobile subsequently withdrew, saying the project did not “meet the internal investment criteria.”) The new trends of China’s investment in Myanmar are having mixed effects. On the positive side, the renegotiated terms for profit-sharing and enhanced awareness and resources designated to environmental and social issues will create more benefits for the Myanmar government and people. In the long run, they represent a victory for
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political liberalization in Myanmar and will strengthen the course of the country’s economic progress. For China, the failures and losses generate important lessons regarding its mercantilist overseas investment in less developed countries and its relationship with authoritarian regimes and the local people, especially involving risk assessment and crisis management. The setbacks in Myanmar have translated into retrospection and policy adjustments by both the Chinese government and companies. However, in the short-term, the direct impact of China’s reluctance to invest might lead to unexpected negative consequences. As Myanmar scrambles to deliver economic benefits to its people in order to reinforce the viability of its democratic system, foreign investments are critical for the process. One major obstacle to the industrialization of Myanmar has been its underdeveloped and inadequate infrastructure, such as a shortage of electricity and an inadequate electric transmission system, along with a poor national transportation network. These are areas where Chinese investors could make a key contribution. In this sense, the decrease of Chinese investment could undercut the speed and scope of Myanmar’s economic development if there is no timely substitution for the withdrawn Chinese capital. Many foreign investors are currently deterred by Myanmar’s volatile investment environment, as seen in the legislative-executive struggles, ethnic and religious conflicts, poor infrastructure, and absence of an effective legal and regulatory regime – even without the negative experiences of Chinese investors.
As Myanmar scrambles to deliver economic benefits to its people in order to reinforce the viability of its democratic system, foreign investments are critical for the process.
Status of Major Chinese Investment Projects in Myanmar The three major Chinese investments in Myanmar we have been discussing – the Myitsone Dam, the Letpadaung Copper Mine and the Sino-Myanmar oil and gas pipelines – stand out due to their size and significance. All three projects were finalized between December 2009 and June 2010, when China consciously pushed to ink these deals before the 2010 elections to maximize its holding of Myanmar natural resources. (The move was motivated by the concern about possible uncertain policy direction of the new government and the potential influx of Western competitors.) However, the dramatic reform by the Thein Sein government – which went much further than almost every foreign country, including the US, anticipated – undercut China’s original plan. As already noted, two of the three major projects are currently suspended and the other one is limping on, albeit with similar problems. Chinese investors have been working with the Myanmar government and local communities to address the issues they face.
The Letpadaung Copper Mine The Letpadaung Copper Mine project is a joint venture between Wanbao Mining, a subsidiary of China’s state-owned China North Industries Corporation (NORINCO) and Union of Myanmar Economic Holdings Ltd (UMEHL), with a total estimated investment of $1.065 billion. The agreement was finalized June 3, 2010 during then-Chinese Premier Wen Jiabao’s visit to Myanmar. The production of the mine commenced in the spring of 2012 but was halted in June due to local complaints and protests against land
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The production of the mine commenced in the spring of 2012 but was halted in June due to local complaints and protests against land grabbing and environmental pollution.
grabbing and environmental pollution. Operations were resumed in September but only lasted for two months before mass protests completely derailed work in November 2012. After the police brutally cracked down on the protests, generating fierce and widespread domestic and international criticism, the Myanmar government set up an investigation committee chaired by Daw Aung San Suu Kyi to scrutinize the project and its alleged environmental and social damage. The investigation report released in March 2013 supported the continuation of the project. However, the report concluded that the compensation to local farmers was “improper” and “lacked transparency” and that the mine “lacked environmental protection measures and had been developed without an environmental impact assessment, a social impact assessment or a heath impact assessment or an environmental management plan.” 8 The report recommended that these requirements be fulfilled before the project continued. Wanbao Mining and the Chinese government welcomed the report’s findings because the report reached a favorable verdict about the continuation of the project. Since then Wanbao, UMEHL and the Myanmar government have engaged in lengthy negotiations over the revision of the contract. In mid-July 2013, a new contract was approved by the Myanmar Investment Commission. The most striking revision has been on the profitsharing of the project. The new contract stipulates that Wanbao and UMEHL will give up 21 percent and 26 percent, respectively, of their original 51percent and 45 percent share of the profits and hand them over to the Myanmar government.9 Compared to the old structure, where Wanbao, UMEHL and the government would receive 51 percent, 45 percent and 4 percent of the profits, respectively, the Myanmar government will receive the largest share of profit – 51 percent, followed by Wanbao’s 30 percent and UMEHL’s 19 percent. The new contract also stipulates that the project will allocate $1 million for corporate social responsibility and $2 million for environmental preservation annually, in addition to increasing the amount of compensation to local farmers.10
Fully understanding that seeking to adhere to the original unfair terms would have threatened the viability of the whole investment, Wanbao was willing to accommodate higher standards on the environment, social issues and land issues.
Such a dramatic change of profit sharing unfavorable to the foreign investor is highly unusual – especially for China – even though contract renegotiation is common in the resource extraction industry. While one assumes Wanbao will still make money, the project now will cost Wanbao more, while producing significantly less profits. The new agreement reveals important facts about the Letpadaung project. Faced with the alternatives of either complete shutdown or a 41 percent loss of profit, Wanbao made the rational choice to pursue the latter. Fully understanding that seeking to adhere to the original unfair terms would have threatened the viability of the whole investment, Wanbao was willing to accommodate higher standards on the environment, social issues and land issues. Interestingly, the military-controlled UMEHL accepted an even bigger loss, meaning it either lacked or failed to exercise enough political sway to protect itself, much less its partner, Wanbao. Given the widespread concern that hurting the military’s economic interests might jeopardize and reverse the reform process, the new Letpadaung agreement suggests that the military’s tolerance for reform and economic loss might be higher than people expected. This has potentially significant implications for the future. Provided that the local community is satisfied with the new agreement, the Letpadaung project’s resumption is expected in the near future. The new contract sheds important light on the future of troubled Chinese projects in Myanmar with similar problems. It creates the legal, political and bilateral precedent for renegotiation on profit-sharing and
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for how Chinese investors should address the inadequacies of their projects.
The Myitsone Dam The agreement on the development of Myitsone Dam was finalized between the China Power International (CPI) and the Ministry of Electrical Power No. 1 on Dec. 20, 2009 during then Chinese Vice President Xi Jinping’s visit to Myanmar. According to the original plan, the Myitsone Dam was to be the largest of seven dams on the upper Irrawaddy River, with 90 percent of its eventual power output to be sold and transmitted to China’s Yunnan Province. With an estimated total investment cost of $3.6 billion,11 it is structured as a Build-Operate-Transfer (BOT) project: after 50 years, it will be transferred to the Myanmar government at no cost.
The enormous project – with a reservoir the size of Singapore – would send 90 percent of electric power it produced to China.
The Myitsone Dam has drawn criticism since its beginnings for several reasons. First, the dam is located in a sacred area for the local Kachin population and the Irrawaddy is known as the “mother river” for all Burmese. Second, the enormous project – with a reservoir the size of Singapore – would send 90 percent of electric power it produced to China. Third, the dam would have tremendous environmental and social impact for the region. It would require the relocation of local villages and affect fisheries, sediment flows and the livelihoods of people hundreds of kilometers downstream. The controversy has been exacerbated by the widespread belief that corruption was rampant during the negotiation and implementation of the project between the military government, CPI and its local partner – the Burmese Asia World Company. The project stirred up massive anti-China, anti-Myitsone Dam sentiment in Myanmar society in 2011, leading to President Thein Sein’s Sept. 30 decision to suspend the Myitsone Dam during his tenure. The project has been on hold since then. President Thein Sein’s first term will last until at least 2015. However, the future of the Myitsone Dam beyond that date is yet to be settled, although many in Myanmar see the suspension (even cancellation) as a “done deal.” The Chinese Embassy and the ambassador appear pessimistic and do not have “full confidence” that the project will be resumed.12 However, CPI remains hopeful, continues to push for the resumption of the project and is willing to wait until after 2015 for what it hopes will be a positive verdict. CPI’s continuous efforts are based on several calculations. First, CPI sees a dire need for electricity in Myanmar to promote industrial growth and foreign investment. The shortage of electric power has become a major obstacle for industrial activities, with the government reportedly able to only provide only 4 to 6 hours of power daily to some factories in Yangon. Although Myanmar enjoys rich natural gas reserves, CPI sees the abundant hydropower resources as the most direct and economical solution to the poor nation’s power shortage problem. As a result, CPI hopes Myanmar will eventually acknowledge and support the economic benefits of the Myitsone Dam. Second, CPI is willing to engage in renegotiation of almost all major aspects of the original contract, including the sharing of the power output, the relocation and compensation of local villages, environmental preservation and the corporate social responsibility projects. Profitability is another main consideration. Although the current suspension is not economical and will raise the company’s costs and reduce its profit margin, in CPI’s calculation the project will still
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The Chinese Embassy and the ambassador appear pessimistic and do not have “full confidence” that the project will be resumed.
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The cancellation of the project by the Myanmar government would generate major legal battles and create financial consequences.
be profitable if it is to be resumed after 2015. The original profit margin was large enough to allow for the delay, which is not optimal but still better than halting work on the dam. The cancellation of the project by the Myanmar government would generate major legal battles and create financial consequences. Although the specific terms on the unilateral breach of the agreement are not known to the public, the common expectation is that if the Myanmar government unilaterally cancels the project, it will have to fulfill its legal obligation and make proper compensation to CPI. This is the other source of CPI’s belief that the losses and interest expenses incurred during the suspension will eventually be paid by the Myanmar government, making the cancellation a less desirable option for Myanmar. CPI currently continues to engage in corporate social responsibility programs in the Kachin state, lobbying both opinion leaders and the general public about the benefits of the Myitsone Dam and pushing for a favorable judgment about its future. One initiative that CPI is particularly interested in is an investigation commission similar to the one formed after the Letpadaung Copper Mine protests to objectively examine the merits and weaknesses of the dam project. CPI claims privately to be committed to full transparency to such a commission regarding all documents, data and records necessary to dispel what it calls the public’s misunderstanding and doubts.
The Sino-Myanmar Oil and Gas Pipelines The Sino-Myanmar oil and gas pipeline project was finalized between China National Petroleum Company (CNPC) and Myanmar’s Ministry of Energy in December 2009 during Xi Jinping’s visit to Myanmar, with a total investment of $2.54 billion. Construction commenced in summer 2010 and the gas pipeline was completed in May 2013 and is now operational. The oil pipeline is expected to be completed in late 2013. Labeled as China’s “fourth largest energy transportation route” after the Central Asia pipelines, sea transportation and the Sino-Russia pipelines, the project is seen to be of national strategic importance by diversifying China’s energy transportation system. The problems faced by the pipeline projects are less severe than those related to the Myitsone Dam and the Letpadaung Copper Mine. This is fortunate for China, because the pipelines are perceived to be a national strategic project with significant implications for the nation’s energy security. Therefore, Beijing’s tolerance for any problems is much lower – a point that Chinese officials and analysts have made abundantly clear since the suspension of the Myitsone Dam in both official and private discussions with Myanmar. In addition, although the pipelines have a Chinese identity, the project is a multinational endeavor. The gas pipeline involves six stakeholders from four countries (China, Myanmar, India and South Korea) and is aimed at delivering gas from a Daewoo-led consortium operating in the Shwe field to China. The participation of other countries effectively helps to mitigate the risks for China alone. Controversy over the pipeline project is focused on its social and environmental impact. Shwe Gas Movement, a Thailand-based nongovernmental organization, has been vocal about the “human rights abuses, environmental damage and poor revenue distribution”
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associated with the pipeline project. These accusations were echoed by local Rhakhine residents, who have staged multiple protests and demonstrations. However, compared to the scale and depth of the criticisms and opposition against the Myitsone Dam and Letpadaung Copper Mine, the pressure on the pipeline project is significantly less. Since the suspension of the Myitsone Dam, CNPC and the Chinese government have made considerable efforts to address the criticisms of the pipelines and to meet local demands. For instance, on profit-sharing, the project agreement allows for allocating a maximum of 2 million tons of crude oil and 20 percent of the natural gas annually to Myanmar for local consumption.13 CNPC has also enhanced its spending on local communities, committing $2 million per year for the local corporate social responsibility programs.
The economic success of the new democratic system in Myanmar is critical to the sustainability of the nation’s political transition.
Interestingly, the controversy over the pipelines’ environmental and social impact does not only apply in Myanmar, but also in China itself. As a part of the pipeline project, CNPC has been building a refinery near Kunming, the capital city of Yunnan, as the first such facility in the province. Since the beginning of this year, the province has planned to build a paraxylene (PX) project related to the refinery.14 But the PX project raised major concern about pollution among local population. In May, thousands of local residents staged protests in Kunming that so far reportedly have delayed the approval of the project. The explosion of a PX plant in Fujian in late July will likely reinforce the opposition.15
Look Ahead Not all Chinese investment projects have had difficulties in Myanmar. The Tagaung Taung Nickel Mine that drew investment from the China Nonferrous Metal Mining Group, the Shweli River Hydropower Project I that drew investment from China’s Huaneng Group, and many other smaller projects have encountered no major problems in their construction and operation. Including the three major projects discussed here that have sparked widespread opposition, Chinese investors are navigating their course by making concessions, correcting their mistakes and working with the Myanmar government and people. Although they are paying the price for their past behavior, the Chinese are not without grievances of their own. Chinese officials and companies have privately complained about the Myanmar government’s dramatic change of position. The lack of consistency and credibility of the Myanmar side, in their view, will further damage foreign investors’ confidence and hurt Myanmar’s effort to develop its economy. The economic success of the new democratic system in Myanmar is critical to the sustainability of the nation’s political transition. Therefore, looking ahead, there is a need for both Chinese investors and Myanmar to recalibrate their positions to reduce distrust and hostility, and assume mutually beneficial cooperation that is not perceived to be a one-sided “exploitation” of the other side. As the Myanmar politicians and government prepare for the 2015 elections, their economic policies may well experience further conflicts between near-term political needs and long-term economic gains. It will be a true test for both Chinese investors and the Myanmar government to amend their terms and navigate through the inevitable turbulence. The future of Chinese investments in Myanmar has a critical impact on their bilateral
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relations. China’s state-run newspaper Global Times has warned: “The implementation of agreed projects is the important foundation of the normal Sino-Myanmar relations. Myanmar must be serious about its relationship with China.”16 China essentially holds a zero-sum perception about its national interests in Myanmar and sees the warming ties between Myanmar and the West (especially the US) as undercutting its positions. The view is problematic and needs to adapt to the new realities of the country. Strategic thinkers in Myanmar and in US should also contemplate how potential pushbacks by Beijing, such as falling investment, will impact the future of Myanmar and its reforms.
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E N D N OTES 1. “China Now No.1 Investor in Burma,” Mizzima News, Jan 18, 2012. http://www.mizzima.com/business/6436-china-now-no-1-investor-in-burma.html 2. “Myanmar Attracts More than 8bl USD Foreign Investment in 2011,” Xinhua News Agency, Mar 13, 2012. http://news.xinhuanet.com/english/business/2012-03/16/c_131472176.htm 3. The data from the Myanmar government are slightly different due to its fiscal year system (from April 1 to March 31), but Chinese investment still added up to $4.35 billion and $8.27 billion in Myanmar fiscal years 2009/2010 and 2010/2011. 4. “Myanmar Attracts More than 8bl USD Foreign Investment in 2011,” Xinhua News Agency, Mar 13, 2012. http://news.xinhuanet.com/english/business/2012-03/16/c_131472176.htm 5. “New Chinese Foreign Investment Commitment Exceed $8 billion,” The Myanmar Times, August 16-20, 2010, http://www.mmtimes.com/2010/business/536/biz001.html. 6. Interview with Chinese analysts, Yangon, August, 2012. 7. “Chinese Investment in Myanmar Falls Sharply,” Wall Street Journal, June 3, 2013, http://online.wsj.com/article/SB10001424127887324063304578525021254736996.html 8. Complete Final Report of Investigation Commission into Letpadaung Taung Copper Mining Project, SarlingyI Township, Monywa District, Sagaing Region; 9. “Commission Approves Contract Giving Government Larger Share of Letpadaung profits,” Democratic Voice of Burma, July 16, 2013. 10. Win Ko Ko Latt and Soe Than Lynn, “Copper Project to Resume in September after New Contract Signed,” The Myanmar Times, July 29, 2013. http://www.mmtimes.com/index.php/national-news/7644-copper-project-to-resume-in-september-after-new-contract-signed.html 11. This number is now strongly disputed by CPI, which argues that the full investment significantly exceeds $3.6 billion. Conversation with CPI senior management, Kunming, June 2013. 12. “Future for Myitsone dam resumption remains unclear, Chinese companies are treated unfairly in Myanmar,” [中缅密松电站重启前景不明 中企在缅甸遭遇不公], Dongfang Daily, July 23, 2013 13. “China Myanmar Starts Delivering Gas,” China News Agency, July 29, 2013, http://www.china.org.cn/world/2013-07/29/content_29555333.htm 14. Paraxylene (PX) is used primarily as a feedstock for the manufacture of purified terephthalic acid (PTA), which is an important chemical in the production of fiber and plastic bottles, as well as polyester. In recent years, similar PX projects have met with fierce local oppositions in China due to its environmental impact, including demonstrations in Dalian, Ningbo, Chengdu and Fujian. 15. “Public Objection of Paraxylene Project Should Be a Warning to the Government,” China Daily, August 1, 2013, http://www.chinadaily.com.cn/opinion/2013-08/01/content_16863653.htm 16. “Oil and Gas Pipelines Are the Test Stone of Myanmar’s Attitude toward China,” [油气管道缅甸对华态度的试金石], Global Times, July 29, 2013.
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The Stimson Center Founded in 1989, the Stimson Center is a nonprofit and nonpartisan think tank that seeks pragmatic solutions for some of the most important peace and security challenges around the world. Stimson’s analysts, who travel the globe for their research, make the Center a trusted source of expert knowledge, fresh perspectives, policy prescriptions and creative ideas. By engaging policymakers, policy implementers, nongovernmental institutions as well as other experts, Stimson is able to craft recommendations that cut across political party lines and are actionable and effective. The Center has been honored as one of the top think tanks in the world and received the prestigious MacArthur Award for Creative and Effective Institutions in 2013. For more information on Stimson, please visit www.stimson.org. ST IMSON’S EAST ASIA AND SOU T H E AST AS I A P R O G R A M S This issue brief on China and Myanmar covers topics studied by Stimson’s East Asia and Southeast Asia programs. The programs seek to illuminate and fashion pragmatic solutions to many of the complex security challenges confronting both regions. Stimson’s East Asia program, led by Alan Romberg, focuses on security in the region. It works on China and US-China relations with particular emphasis on cross-strait relations, as well as on China’s overall foreign and security policies. The program also spotlights the US-Japan alliance and Japan’s evolving security policies and practices. In addition, Stimson scholars work on Korean Peninsula issues, from exploring North Korean nuclear issues, to inter-Korean relations, North and South Korea’s regional relations and the US-South Korean alliance. The Southeast Asia Program, led by Richard Cronin, focuses on regional issues from the perspective of political economy, including regional economic integration; maritime disputes in the South China Sea; the Association of Southeast Asian Nations (ASEAN); US-ASEAN relations and other related US policy issues. Currently the program seeks to identify and promote practical approaches to reducing the transboundary impacts of hydropower dams in the Mekong Basin on regional relations and security.
A BOUT THE AUTHOR Yun Sun is a fellow with the East Asia program at Stimson. She was previously a visiting fellow at the Brookings Institution, a China analyst for International Crisis Group based in Beijing from 2008 to 2011, and earlier worked on US-Asia relations at the Maureen and Mike Mansfield Foundation and the Asia Society in Washington. Her expertise is in Chinese foreign policy, US-China relations, and China’s relations with neighboring countries and authoritarian regimes. She earned her master’s degree in international policy and practice from George Washington University, an MA in Asia Pacific studies, and a BA in international relations from the Foreign Affairs College in Beijing.
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Journal of Current Southeast Asian Affairs
SUN, Yun (2012), China’s Strategic Misjudgement on Myanmar, in: Journal of Current Southeast Asian Affairs, 31, 1, 73-96. ISSN: 1868-4882 (online), ISSN: 1868-1034 (print) The online version of this article can be found at:
Published by GIGA German Institute of Global and Area Studies, Institute of Asian Studies and Hamburg University Press. The Journal of Current Southeast Asian Affairs is an Open Access publication. It may be read, copied and distributed free of charge according to the conditions of the Creative Commons Attribution-No Derivative Works 3.0 License. To subscribe to the print edition: For an e-mail alert please register at: The Journal of Current Southeast Asian Affairs is part of the GIGA Journal Family which includes: Africa Spectrum ● Journal of Current Chinese Affairs ● Journal of Current Southeast Asian Affairs ● Journal of Politics in Latin America ●
Journal of Current Southeast Asian Affairs 1/2012: 73-96
China’s Strategic Misjudgement on Myanmar Yun SUN Abstract: Yun Sun argues that China’s policy failures on Myanmar in 2011 are rooted in several strategic post-election misjudgements. Following President Thein Sein’s inauguration in March 2011, the Sino–Myanmar relationship was initially boosted by the establishment of a “comprehensive strategic cooperative partnership,” and China sought reciprocation for its long-time diplomatic support in the form of Myanmar’s endorsement of China’s positions on regional multilateral forums. A series of events since August have frustrated China’s aspirations, however, including Myanmar’s suspension of the Myitsone dam and the rapid improvement of its relationship with the West. Several strategic misjudgements contributed to China’s miscalculations, including on the democratic momentum of the Myanmar government, on the U.S. –Myanmar engagement and on China’s political and economic influence in the country. China’s previous definition of Myanmar as one of China’s “few loyal friends” and the foundation of its strategic blueprint has been fundamentally shaken, and China is recalibrating its expectations regarding future policies.
Manuscript received 18 February 2012; accepted 23 April 2012
Keywords: PR China, Myanmar, Myitsone dam SUN Yun was the China Analyst of International Crisis Group based in Beijing from 2008 to 2011. This paper was finished during her tenure as a visiting fellow at the Center for Northeast Asia Policy Studies at Brookings Institution, USA. Her research mainly focuses on China’s foreign policy, especially China’s relations with developing countries and authoritarian regimes. E-mail:
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Overview
Yun SUN
2011 marked a year of significant setbacks for China’s relationship with Myanmar. The rapid changes in Myanmar’s domestic politics brought serious challenges to both China’s existing interests in the country and its strategic planning for the future. Early in the year, after the March inauguration of the new Myanmar government, China possessed a well-developed strategic blueprint for its relations with its south western neighbour. Key elements of this blueprint – border stability, energy transportation, and economic cooperation – remained China’s basic considerations in Myanmar. Beijing, however, began to envision and foster an additional layer of strategic cooperation based on the traditional fraternal friendship and economic ties between the two nations. This additional diplomatic aspiration was manifested during the visit by the No. 4 military leader of China’s Central Military Commission six weeks after the inauguration of Thein Sein’s government, as well as through the establishment of a “comprehensive strategic cooperative partnership” two weeks later. “Coincidentally,” during the same time period, Yunnan province launched the “bridgehead campaign” aimed at turning Yunnan and Myanmar into China’s bridgehead into the Indian Ocean. Meanwhile, as reciprocation for China’s long-term diplomatic support, China solicited Myanmar’s endorsement of its positions on regional multilateral forums (especially the ASEAN), most notably on the issue of the South China Sea. Since August, however, a series of events has frustrated China’s Myanmar aspirations. The suspension of the controversial Myitsone Dam project and the rapid improvement of Myanmar’s relationship with the West, especially with the United States, fundamentally shook Beijing’s previous understanding of Myanmar as one of China’s “few loyal friends” and rocked the foundation of its strategic blueprint. As a result, China is carefully recalibrating its expectations about Myanmar and, subsequently, adjusting its policies and commitments. The setbacks China has encountered are deeply rooted in several strategic misjudgements about post-election Myanmar. From prior to the November 2010 elections until the announcement of the Myitsone Dam suspension, the Myanmar policy circle in China believed the elections would prompt no fundamental change in Myanmar’s domestic politics. China underestimated the democratic momentum encouraged then tolerated by the former military officials, along with their willingness to adapt and change. In China’s perspective, privileged military rulers would never give up their power willingly, and the new civilian government would be only marginally and negligibly different from the old junta. Secondly, China mistakenly regarded the U.S. engagement as failed and thought that it had ended after the
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2010 elections, when Washington pronounced those elections as “neither free nor fair.” Most Chinese policy analysts believed that Myanmar had embarked on a long path of slow political changes and economic reforms conducive to China’s economic and strategic endeavours in the country. Last, but not least, China overestimated its political and economic influence in Myanmar and underestimated the anti-China sentiment of the local people, which led to a rather blind confidence in China’s policy towards Myanmar and the concomitant failures of 2011.
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China’s Basic Interests in Myanmar
2.1 Border Stability Beijing’s fundamental interests in Myanmar include three basic factors: border stability, economic cooperation, and an energy transportation route. Among these, border stability remains the top priority (Interviews with Chinese officials, Beijing, Kunming, July 2011). During 2009’s Kokang conflict, China learned the danger of a premature military resolution to hostilities among border ethnic groups. The conflict sent more than 37,000 refugees into China’s southwest Yunnan province and generated tremendous pressure for the Chinese authorities to maintain stability along the border (International Crisis Group 2010: 4). Prior to the 2010 elections, the Kokang conflict led China to prioritize “peaceful negotiation” as a solution to the ethnic group issues. During this period, there was a genuine fear in China that Naypyidaw’s repeated ultimatums for ethnic groups to disarm and transfer into Border Guard Forces would escalate tensions and result in a full military confrontation (International Crisis Group 2010: 4). To prevent such a disastrous scenario, China mobilized its diplomatic influence and quietly intervened between Naypyidaw and the two main ethnic armed forces along the Sino–Burmese border: the Kachin Independence Army (KIA) and the United Wa State Army (UWSA).1 A strategy of “persuading for peace and promoting talks” (઼࣍ ׳䈸) was pursued at both central and local levels. Senior Chinese leaders openly lectured Myanmar leaders on maintaining “peace and stability” at the border (Ministry of Foreign Affairs 2009; BBC 2010; China News Agency 2010). Local Yunnan officials also made “restraints” and “no war” their
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For example, senior Chinese leaders made border stability a top priority during their visits of Myanmar, including the December 2009 visit by Vice-President Xi Jinping and the May 2010 visit by Premier Wen Jiabao.
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lobbying key words whenever they met with leaders from KIA and UWSA (Interviews with local officials, Kunming, July 2011). China was pleased to see the relatively peaceful and smooth power transition in Myanmar during 2011. This had a determining impact on China’s attitude toward the ethnic groups. Under the assumption that Myanmar would remain China’s loyal friend and warrant China’s help in resolving its ethnic group issue, China’s position on the ethnic groups gradually shifted from maintaining the status quo towards promoting reconciliation. This new point was made repeatedly by top Myanmar specialists in Beijing and Yunnan: “[t]he national unity of Myanmar is Naypyidaw’s natural right. The ethnic groups cannot hope to maintain their semi-independent and armed status forever” (Interviews with government analysts, Beijing and Kunming, July 2011). This thinking has dominated China’s policy towards the armed conflicts between KIA and Tatmadaw since early June 2011. Unlike the Kokang conflict, during which China expressed great displeasure and demanded that Naypyidaw respect the border stability, the Kachin conflict resulted in little reaction from Beijing. China strengthened its border patrols against potential refugee flows2 and called for restraints and negotiations (Press Conference, Ministry of Foreign Affairs, June 16, 2011). However, it declined the KIA’s public appeal for China to be the referee during its negotiations with Naypyidaw (Dongfangwang 2011). Besides genuine interest in resolving the ethnic group issue, several additional factors contributed to China’s indifference toward the KIA. Firstly, the conflict did not result in a large flow of refugees over the Chinese border, as most of the refugees gathered at KIA headquarters in Laiza, alleviating China’s deepest concerns over border security (Interview with KIA officers, Ruili, July 2011). Secondly, from China’s perspective, it was the KIA that attacked the Tatmadaw over the control of the Chinese Dapein Dam in Shan State, using the project as leverage in an attempt to force China to intervene (Dong Fang Zao Bao 2011a). The KIA’s lack of respect for Chinese commercial interests is also perceived through its strong opposition to the Chinese Myitsone Dam project in Kachin State (Interviews, Beijing and Kunming, July 2011). Thirdly, China sees the KIA’s political aspirations as “unrealistic.” It believes that the KIA is ultimately seeking independence and the conflict is merely a way to strengthen its negotiating position against Naypyidaw. According to a local Chinese official, “KIA’s stubborn adherence to the 1947 Panglong Agreement was completely out of touch with
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However, the Kachin conflict did not result in major refugee flows into China. Interviews, Kunming and Ruili, July 2011.
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reality” (Interview, Kunming, August 2011). Finally, China’s historical suspicion of the pro-West, Christian, Kachin population deepened during the past twelve months when Kachin organizations sent several delegations to Washington seeking help, thus triggering China’s deepest fear of “Americans being invited in to meddle with affairs on the Chinese border” (Conversation with Chinese analysts, Spring 2011). While the Kachin conflict continues with no speedy resolution in sight, the negotiations between Naypyidaw and the UWSA yielded promising results. In September, it was reported that the two sides reached a preliminary agreement over a ceasefire and the reopening of peace talks (McCartan 2011). Although the agreement does not resolve fundamental issues, such as the armed status of the UWSA and the scope of its autonomy, China finds such an agreement highly desirable as it includes peace and stability in the mutually accepted agreement.
2.2 Economic Cooperation China identified the new civilian government in Myanmar as opening up tremendous business opportunities for Chinese commercial endeavours within the country (China News Agency 2011). A relatively smooth power transition consolidated the legitimacy of the new government. With Naypyidaw’s top security concern resolved, Beijing believed the Myanmar government would next focus on domestic economic development in an effort to boost its legitimacy (Interviews, Beijing and Kunming, August 2011). This is where China wished to step in, continuing to fill the void created by Western sanctions in the country. Both bilateral trade and Chinese investment in Myanmar had grown substantially before the inauguration of the Thein Sein government. According to the Chinese Ambassador in Myanmar, bilateral trade grew by 52.3 per cent to 4.4 billion USD in 2010 (Chinese Embassy in Myanmar 2011). According to Myanmar official statistics, between April 2010 and March 2011, China invested 7.75 billion USD in Myanmar, focused mostly in the natural resources and energy sectors.3 (The Chinese statistics showed a total invest-
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“By the end of fiscal year 2010/2011, total foreign investment in Myanmar reaches 36 billion USD”, [ᡚ→ 2010/2011 䍒ᒤˈཆഭሩ㔵⭨ᣅ䍴ᙫ仍䎵 360 ӯ㖾]ݳ, Economic and Commercial Counselor’s Office of Chinese Embassy in Myanmar, May 4, 2011. (12 March 2012).
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ment of 12.32 billion USD in 2010; Xinhua News 2011a).4 China continues to emphasize Myanmar as an important hydropower supplier to energy-thirsty south western China. Approximately 54 per cent of China’s total investment in the country has been focused on hydropower dam projects (Li 2011). In May 2010, during Thein Sein’s visit to Beijing, the two countries signed nine economic agreements, including one hydropower project and a 745 million USD credit provided to the Myanmar Ministry of Finance by China Development Bank (BBC 2011).
2.3 Energy Transportation Route Currently, the oil and gas pipeline project from Myanmar to Yunnan province is seen by China as the most important project in Myanmar (Interview with Chinese analyst, Beijing, January 2012). China hopes the project will mitigate its dependence on the Malacca Strait for most of its oil imports from North Africa and the Middle East (IHN 2010). Since the beginning of its construction in June 2010, the pipeline project has enjoyed smooth progress. Some key components, such as the bridges over the Myitnge River and the Maday Island reservoir, were completed in the fall of 2011 (CNPC News 2011). China is optimistic that, by 2013, the pipelines will be able to transfer 22 million tons of crude oil from North Africa and the Middle East, as well as 12 billion cubic meters of natural gas from Myanmar’s offshore gas fields into China (Xinhua Net 2010). Although Chinese analysts acknowledge that such pipelines will not free China from its strategic vulnerability in the event of a military blockade of the Malacca Strait (International Crisis Group 2010: 9), expectations remains high that, once completed in 2013, the pipeline project will serve as a prequel to China’s expansion of trade relations with, not only, Myanmar but, also, Southeast Asia and South Asia (Xinhua News 2011b). Meanwhile, local authorities aspire for the pipelines to bring refineries to Yunnan and turn the province into the new energy and trade hub of south western China (People’s Daily website 2010).
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The difference between the Myanmar and Chinese statistics is due to the different definition of fiscal year, which in Myanmar starts by April 1 each year and ends on the end of March the following year.
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China’s Strategic Blueprint for Myanmar
3.1 Evolution of China’s Strategic Perception of Myanmar China’s strategic perception of Myanmar has undergone different stages since the establishment of diplomatic relations between the two countries. At various times, Myanmar’s importance to China has fluctuated. In 1949, just after the founding of the People’s Republic of China, Burma, as the first non-socialist country to establish diplomatic relationship with Beijing, was a third-world friend that helped China to break its international isolation (Zhu 2009). Before 2000, political friendship (or paukphaw friendship) was the one – and almost only – highlight of bilateral relations (Interview with former Chinese Ambassador to Myanmar, November, 2009). Political ties were strong, but other factors, such as economic cooperation, lagged behind. During this period, Burma was seen as China’s political friend. Around 2000, as China began to seek new resources and markets, the economic cooperation between the two countries picked up speed. Myanmar, conveniently located along the Chinese border and rich in natural resources (such as hydropower, minerals, timber, and jade), turned out to be a natural destination for Chinese investment and business (Guo Ji Shang Bao 2006). First led by border trade, the economic campaign soon became dominated by large Chinese state-owned enterprises seeking energy and mineral supplies from Myanmar (Interview with Chinese analysts, Kunming, August 2011). By 2010, China became Myanmar’s biggest investor and secondlargest trading partner (People’s Daily 2011b; Xinhua News 2011a). During this period, Myanmar, as a supplier of natural resources and raw materials, achieved a highly important status as an economic partner to China (Interview with former Chinese Ambassador to Myanmar, August 2011). Thus, political friendship and economic cooperation were the two cornerstones of China’s relationship with Myanmar, with little or no specific mentioning of the country’s strategic importance. Analysts and officials talked about Myanmar as a corridor into the Indian Ocean, but the purpose was mostly for trade and transportation routes. The U.S. attempt to alienate the Myanmar–China friendship was also discussed, but the focus was Washington’s strategic intention, rather than Myanmar’s own strategic utility. China, in general, did not actively seek to build a formal or strong strategic relationship with Myanmar. Some Chinese analysts explained China’s reluctance as a careful calculation not to antagonize other regional players, such as India (Interview with Chinese analysts, Kunming, August 20). Others emphasized the xenophobic nature of the military government and its deep suspicion of and unwilling-
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ness to form too close a strategic tie with its northern neighbour (Interview with Chinese analysts, Beijing, July 2011). More importantly, China, in the past, could afford not to look at Myanmar through a strategic and regional lens because its strategic priority had remained primarily domestic and along the border. However, as China’s national interests and influence expand in the region, Myanmar’s strategic importance has increased substantially. This importance is manifested through four initiatives China has taken since the inauguration of the Thein Sein government: the establishment of a comprehensive strategic cooperative partnership; China’s seeking of Myanmar’s support in regional diplomacy; the potential enhancement of military cooperation; and Yunnan’s bridgehead strategy.
3.2 A Comprehensive Strategic Cooperative Partnership During Thein Sein’s visit to Beijing in May 2011, China and Myanmar announced the elevation of their bilateral relations to a “comprehensive strategic cooperative partnership” (Xinhua News 2011d). This is the first time that the Chinese government defined the bilateral relationship as a strategic one, clearly signalling a new definition of the affiliation. Indeed, Song Qingrun, the Myanmar specialist at one of China’s top think tanks, the China Institute for Contemporary International Relations, publicly commented that such an elevation was a natural next step following decades of cordial political friendship and economic cooperation (Guo Ji Zai Xian 2011). The expectation was extremely high for the Sino–Myanmar “kinship” to get closer and closer (Guo Ji Zai Xian 2011). In outlining the specifics of what the comprehensive strategic cooperative partnership constitutes, Chinese President Hu Jintao emphasized four basic components: elevating bilateral relations and expanding exchanges and cooperation at all levels, strengthening mutual strategic support, deepening pragmatic cooperation, and maintaining border stability (Xinhua News 2011e). The first and the last components revisit old territory, as China has always aspired to improve relations and maintain border stability. The other two, however, indicated certain new elements in China’s aspirations in Myanmar. Firstly, “mutual strategic support” signals China’s expectation for reciprocity between China and Myanmar on strategic issues. Domestically, China respects the development path and political system chosen by the Myanmar people and supports the efforts of the new government to maintain stability, develop economy, and improve the livelihood of Myanmar people. And China highly compliments the Myanmar government’s unswerving support of the One China policy.
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In essence, China’s support of the new government in Myanmar has been and will continue to be met and matched by Naypyidaw’s support of the “One China–policy” (Xinhua News 2011e). In terms of foreign policy, China wishes to “strengthen the cooperation with Myanmar on regional frameworks, including ASEAN+3, ASEAN+1, and Greater Mekong SubRegional Economic Cooperation.” In other words, Beijing hopes for more coordination with Myanmar to support each other’s positions on the regional multilateral platforms, turning Myanmar into a useful ally to support the Chinese regional foreign policy agenda (Interview with Chinese analysts, Beijing, July 2011). (Further discussed below). Secondly, “mutually beneficial and pragmatic cooperation” clarifies that China’s economic relationship with Myanmar has to benefit not only Myanmar, but also China (Interview with Chinese analysts, Kunming, August 2011). Hu detailed several areas for expanded cooperation in which China is interested, including energy, power, transportation and agriculture. He also specifically emphasized the importance of the on-schedule completion of large cooperation projects currently under construction (Xinhua News 2011e). Some analysts argue that China’s “partnership” diplomacy is nothing new. China established strategic partnerships with Russia and the U.S. in the 1990’s, and gradually expanded the scope of “strategic partners” to other powers (UK, French, Germany, India) and neighbouring countries (Pakistan, Indonesia, South Korea, Laos, Cambodia, Vietnam) over the past ten years.5 However, given the importance of Myanmar to China and the close ties between the two countries, the fact that a “strategic partnership” with Myanmar was not established until 2011, by itself, is intriguing. The coincidence of the timing (the partnership was established immediately after the inauguration of the new civilian government) is a clear indicator of China’s changing perception of Myanmar from a political and economic friend (under the junta) to a strategic partner (under a legitimate civilian government). Although Chinese analysts maintain that this partnership does not have a military component nor is it targeted at other regional countries (Interviews with Chinese analysts, Beijing and Kunming, July 2011), some developments in bilateral relations might prove otherwise.
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Li Chenyang, presentation at the conference “China and Myanmar: the Dilemmas of Mutual Dependence”, Georgetown University, November 4, 2011.
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3.3 China Seeking Myanmar’s Support on Multilateral Platforms According to the statement made by Chinese President Hu Jintao on the establishment of the comprehensive strategic cooperative partnership, a key component of the partnership concerns Myanmar’s role in the regional multilateral platforms. China wishes to “coordinate with Myanmar on ASEAN+3, ASEAN+1, and the Greater Mekong Sub-Regional Economic Cooperation to protect the interests of Myanmar and China” (Xinhua News 2011e). The underlying logic here is: now that Myanmar has finally achieved some legitimacy at home and abroad, its international status and reputation have improved. (Myanmar will become the chair of ASEAN in 2014, a scenario unthinkable during the military government.) As Myanmar gradually re-integrates into the international community, it has the potential to become a solid, powerful diplomatic supporter of China’s national interests and policy preferences in the region (Interviews with Chinese analysts, Beijing and Kunming, July 2011). After years of shielding Myanmar internationally, the time has come for Myanmar to “reciprocate” (Interviews with Chinese analysts, Beijing and Kunming, July 2011). China’s most immediate expectation of Myanmar is support for China’s position on South China Sea issues at ASEAN. Three key ASEAN members – Vietnam, the Philippines and Malaysia – have major territorial disputes with China in the South China Sea, with the tension’s reaching an historic high during the first half of 2011 (Thayer 2011: 5). ASEAN claimants have been seeking to engage in multilateral negotiations with China, through ASEAN as a group, to mitigate the overwhelming leverage of a powerful China during bilateral negotiations with individual countries (Interviews with Vietnamese, Philippine and Malaysian diplomats, Ho Chi Min City, December 2010). China, however, has consistently pursued a bilateral negotiation formula to settle the disputes. China has insisted that Myanmar support its positions, especially the “bilateral negotiations” formula at ASEAN. This expectation was directly conveyed to Myanmar officials before the 2011 July ASEAN Regional Forum in Bali (Interview, Rangoon, August, 2011). Another instance of China’s seeking Myanmar’s support on Chinese policy is the establishment of the joint patrol of Mekong River by China, Myanmar, Thailand, and Laos after the October killing of 13 Chinese shipmen. Allegedly, the original proposal by China met strong opposition from Thailand (Interview, Beijing, October, 2011). Myanmar’s support of the joint patrol scheme helped China reach a speedy resolution of the differences (Interview, Beijing, October, 2011).
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3.4 Potential Military Cooperation Preceding the establishment of the comprehensive strategic cooperative partnership, China dispatched to Myanmar the most senior military delegation in recent years,6 headed by the No. 4 leader of China’s supreme military command, Central Military Commission (CMC) Vice Chairman Xu Caihou (Xinhua News 2011c). Prior to this, the most recent visit by a senior Chinese military leader to Myanmar was more than two years ago by the PLA Chief of Staff, Chen Bingde, in March of 2009 (Chinese Embassy in Myanmar 2009). There has been no public disclosure of the results of Xu’s visit regarding any details of military cooperation between China and Myanmar, discussed by the two sides “enthusiastically and at length” (Xinhua News 2011c). Many different interpretations of the trip have emerged from within China. Various Chinese analysts have downplayed the significance of the visit, calling the head of the delegation, Xu Caihou, a “random choice among senior Chinese leaders” and his presence there a “regular visit by PLA to Myanmar” (Interview with Chinese analysts, Beijing, July 2011). A close look at the composition of Xu’s delegation reveals a rather different story. Along with the regular senior leaders of the Chengdu Military Region (under which the Sino–Myanmar border falls),7 Xu was accompanied by the Deputy Chief of the General Armament Department and the Political Chief of the South Sea Fleet (PLA Daily 2011). The General Armament Department is in charge of arms sales, and the South Sea Fleet recently had two vessels visit Myanmar during their return trip from the Gulf of Arden in 2010 (Xinhua News 2011f). Given that each member of Chinese delegations is always carefully selected to fulfil a certain mission, the inclusion of these two officials serves, at least, as an indication of China’s emphases on its military relations with Myanmar: arms sales and naval cooperation.8
3.5 Yunnan’s Bridgehead Strategy As part of the “Twelfth Five Year Plan” launched in 2011, China formally introduced the national “bridgehead strategy,” which proposes to turn Yun6 7 8
Although the Vice President Xi Jinping, also a Central Military Commission (CMC) Vice Chair visited Myanmar in the December of 2009, he was visiting under his civilian capacity as the Vice President of China. Chengdu military region is in charge of the security of southwest China, including Yunnan province and China’s border with Myanmar. South Sea Fleet has carried most of the escort missions in the Gulf of Arden, sending naval vessels such as “GuangZhou” and “ChaoHu” through the Indian Ocean.
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nan into a strategic corridor and a bridgehead for China’s strategic engagement in the Indian Ocean (Yunnan Wang 2011). As the Vice Governor of Yunnan explained, China’s main theater of international relations is the oceans. China’s coastal line is on the east side, leading naturally to the strategic prioritization of the Pacific. For inland China, however, it is more convenient and active to use the Indian Ocean as the outlet. The bridgehead strategy will free China from the “strategic passiveness” of the “One Ocean Strategy” (China News 2011). the bridgehead strategy itself is a manifestation of China’s pursuit of the “Two Ocean Strategy” and represents China’s strategic aspirations in the Indian Ocean. Although most of the reports, by far, have focused on the economic, trade, and transportation aspects of the bridgehead strategy, government analysts from both Beijing and Yunnan privately acknowledged that the orientation of such a strategy has an eventual political and security component and that “the bridgehead strategy itself is China’s strategic offensive into the Indian Ocean” (Interviews, Beijing and Kunming, November 2011). There are ample analyses in China calling for a more active Indian Ocean strategy and for turning Pakistan and Myanmar (two of China’s most loyal friends) into outposts of China’s strategic outreach into the Indian Ocean (Interviews, Beijing, May 2011). To facilitate this goal, many assert that China must go beyond the existing political and economic ties with Myanmar and pursue security and military cooperation. Some hardliners even go as far as calling for the expansion of China’s naval forces and the establishment of a military base in the Indian Ocean to protect the security of communication sea lines, as well as to maximise China’s geopolitical interests (Interviews, Beijing, May 2011). By comparison, the bridgehead strategy seems to be the least threatening, among all the choices, in establishing and enhancing China’s strategic outreach into the Indian Ocean.
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Major Setbacks in China’s Myanmar Strategy
Although China has crafted specific plans to enhance Myanmar’s strategic importance to China, such plans have encountered unanticipated obstacles and setbacks since the fall of 2011. Spearheaded by President Thein Sein’s decision to suspend the Myitsone Dam project on September 30 and followed by the rapid improvement of relations with the United States, Myanmar’s moves surprised and frustrated many in China, forcing China to reconsider its strategies towards its south western neighbour.
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4.1 The Myitsone Dam Suspension President Thein Sein’s decision, during the fall of 2011, to suspend the Myitsone Dam project came unexpectedly for Beijing. Although the Myitsone Dam had always been controversial and garnered tremendous public opposition, China did not think that Naypyidaw would dare to jeopardise a project of such large scale and great importance to China – an opinion firmly held by analysts and officials prior to the announcement (Interviews with Chinese analysts, Beijing, Kunming and Rangoon, July and August 2011). This extreme confidence was based on the fundamental belief that an isolated and sanctioned Myanmar would not risk angering its largest political and economic patron over a dam project. Despite the repeated appeals by Naypyidaw for China to reconsider the project and reassess its environmental impact, China brushed off such messages, believing the government was effectively “silenced.”9 China attributes the suspension decision to both internal and external factors in Myanmar. On the one hand, China feels the dam project is the victim of Myanmar’s urge to improve relations with the U.S. (Interviews, Beijing, October 2011. And People’s Daily 2011a). Chinese analysts noted that the suspension decision was made after rounds of heated engagement between Naypyidaw and Washington and concluded that the encouraged Naypyidaw “felt the urge to show Washington that it is not China’s client state and truly represents the people” in an effort to solicit more rewards from the U.S. (Interviews, Beijing, October 2011. And People’s Daily 2011a). The Myitsone Dam project, as a controversial and therefore easy target, was “unfortunately” sacrificed. On the other hand, while China recognizes there is strong anti-China sentiment in Myanmar, it refuses to acknowledge that such sentiment is indigenous (Interviews with analysts, Kunming and Rangoon, July and August 2011). China did not believe that Myanmar could transform from an authoritarian state to a liberal democracy within a few months and that public opinion could, seemingly overnight, become a determining factor in Myanmar politics (Interviews with Chinese analysts, October 2011). In China’s view, therefore, the cancelation was the result of Western countries and NGOs’ instigating the anti-Myitsone movement within and outside Myan9
It is said that the Chinese government had left the “government relations” related to the Myitsone dam primarily to the China Power International, the Chinese investor of the project, which used large amount of resources to “obtain” the support of certain senior Myanmar officials. Interviews, Kunming, July 2011. One week before the announcement of the suspension, the Minister of Electric Power, Zaw Min, publicly proclaimed that the project will proceed as planned and the project is in Myanmar’s national interest. UPI 2011.
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mar (People’s Daily 2011a). The Wikileak reports on the U.S. Embassy’s funding of anti-Myitsone activities within and outside Myanmar confirmed such suspicions and reinforced China’s perception that Western efforts to sabotage Chinese projects and alienate China–Myanmar relations are primarily motivated by the geopolitical goal of curbing Chinese influence (World Knowledge 2011). Under these circumstances, China’s initial response to the Myitsone Dam decision was hawkish and resolute. According to the statement made by the Chinese Ministry of Foreign Affairs, the legitimacy and validity of the Myitsone Dam is not an issue since the project has “gone through scientific verification and strict examination by both sides.”10 At this point, any issues about the project are merely “relevant matters arising from the implementation of the project” and “should be handled appropriately through bilateral friendly consultation.”11 During his October 21 meeting with Myanmar Vice President Tin Aung Myint Oo, Premier Wen Jiabao urged the Myanmar government to “keep its promises” and “implement the consensus reached” (Dong Fang Zao Bao 2011b). Apparently for China, the issue to be discussed was not whether the project should or would be implemented, but how to resolve any differences on the specifics of its implementation. Meanwhile, China hoped that differences on the project could be resolved through negotiations. Some analysts suggested that the original plan could be revised but the project should continue. Otherwise, a complete abandonment would be excessive unnecessary, and “humiliating” for China (Interviews with Chinese analysts, Beijing, October 2011). Furthermore, if Naypyidaw insisted on abandoning the project, China – especially China Power International (CPI) – would not offer a waiver for compensation. CPI has invested more than 42 million USD in the Myitsone Dam, including 18 million USD on the relocation of local populations alone (Interviews with Chinese analysts, Beijing, November 2011). Other spin-off infrastructure projects include factories, bridges and roads. The total amount of the compensation could be astronomical and well beyond the solvency of the Myanmar government.12 As these harsh responses failed to reverse Thein Sein’s decision, China readjusted its initial position to prepare for an eventual, complete abandonment of the Myitsone Dam project (Interviews with Chinese analysts, Washington DC, January 2012). According to Chinese analysts, Beijing has decid10 11 12
Ministry of Foreign Affairs Press Conference, Chinese Ministry of Foreign Affairs, October 1, 2011. Ibid. Later, it was said that the compensation would be deducted from the tolls to be paid by China for the oil and gas pipelines upon its completion.
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ed to redefine the project as a commercial project between Chinese and Myanmar companies, mitigating the government’s involvement and the project’s political significance (Interviews with Chinese analysts, Washington DC, January 2012). Chinese investors still need to be compensated for investments already made but will relinquish punitive claims for collateral damage (Interviews with Chinese analysts, Washington DC, January 2012). The Myitsone suspension has a major impact on China’s perception of and relationship with Myanmar. It is cited as a third case of Naypyidaw’s openly challenging China’s national interest while embarrassing China internationally. (The other two cases are the 2005 relocation of the capital from Rangoon to Naypyidaw without advance notice to Beijing and the Tatmadaw’s military attack at Kokang in 2009; Interview with Chinese analysts, Beijing, November 2011). Some Chinese analysts believe that the suspension “fundamentally shook Chinese leaders’ trust and confidence in Myanmar as a partner, and is going to have a long-term impact over how they perceive Myanmar’s reliability and trustworthiness” (Conversations with Chinese analysts, Washington, DC, November 2011).
4.2 U.S.–Myanmar Engagement China’s strategic blueprint for Myanmar was based on the assumption that the domestic politics of Myanmar would not undergo drastic changes in the near future, keeping the country isolated and subject to economic sanctions by the West. Naypyidaw’s need for economic development to enhance its legitimacy and the lack of foreign investment sources other than China laid the foundation for China’s absolute position and leverage. However, the rapid improvement of relations between the U.S. and Myanmar since the fall of 2011 altered these assumptions, causing China to lose its monopolistic edge. Although the Obama Administration announced its engagement strategy towards Myanmar as early as in 2009, China’s concern over the engagement was greatly eased during 2010 and early 2011.13 Up until the summer of 2011, China was extremely pleased to see the engagement “going nowhere” due to Washington’s “obsession” over Myanmar domestic politics, especially the issue of Aung San Suu Kyi (Interview with Chinese analysts, Beijing, July 2011). The American condemnation of the 2010 elections as “neither open nor democratic” reassured China that a rapid improvement of bilateral relations and the removal of western sanctions were still far out of 13
China had seen the U.S. engagement with Myanmar as a key component of its “return to Southeast Asia” to undercut China’s security interests in the region. International Crisis Group 2010: 9-10.
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sight (Interview with Chinese analysts, Beijing and Kunming, July 2011). China could still enjoy its “monopoly” of Myanmar’s economic resources and external relations. However, beginning with President Thein Sein’s meeting with Aung San Suu Kyi, U.S.–Myanmar relations began to improve at a “dazzling speed” (Interview with Chinese analysts, Beijing, November 2011). Not only has U.S. Special Envoy Derek Mitchell paid an historic number of visits to the country since September, Secretary of State Hillary Clinton also travelled to Myanmar three months later, the first U.S. Secretary of State in five decades to make a state visit. That steps toward diplomatic normalization are being taken is crystal clear, highlighted by Clinton’s announcement that the U.S. would start exchanging ambassadors with Myanmar in January 2012 (BBC 2012). The two countries have engaged in substantive dialogues about the new government’s domestic policies and how the U.S. would adapt its economic sanctions to reward certain developments (Interviews with U.S. government officials, Washington DC, November, 2011). China’s fear of the rapid improvement of U.S.–Myanmar relations is multi-fold. First and most importantly, the warmer ties between the U.S. and Myanmar are essentially seen by Beijing as a conspiracy to encircle and contain China, with potential threats to the Chinese south western border, Indian Ocean access, and the oil and gas pipelines (Guangzhou Daily 2010). In terms of economics, the easing of sanctions could open the floodgates for Western companies to return to Myanmar, creating competition for Chinese companies that have thrived under the sanctions during the past two decades. Furthermore, China is concerned that, as multilateral financial institutions return to Myanmar offering technical assistance, these pro-Western institutions will help Naypyidaw formulate a set of economic, financial, and monetary systems without China’s participation, forcing China to accept potentially unfriendly rules in its future economic activities in the country (Interview with Chinese analysts, Beijing, October 2011). (For example, if experts from International Monetary Fund convince the Myanmar government to accept a new foreign exchange mechanism pegged to US dollars, the existing trade with China in Chinese currency would come under severe challenges.) In terms of regional influence, Washington’s relationship with Myanmar is being scrutinized within the broader scope of U.S. competition with China in Southeast Asia. Beijing sees the U.S. attempting to economically replace China’s leadership in the East Asia Free Trade Zone with the TransPacific Partnership and politically sabotage the U.S.-free East Asia Community by inserting itself into the East Asia Summit (Interviews with Chinese analysts, Beijing, November 2011). Washington’s engagement with Naypyi-
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daw is seen as another layer in the behind-the-scenes manoeuvring of the U.S. to alienate the traditional friendship between China and continental ASEAN states, thereby strengthening the U.S.’s standing in ASEAN, based on its traditional ties with the maritime ASEAN states (Interviews with Chinese analysts, Beijing, November 2011). Specifically, China is fearful that Myanmar’s improved reputation and regional status might be exploited by the U.S. to advance its agenda at ASEAN on regional issues such as the South China Sea (Interviews with Chinese analysts, Beijing, October 2011). Viewed from these perspectives, China’s assessment of the U.S. presence in Myanmar is essentially zero-sum. Any gains made by Washington will come at China’s expense, either now or in the future. Such a perception is pre-determined by the bipolar power structure and competition in Southeast Asia – a consensus shared by U.S. and Chinese analysts alike (Interviews with American and Chinese analysts, Washington DC and Beijing, November 2011). Paradoxically, from November to December 2011, the Chinese Foreign Ministry made several statements welcoming the improvement of relations between Myanmar and the West, including the U.S.14 These seemingly contradictory messages by Beijing, however, can be seen as a diplomatic tactic (or diplomatic rhetoric) rather than an authentic reflection of how China perceives Myanmar’s relations with the West. Since China is in no position to alter or slow down the course of such improvements, it may as well appear to publicly welcome them rather than be seen as bitter and territorial (Interviews with Chinese analysts, Washington DC, January 2012). Furthermore, any open opposition by China to the improvement of U.S.–Myanmar relations would constitute interference in Myanmar’s internal affairs and damage China’s relationship with both Naypyidaw and opposition parties (Ding 2011). Therefore, it makes no sense for China to pick a fight that it cannot win while risking more stress over its already-strained relationship with Myanmar.
5
China’s Strategic Misjudgements on Myanmar
China was surprised and frustrated by the unexpected developments in Myanmar’s domestic politics and in its foreign policy, developments which have a direct impact on Beijing’s original strategic planning. The turbulence in China’s relationship with Myanmar during 2011 revealed several basic stra14
Press Conferences of the Ministry of Foreign Affairs, Chinese Ministry of Foreign Affairs, November 29, 2011, December 2, 2011 and December 19, 2011.
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tegic misjudgements by the Chinese policy community about Myanmar and its bilateral relations with China. Firstly, China fundamentally underestimated the political momentum of democratization within Myanmar. Prior to the 2010 elections, most Chinese analysts concluded that the new civilian government would be nothing more than old wine in a new bottle. In their assessment, its transformation into a civilian government was clearly the military’s tactic to strengthen its legitimacy with no clear intention to give up power. According to a government analyst speaking after the elections, Thein Sein is a transitional figure designed to maintain the stability and balance of power within the new government, not a democratic leader to guide the country towards democracy (Interviews with Chinese analysts, Beijing, November 2010).
The judgment that domestic politics would remain unchanged led to the conclusion that Myanmar’s relations with the West would not improve in the near future, thereby guaranteeing China’s existing and expanding interests in Myanmar, as it remained the primary source of political and economic support for the isolated country. Ignorance of the domestic political momentum was also reflected through China’s approach toward the anti-China sentiment in Myanmar. From China’s perspective, public opinion in Myanmar did not constitute a critical challenge to China’s interest as long as the government backed Chinese projects. Such support could always be acquired using the “powerful lubricant” favoured during the junta era – bribes (Interview with government analyst, Kunming, June 2010). This logic prompted CPI to rely on “government relations” to smooth obstacles such as public opposition to the Myitsone Dam (Interview with Chinese analyst, Kunming, July 2011). This approach indicated that Chinese government and companies assumed the new government was essentially the same as the military government, prompting them to adopt the same old methods when dealing with it. Secondly, up until the summer of 2011, China mistakenly assumed that the U.S. engagement had failed, ending after the 2010 elections, when Washington pronounced the elections as “neither free nor fair.” Convinced that U.S. domestic politics, especially in Congress, would not favour acceptance of the new government, Chinese analysts shifted their focus from U.S. engagement to the expansion and deepening of the Chinese presence in Myanmar. Even after the appointment of Derek Mitchell as Special Envoy, China still maintained that the U.S. diplomatic efforts would not produce any results in the near future (Interview with Chinese analyst, Kunming, July 2011). This conclusion is based primarily on the belief that Naypyidaw would not make concessions on issues such as Aung San Suu Kyi and ethnic
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groups simply to cater to Washington as they, in China’s view, represented fundamental challenges to the rule of the new government and its 2008 Constitution (Interview with Chinese analyst, Kunming, July 2011). This explains why China was repeatedly “surprised” by the level of compromises Thein Sein’s government agreed to and was repeatedly hopeful that Washington had driven Naypyidaw to its bottom line, prompting Naypyidaw to soon push back. China has been quite disappointed that such push-back is yet to take place. Thirdly, China overestimated its absolute political and economic influence in Myanmar. As the biggest investor in Myanmar, as well as the provider of critical international political shielding for Myanmar’s junta (including a UN veto in early 2007), China believed it deserves certain privileges in Myanmar (Interview with Chinese analyst, Kunming, July 2011). With no removal of Western sanctions in sight, China was comfortably positioned for Myanmar’s continued reliance on China for economic development and political support. Under this premise, China intentionally ignored public opposition to Chinese projects and the anti-China sentiment on the ground, believing that an isolated Myanmar would not dare to challenge Chinese projects and jeopardise future economic patronage. The failure to accurately assess and predict the future of Myanmar’s politics and bilateral relations reflects a deep-rooted issue with China’s foreign policy toward developing countries. China has a strong tendency to view other non-democratic countries’ politics through its own lens and experiences. Beijing’s reluctance to accept political reform is translated into a general disbelief that any non-democratic government would willingly give up its absolute power. The priority of such governments in China’s view will always be to maintain the current power structure. Rapid political changes, voluntary or not, are often seen as “threats to stability.” In the case of Myanmar, this thinking underlines China’s misjudgement of the aspiration and policies of the Thein Sein government and its policy toward democratic opposition (especially, Aung San Suu Kyi) and ethnic groups. This “mirror effect” also dominates China’s economic and political relations with many less-developed countries. China believes the fundamental legitimacy of any government should come from its ability to generate economic growth and improve the livelihood of its people. Such a mercantilist value system also characterises the dominant theme in China’s external relations – as long as China helps the local government deliver growth and revenue, Chinese presence should be embraced and welcomed, regardless of any negative impact. In China’s own history, it made similar social and environmental sacrifices during the early years of reform and opening up. The repetition of this development model in less-developed countries, such as
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Myanmar, is perfectly justifiable and acceptable in China’s perception (Interview with Chinese analysts, Kunming, June 2010). China fails to understand or accept other non-mercantilist approaches toward economic and social development, especially for countries without many alternatives. Therefore, opposition to the Chinese presence in these countries is often interpreted as non-indigenous, instigated by hostile Western forces stirring up local resentment.
6
Conclusions
2011 marked a turbulent year in China’s relationship with Myanmar. After two decades of relatively smooth political friendship and economic cooperation, China had hoped to bring the bilateral relations to a higher strategic level and turn Myanmar into China’s strategic asset in Southeast Asia and the Indian Ocean. However, such expectations have been greatly frustrated by recent developments in their bilateral relations and Myanmar’s rapidly improving relations with the West. These have served as a wake-up call for China as it attempts to implement its strategic blueprint in Myanmar. The setbacks China encountered in Myanmar reveal its several strategic misjudgements about the political reality and foreign relations of its south western neighbour. China missed key signs of the democratic momentum inside Myanmar after the inauguration of the Thein Sein government and underestimated the government’s determination to pursue democracy and national reconciliation. Consequently, it failed to anticipate the pace and result of U.S. engagement with Myanmar, miscalculating the degree of China’s economic and political influence in the country. These misjudgements originated from China’s perception of its own political development and economic model, which plays a dominant role in its interpretation of other countries and its external relations with them. As a result, China has been taking a different look at its policy toward Myanmar. In the near future, China most likely will maintain a “wait and see” posture, refraining from making further political, economic, and strategic commitments to the country, while focusing on the implementation of the existing agreements. Chinese companies and the government have learned from the Myitsone Dam incident to place increased emphasis on and resources into improving relations with the local communities and developing more corporate social responsibility programs. The policy community seems to have accepted the new reality that China will no longer be the sole dominant power and are preparing for new competition in the country. Given its geopolitical reality, Myanmar’s best strategy always lies in seeking a balanced diplomacy among big powers to maximize its leverages
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and gains. It is an extremely delicate balancing act that requires wisdom and accurate calculations. Naypyidaw certainly doesn’t want to become China’s satellite state; it does not, however, make sense for it to alienate China. What the world has seen in 2011 between China and Myanmar are the natural consequences of Myanmar’s correction of its previous over-dependence on China. At a certain point, Naypyidaw will have to recalibrate its relationship with the U.S., China, and other powers in the region and bring its foreign policy to its traditionally non-aligned, balanced path.
References BBC (2012), U.S. to exchange ambassadors with Burma, 13 January, online: (13 January 2012). BBC (2011), China, Myanmar signed 700 million USD credit agreement, [ѝ ഭ઼㔵⭨ㆮ㖢гӯཊ㖾ؑݳ䍧ॿ䇞], 27 May, online: (14 December 2011). BBC (2010), China and Myanmar reached consensus on maintaining the stability of the border, [ѝഭо㔵⭨ቡ㔤ᣔ䗩ຳൠ४઼ᒣ䗮ᡀޡ䇶], 3 June. China News (2011), Yunnan wishes to revitalize the southern silk road, joining hands with 9+2 to launch into the Indian Ocean, [ӁইⅢ༽“ޤই ᯩэ㔨ѻ䐟” 㚄“9+2”䘋ߋঠᓖ⌻@, 22 September, online: (11 December 2011). China News Agency (2011), Chinese companies increase investment in Myanmar: Experts say China should focus on business opportunities for a win-win solution, [ѝഭԱъᣅ䍴㔵⭨໎ཊ уᇦ〠ᓄ୶⌘ޣᵪޡ䎒 ], 27 May. China News Agency (2010), Hu Jintao met with Than Shwe and reached consensus on maintaining the stability of the border, [㜑䭖⏋ 8 ᰕ਼ѩ⪎ Պ䈸䗮ᡀ㔤ᣔ䗩ຳ઼ᒣޡ䇶], 9 September. Chinese Embassy in Myanmar (2011), Ambassador Li Junhua: China-Myanmar trade has great future under ASEAN framework, [བྷ֯ᵾߋॾ˖ьⴏṶᷦ лⲴѝ㔵ਸབྷᴹਟѪ], 16 November, online: (15 December 2011). Chinese Embassy in Myanmar (2009), PLA Chief of Staff General Chen Bingde visited Myanmar, [ѝഭӪ≁䀓᭮ߋᙫ৲䈻䮯䱸⛣ᗧкሶᡀ࣏䇯䰞㔵 ⭨ ], 12 March, online: (15 December 2011).
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CNPC News (2011), An overview of the Sino-Myanmar oil and gas pipeline construction, [ѝ㔵⋩≄㇑䚃ᔪ䇮᧐ᖡ], 24 October, online: (14 December 2011). Ding, Dong (2011), China welcomes the improvement of relations between U.S. and Myanmar?, [ѝഭ⅒䗾㖾㔵᭩ழޣ㌫˛], in: China Elections and Governance, 3 December, online: (12 December 2011). Dongfangwang (2011), KIA appeals to China for mediation, [ݻ䫖⤜・ߋ㠤 ؑ ѝ ഭ 㾱 ≲ 䈳 ] ڌ, 17 June, online: (12 December 2011). Dong Fang Zao Bao (2011a), KIA announced the start of civil war, [㔵⭨ݻ䫖 ⤜ ・ ߋ ᇓ ᐳ ᔰ ᢃ ᡈ ], 15 June, online: (12 December 2011). Dong Fang Zao Bao (2011b), Wen Jiabao urges Myanmar to properly resolve the Myitsone dam issue, [ᇦᇍ׳㔵⭨࿕ழ䀓ߣᇶᶮ⭥ㄉ䰞仈], 21 October, online: (12 December 2011). Guangzhou Daily (2010), U.S. adjusts policy towards Myanmar. Experts say it may challenge Sino-Myanmar relations, [㖾ഭ䈳ᮤሩ䶒᭯ㆆˈуᇦ〠 ᡆߢࠫѝ㔵ޣ㌫], 24 May. Guo Ji Shang Bao (2006), Interview with Commercial Counselor Tang Hai: Sino-Myanmar Cooperation has Great Potential, [䇯傫㔵୶࣑৲䎎ୀ ⎧ѝ㔵ਸᴹᐘབྷオ䰤], 6 August, online: (12 December 2011). Guo Ji Zai Xian (2011), China’s ASEAN scholar argues the Sino-Myanmar relationship is at a new historical starting point, [ѝഭьⴏᆖ㘵䇔Ѫѝ 㔵 ޣ㌫ ㄉ൘শ ਢ 儈 䎧⛩к ], 31 May, online: (12 December 2011). International Crisis Group (2010), China’s Myanmar Strategy: Elections, Ethnic Politics and Economics, International Crisis Group Asia Briefing N 112, 21 September. IHN see International Herald News International Herald News (2010), The construction of Sino-Myanmar oil and gas pipelines will ease China’s Malacca dilemma, [ѝ㔵⋩≄㇑䚃ᔰᐕ ᔪ䇮ਟ㕃䀓傜⭢ޝഠተ], 13 June, online: (12 December 2011).
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Li, Xiuzhong (2011), Myanmar says it will continue to protect Chinese investments, [㔵⭨Պ䘋а↕؍ᣔѝഭᣅ䍴], in: Di Yi Cai Jing Ri Bao, 25 October, online: (15 December 2011). McCartan, Brian (2011), Partial peace in Myanmar, in: Asia Times Online, 12 October, online: (14 December 2011). Ministry of Foreign Affairs (2009), Xi Jinping met with Myanmar SPDC Chair Than Shwe, [Ґ䘁ᒣՊ㿱㔵⭨ഭᇦ઼ᒣоਁኅငઈՊѫᑝѩ⪎], 20 December. People’s Daily (2011a), Western media enthusiastically discusses the Myitsone dam project – A disgusting smile from ‘observers’, [㾯ᯩჂփ✝⛂㔵 ⭨ ᇶ ᶮ ⭥ ㄉ 亩 ⴞ Ԕ Ӫ ⭏ ় Ⲵ ᯱ 㿲 㘵 ㅁ ], 10 October, online: (15 December 2011). People’s Daily (2011b), China becomes the biggest investor in Myanmar, 22 February, online: (15 December 2011). People’s Daily website (2010), Sino-Myanmar pipelines constructs another energy artery for China, [ѝ㔵⋩≄㇑䚃䙐ѝഭ㜭Ⓚࣘ㜹], 14 September, online: (10 December 2011). PLA Daily (2011), Xu Caihou met with Myanmar’s chief military commander and suggested improving mutual strategic trust, [ᗀՊ㿱㔵⭨ ߋᯩᙫਨԔᔪ䇞໎䘋ᡈ⮕ӂؑ], 13 May, online: (12 December 2011). Thayer, Carlyle A. (2011), China’s New Wave of Aggressive Assertiveness in the South China Sea, paper presented at the Conference on Maritime Security in the South China Sea, sponsored by the Center for Strategic and International Studies, Washington, June 20-21, 2011. UPI see United Press International United Press International (2011), Myanmar stands firm on Myitsone dam, 22 September, online: (12 December 2011). World Knowledge (2011), Why did Myanmar government suspend the Myitsone dam project, [㔵⭨᭯ᓌѪօᨱ㖞ᇶᶮ≤⭥ㄉ亩ⴞ], 15 November, online: (15 December 2011).
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Xinhua News (2011a), China, Myanmar forges partnership, inks deals on Myanmar president’s maiden visit, 27 May, online: (10 December 2011). Xinhua News (2011b), Yunnan: The construction of the grand international corridor speeds up, [Ӂই˖ഭᇦབྷ䙊䚃ᔪ䇮⅑ᨀ䙏], 27 November, online: (10 December 2011). Xinhua News (2011c), CMC Vice Chair Xu Caihou visited Myanmar, [ߋင ࢟ѫᑝᗀ䇯䰞㔵⭨], 13 May, online: (10 December 2011). Xinhua News (2011d), China and Myanmar announced the establishment of comprehensive strategic cooperative partnership, [ѝ㔵ᇓᐳᔪ・ޘ䶒 ᡈ⮕ਸՉդޣ㌫], 27 May, online: (10 December 2011). Xinhua News (2011e), During Myanmar President’s first visit to China, Hu Jintao made four suggestions on the future of the bilateral relations, [㔵 ⭨ᙫ㔏俆䇯ѝഭ㜑䭖⏋ᨀਁኅѝ㔵ޣ㌫ഋ⛩ᔪ䇞], 27 May, online: (13 December 2011). Xinhua News (2011f), PLA Navy escort fleet arrived in Myanmar for friendly visit on August 29, [ѝഭ⎧ߋᣔ㡚㕆䱏 8 ᴸ 29 ᰕᣥ䗮㔵⭨䘋㹼৻ ྭ䇯䰞], 29 August, online: (13 December 2011). Xinhua Net (2010), The construction of the China section of Sino-Myanmar oil and gas pipelines started with annual transport volume of 22 million tons, [ѝ㔵⋩≄㇑䚃ѝഭ⇥ᔰᐕᒤ䗃⋩㜭࣋ 2200 з], 10 September. Yunnan Wang (2011), Six strategic priorities in the 12th Five Year Plan are related to Yunnan, [“ॱҼӄ”ޝњᡈ⮕䟽⛩⎹৺Ӂই], 7 March, online: (13 December 2011). Zhu, Zheming (2009), China’s Good Neighbor Diplomacy and Sino-Myanmar Relationship, [ѝഭⲴⶖ䛫ཆӔ઼ѝ㔵ޣ㌫], Southeast Asia and South Asia Studies, Kunming: Yunnan Academy of Social Sciences, Volume II, 21 September, online: (14 December 2011).
CHINA’S MYANMAR DILEMMA Asia Report N°177 – 14 September 2009
TABLE OF CONTENTS EXECUTIVE SUMMARY ...................................................................................................... i I. INTRODUCTION ............................................................................................................. 1 II. BEIJING NAVIGATES MYANMAR’S POLITICS ..................................................... 2 A. BILATERAL RELATIONS ...............................................................................................................2 B. UNITED NATIONS .........................................................................................................................4 1. The Security Council veto ...........................................................................................................4 2. Beijing’s reaction to the Saffron Revolution ...............................................................................6 3. Ensuring aid after Cyclone Nargis ...............................................................................................8 4. Detention and trial of Aung San Suu Kyi ....................................................................................9 C. CHINA AND THE OPPOSITION........................................................................................................9 D. CHINA AND THE ETHNIC GROUPS ...............................................................................................10
III. DRIVERS OF CHINESE POLICY ............................................................................... 14 A. BORDER STABILITY ...................................................................................................................14 1. Narcotics ....................................................................................................................................14 2. HIV/AIDS ..................................................................................................................................15 3. Gambling ...................................................................................................................................16 B. ECONOMIC CALCULATIONS........................................................................................................17 1. Chinese investment and economic assistance ............................................................................17 2. Yunnan and the “Go West” campaign .......................................................................................18 C. STRATEGIC INTERESTS ...............................................................................................................19 1. The “Malacca dilemma” and the Indian Ocean .........................................................................19 2. Arms sales and technical assistance ...........................................................................................21
IV. RISKS OF CHINESE POLICY ..................................................................................... 22 A. B. C. D.
WEAK GOVERNANCE IN MYANMAR ...........................................................................................22 THE COST OF INVOLVEMENT IN EXTRACTIVE RESOURCES .........................................................23 RESENTMENT TOWARDS CHINA .................................................................................................24 BEIJING POLICY UNDERCUT BY LOCAL ACTORS ........................................................................25
V. LIMITS TO CHINESE INFLUENCE .......................................................................... 26 A. B. C. D.
HISTORICAL DISTRUST...............................................................................................................26 EXPLOITING BILATERAL COMPETITION ......................................................................................28 CHARACTERISTICS OF THE MYANMAR GOVERNMENT ................................................................30 ASEAN .....................................................................................................................................31
VI. IMPLICATIONS FOR INTERNATIONAL APPROACHES.................................... 33 VII.CONCLUSION ............................................................................................................... 35 APPENDICES A. MAP OF MYANMAR .........................................................................................................................37 B. HIGH-LEVEL OFFICIAL VISITS BETWEEN MYANMAR AND CHINA .....................................................38 C. FOREIGN DIRECT INVESTMENT FLOWS ............................................................................................39 D. LOCAL INTERESTS: LOGGING AND CROP SUBSTITUTION ..................................................................40 E. ABOUT THE INTERNATIONAL CRISIS GROUP ....................................................................................42 F. CRISIS GROUP REPORTS AND BRIEFINGS ON ASIA............................................................................43 G. CRISIS GROUP BOARD OF TRUSTEES ................................................................................................46
Asia Report N°177
14 September 2009
CHINA’S MYANMAR DILEMMA EXECUTIVE SUMMARY Each time global attention is focused on events in Myanmar, concerned stakeholders turn to China to influence the military government to undertake reforms. Yet simply calling on Beijing to apply more pressure is unlikely to result in change. While China has substantial political, economic and strategic stakes in Myanmar, its influence is overstated. The insular and nationalistic leaders in the military government do not take orders from anyone, including Beijing. China also diverges from the West in the goals for which it is prepared to use its influence. By continuing to simply expect China to take the lead in solving the problem, a workable international approach will remain elusive as Myanmar continues to play China and the West against each other. After two decades of failed international approaches to Myanmar, Western countries and Beijing must find better ways to work together to pursue a wide array of issues that reflect the concerns of both sides. The relationship between China and Myanmar is best characterised as a marriage of convenience rather than a love match. The dependence is asymmetric – Myanmar has more to lose should the relationship sour: a protector in the Security Council, support from a large neighbour amid international isolation, a key economic partner and a source of investment. While China sees major problems with the status quo, particularly with regards to Myanmar’s economic policy and ethnic relations, its preferred solution is gradual adjustment of policy by a strong central government, not federalism or liberal democracy and certainly not regime change. In this way, it can continue to protect its economic and strategic interests in the country. In addition to energy and other investments, Myanmar’s strategic location allows China access to the Indian Ocean and South East Asia. But Beijing’s policy might ultimately have an adverse effect on Myanmar’s stability and on China’s ability to leverage the advantages it holds. Political instability and uncertainty have resulted in a lack of confidence in Myanmar’s investment environment, and weak governance and widespread corruption have made it difficult for even strong Chinese companies to operate there. Myanmar’s borders continue to leak all sorts of problems – not just insurgency, but also drugs, HIV/AIDS
and, recently, tens of thousands of refugees. Chinese companies have been cited for environmental and ecological destruction as well as forced relocation and human rights abuses carried out by the Myanmar military. These problems are aggravated by differences in approach between Beijing and the provincial government in Yunnan’s capital Kunming, which implements policies towards the ethnic ceasefire groups. At the same time, resentment towards China, rooted in past invasions and prior Chinese support to the Communist Party of Burma, is growing. Myanmar’s leaders fear domination by their larger neighbour, and have traditionally pursued policies of non-alignment and multilateralism to balance Chinese influence. Increasing competition among regional actors for access to resources and economic relationships has allowed Myanmar to counterbalance China by strengthening cooperation with other countries such as India, Russia, Thailand, Singapore, North Korea and Malaysia. The military government is intensely nationalistic, unpredictable and resistant to external criticism, making it often impervious to outside influence. While China shares the aspiration for a stable and prosperous Myanmar, it differs from the West on how to achieve such goals. China will not engage with Myanmar on terms dictated by the West. To bring Beijing on board, the wider international community will need to pursue a plausible strategy that takes advantage of areas of common interest. This strategy must be based on a realistic assessment of China’s engagement with Myanmar, its actual influence, and its economic and strategic interests. The West could better engage China to encourage Myanmar’s government to commit to a truly inclusive dialogue with the opposition and ethnic groups. In addition to talks on national reconciliation, dialogue should also address the economic and humanitarian crisis that hampers reconciliation at all levels of society. At the same time, China should act both directly and in close cooperation with ASEAN member countries to continue support for the good offices of the United Nations as well as to persuade the military to open up.
China’s Myanmar Dilemma Crisis Group Asia Report N°177, 14 September 2009
Myanmar is heading towards elections in 2010 which, despite major shortcomings, are likely to create opportunities for generational and institutional changes. International policy towards Myanmar accordingly deserves careful reassessment. China is encouraging the government to make the process genuinely inclusive, but will certainly accept almost any result that does not involve major instability. While its capacity and willingness to
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influence Myanmar’s domestic politics is limited, the international community should continue to encourage Beijing as well as other regional stakeholders to take part in a meaningful and concerted effort to address the transition in Myanmar.
Beijing/Jakarta/Brussels, 14 September 2009
Asia Report N°177
14 September 2009
CHINA’S MYANMAR DILEMMA I. INTRODUCTION China’s political and commercial position in Burma/ Myanmar1 is in large part a consequence of decisions made in Western capitals. Confronting a comprehensive set of economic and diplomatic sanctions by the U.S. and the European Union, as well as the suspension of new development assistance by Japan in 1988, 2 Myanmar sought stronger relations with its neighbours. Burmese Prime Minister Ne Win had begun working to improve diplomatic relations with China in October 1970 and visited Beijing the following August, but it was not until years later that ties improved. Border trade officially opened in 1988. The Communist Party of Burma (CPB), which China had supported, collapsed in March 1989, around the same time that democracy movements in both countries were followed by harsh crackdowns and Western condemnation. Relations warmed considerably. China, which had just entered a period of economic reform and development, readily expanded its stake in Myanmar. The benefits were almost immediate for Myanmar. China’s economic, military and political support was a lifeline for the military government.3 Disastrous nationalisation
policies had turned Myanmar into one of the world’s most impoverished countries, and it relied increasingly on trade, investment and aid from China. China also provided military assistance, beginning in 1989, at a time when few others were willing to supply arms. China’s value to Myanmar has only increased with its rise as a regional power. As Myanmar’s strongest supporter, China’s backing for any international strategy to promote positive change is vital, but there are important limits to China’s influence over Myanmar and to how it is willing to exert pressure. This report examines the drivers of Chinese national and provincial policy towards Myanmar and its implications for international approaches toward the country. In so doing, it explains how Chinese authorities manage the relationship with the Myanmar government, ethnic groups and opposition; and analyses limits on Chinese influence. The report does not present a general framework for international policy on Myanmar, which was the subject of an earlier Crisis Group report.4 This report is based on interviews conducted on both sides of the China-Myanmar border, from Thailand on the Thai-Myanmar border, as well as in Yangon, Mandalay, Kunming, New Delhi, Bangkok, Geneva, New York and Washington DC. Crisis Group spoke to a wide range
1
This report uses the name Myanmar, in line with the practice of the UN and most countries outside North America and Europe. This is not a political statement or a judgment on the right of the military regime to change the name of the country. 2 Up to 1988 Japan had been the main foreign aid donor to Myanmar, making up 78 per cent of Myanmar’s overseas development assistance (ODA). Following that year’s military coup and crackdown on pro-democracy demonstrators, Japan suspended all assistance, except for a small amount of humanitarian aid and projects that had been previously agreed upon. Even so, Japan continues to be among the largest donors. Toshihiro Kudo, “Myanmar and Japan: How Close Friends Become Estranged”, Institute of Developing Economies, discussion paper no. 118, August 2007, at www.ide.go.jp/ English/Publish/Download/Dp/pdf/118.pdf; Patrick Strefford, “Japanese ODA diplomacy towards Myanmar: A Test for the ODA Charter”, Ritsumeikan Annual Review of International Studies, vol. 6 (2007), pp. 65-77, at www.ritsumei.ac.jp/acd/ cg/ir/college/bulletin/e-vol.6/04Patrick%20Strefford.pdf. 3 The State Peace and Development Council (SPDC) is the official name of the government, which until 1997, was known as the State Law and Order Restoration Council (SLORC).
4
See Crisis Group Asia Report N°144, Burma/Myanmar: After the Crackdown, 31 January 2008. Other previous Crisis Group reports include Asia Report N°174, Myanmar: Towards the Elections, 20 August 2009; Asia Report N°161, Burma/ Myanmar After Nargis: Time to Normalise Aid Relations, 20 October 2008; Asia Briefing N°58, Myanmar: New Threats to Humanitarian Aid, 8 December 2006; Asia Briefing N°34, Myanmar: Update on HIV/AIDS Policy, 16 December 2004; Asia Report N°82, Myanmar: Aid to the Border Areas, 9 September 2004; Asia Report N°78, Myanmar: Sanctions, Engagement or Another Way Forward?, 26 April 2004; Asia Report N°52, Myanmar Backgrounder: Ethnic Minority Politics, 7 May 2003; Asia Briefing N°21, Myanmar: The Future of the Armed Forces, 27 September 2002; Asia Briefing N°15, Myanmar: The HIV/AIDS Crisis, 2 April 2002; Asia Report N°32, Myanmar: The Politics of Humanitarian Aid, 2 April 2002; Asia Report N°28, Myanmar: The Military Regime’s View of the World, 7 December 2001; Asia Report N°27, Myanmar: The Role of Civil Society, 6 December 2001; Asia Report N°11, Burma/Myanmar: How Strong is the Military Regime?, 21 December 2000.
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of diplomats, representatives of the ethnic and political opposition both in Myanmar and in exile, representatives of ethnic armed groups (both ceasefire and non-ceasefire), members of civil society, UN officials, and representatives of local and international NGOs. Most of those interviewed asked to remain anonymous, due to the sensitive nature of the subject and because of potential risks, particularly to those based in Myanmar.
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II. BEIJING NAVIGATES MYANMAR’S POLITICS A. BILATERAL RELATIONS While China holds a prominent place in Myanmar’s foreign policy, the reverse is hardly true. Myanmar is currently a low priority for Beijing.5 This was not always the case. In the years following the establishment of the People’s Republic of China in 1949, when China was relatively weak and had few friends, it made efforts to build relations with its neighbours to secure diplomatic recognition and ensure peace along its borders. China deployed significant resources, for example, to strengthen its relationship with Myanmar, including sending Premier Zhou Enlai to Myanmar nine times between 1954 and 1965.6 In return for its assistance, China gained access to a large, untapped consumer market; exploration rights to oil and gas reserves; the rights to extract timber, minerals and gems; and contracts to build new energy and transport routes to support the development of its southwest. But as China became a regional force and now an aspiring global power, Myanmar remained isolated. The costs of cooperation with Myanmar have increased along with China’s international profile. Providing backing to a repressive and highly unpopular regime is a reputational burden. The issue has become an irritant in Beijing’s relationships with other powers, including the U.S., which its foreign policy increasingly prioritises. Nor does China discount the danger that future political upheavals caused by inept governance presents to its investments. While high-level contacts continue apace, including visits of top Burmese officials to China, 7 no Chinese president or premier has visited Myanmar since 2001.8
Myanmar’s low priority as a foreign policy issue, particularly at the Beijing level – was an opinion expressed by most diplomats interviewed. No think tank in Beijing has a full-time researcher dedicated to Myanmar; rather the country is covered under the umbrella of South East Asia and ASEAN. Within the foreign ministry, more diplomats are assigned to Thailand and Indonesia, for example, than Myanmar. Most Chinese experts on Myanmar are located in Yunnan. 6 Similarly, China’s renunciation of disputed territory in today’s Kachin state was a gesture to show China’s loyalty and friendship. “周恩来总理曾九次访问缅甸” [“Premier Zhou Enlai visited Myanmar 9 times”], Xinhua, 12 December 2001; Crisis Group interview, Beijing, February 2009. 7 See Appendix B. 8 Jiang Zemin visited Myanmar in 2001. Elsewhere in South East Asia, President Hu Jintao made state visits to Laos and Vietnam in March 2006; Vietnam in 2005; Malaysia in December 2005; Indonesia, Brunei and the Philippines in April 2005; and Malaysia and Singapore in 2002. Premier Wen Jiabao visited Laos in March 2008; Singapore in November 5
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This loss of priority has been noted by Myanmar, which has become increasingly suspicious of China’s strategic intentions. Many in Myanmar fear that China might use it as a bargaining chip in its relationship with the U.S.9 These fears increase every time China backs UN efforts to pressure Myanmar (see below). More troubling to Beijing than international opprobrium, however, is the potential instability that could spill across the border. China’s security strategy has traditionally focused on protecting its long, unstable borders.10 The 2,192-km frontier region with Myanmar has long been known for its lawlessness, drug trafficking and the prevalence of HIV/AIDS. Because conflict along the border has been an enduring characteristic of post-independence Myanmar, China is acutely sensitive to any rapid political change that could lead to instability.11 It is also nervous about the aspirations of the Wa and Kachin populations within its own borders.12 Many Chinese officials realise that the continued failure of the military government to deliver basic economic development and social progress to its people could undermine both Myanmar’s stability and China’s ability to advance its own economic blueprint. Such concerns deepened after the October 2004 arrest of the former prime minister and intelligence chief, Khin Nyunt, whom Chinese officials had hoped would gradually lead Myanmar out of international isolation and on to economic reforms. Since his purge (and that of the relatively internationalised technocrats surrounding him), Beijing has been increasingly frustrated with the erratic and isolationist behaviour of the military leadership, which has spent vast amounts constructing a new capital in Naypyidaw, engaged in discussions to purchase a nuclear reactor from Russia and developed dubious relations with North Korea.13
2007; the Philippines in January 2007, and Malaysia in December 2005. 9 Crisis Group interview, Yangon, 2 February 2009. 10 China’s national security is identified with safeguarding its territorial sovereignty, reunification with Taiwan, maintaining internal stability, and curbing intrusion by other great powers into its periphery. Taylor Fravel, “China’s Search for Military Power”, The Washington Quarterly, vol. 33, no. 3 (Summer 2008). 11 “The Burmese civil war is the longest-running armed conflict in the world and has continued, in one form or another, from independence to the present day”. Thant Myint-U, The River of Lost Footsteps (New York, 2006), p. 258. 12 These ethnic groups straddle the border. For example, there are about 700,000 Was in Burma and another 3,000 in China. Ibid. In particular, China fears the consequences of a “panKachin” or “pan-Wa” movement. 13 Crisis Group interviews, Washington DC, February and July 2008; Bangkok, February 2009; Beijing, August 2009.
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Rejecting tactics of isolation and sanctions, Beijing believes that political change must be gradual and is best promoted through engagement and encouraging economic development. It has been consistent in its opposition to sanctions – whether bilateral or multilateral.14 Its antipathy partially derives from its experience of being targeted by the USSR in the 1960s because of its nuclear program, by the U.S. until the 1970s, by the West after 1989, and in the 1990s for missile sales to Pakistan. Beijing believes sanctions are a product of power politics to force countries to submit to the will of more powerful others.15 Sanctions are also seen as a serious violation of the principle of non-interference.16 In China’s view, sanctions punish people more than governments, leading to humanitarian and economic crises such as those in Iraq and Yugoslavia.17 Officials argue that they only complicate situations and add to difficulties in reaching an eventual settlement,18 and so are more effective as threats than when actually applied.19 Chinese
14
One of the rare exceptions has been the recent support of Resolution 1874 on North Korea which enacted targeted sanctions on specific goods, persons and entities, and widened the ban on arms imports-exports to and from the country; and Resolutions 1737, 1747, 1803 against Iran. China made the concessions because the countries that were the object of sanctions had indisputably violated international norms, but also because blocking them would have jeopardised the issue in the U.S.-China bilateral relationship. Crisis Group interview, Beijing, July 2009. 15 Sanctions are a tool of those who “thought they had supreme authority and could impose sanctions on any country and people not obedient to their wishes”. “First Priority Should Always Be Given To National Sovereignty and Security”, People’s Daily, 1 December 1989. 16 An emphasis on sovereignty and non-intervention has long been a key theme of China’s foreign relations. Its “Five Principles of Peaceful Coexistence” (和平共处五项原则), which date from the 1950s, reject interference in other states’ sovereign affairs. These principles were central to critiques of Soviet intervention in Eastern Europe and continued through to the U.S.-led NATO intervention in the former Yugoslavia, which China denounced as “hegemonist”. Beijing has often expressed a similar distaste for milder means of trying to alter other states’ domestic policies. In recent years, Beijing has deviated from a pure non-interference policy in practice. Crisis Group Asia Reports N°153, China’s Thirst for Oil, 9 June 2008; N°166, China’s Growing Role in UN Peacekeeping, 17 April 2009. 17 “联合国近年制裁过谁” [“Who has been sanctioned bv the UN in recent years”], Global Times, 20 October 2006. 18 Statement by China’s Foreign Minister Qian Qichen on the 50th Anniversary of the United Nations, S/PV.3583, 26 September 1995. 19 Dingli Shen, “Can Sanctions Stop Proliferation?” The Washington Quarterly, vol. 31, no. 3 (Summer 2008), pp. 89-100. Such a conclusion could potentially lead Beijing to structure
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analysts have also asserted that sanctions can backfire, leading to hardened positions and the loss of a channel for communication, citing as an example North Korea’s first nuclear test which occurred just days after Beijing cut off oil deliveries in September 2006.20 Within China itself, there is very little interest in Myanmar, its people, or its social or political situation. Those with knowledge of the country regard it as a failed state rich in natural resources. 21 According to one official, “They are beggars carrying gold bowls”.22 Others believe that Myanmar’s people have even fewer expectations of their government than the Chinese. 23 Several officials cited as the principal reason for this the Buddhist belief that one has to suffer through this life to atone for the sins of a previous life.24 Chinese who have worked in the country recount difficulties in getting along with the Burmese, who they find overly sensitive and easily offended, behaviour they attribute to Burmese feelings of inferiority.25 Chinese living in Myanmar believe that local Burmese are not hard working or as industrious as the Chinese. 26 Feelings of antipathy toward Burmese are also expressed in the Chinese blogosphere.27
sanctions to maximise their threat value without necessarily enforcing them. 20 Hui Zhang “Do Not Let the Rocket Launch Block North Korean Denuclearization”, The Nautilus Institute, 14 April 2009. 21 Crisis Group interviews, Beijing, February-March 2009. 22 Crisis Group interview, Beijing, February 2009. 23 Ibid. 24 Crisis Group interviews, Beijing, 18 February 2009; Yangon, 12, 16 March 2009. 25 Crisis Group interviews, Beijing, 18 February 2009; Ruili, 7 March 2009. 26 Interviewees cited the frequent tea breaks taken by the Burmese as an illustration of this. Crisis Group interview, Ruili, 7 March 2009. 27 Some Chinese bloggers have speculated that the Saffron Revolution was an American conspiracy to thwart plans for China’s oil pipeline. Another view is that the Saffron Revolution was sponsored by the West so that Aung San Suu Kyi could come to power, thereby giving the U.S. a foothold in South Asia to further contain China. “从’入联公投’到缅甸’袈 裟革命’，美力阻中国武力收台 ?” [“From UN referendum to Saffron Revolution: US Stopping China from Reuniting TW by Force”], China.com blog, 26 September 2007, http:// shi.blog.china.com/200709/1005722.html; “ 南方朔：西方在 缅甸搞袈裟革命 围堵中国 ” [“The West Prompts Saffron Revolution to Contain China”], 铁血社会 (Iron Blood Society), 1 October 2007, http://bbs.tiexue.net/post_2289259_1.html; “ 缅甸危机解读 ” [“Interpreting Crisis in Myanmar”], China.com blog, 27 September 2007, http://dyer215.blog. china.com/200709/1012269.html; “ 跟大佬就要跟出风范！ ” [“Following the Big Brother and Learning its essence”], 松乙 先生的博客 [Mister Song Yi’s Blog], 10 November 2007, http://linstory8.blog.163.com/blog/static/539906152007
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B. UNITED NATIONS The UN has been involved with Myanmar since the massacres of pro-democracy protesters in 1988.28 Since 1991, the General Assembly has passed seventeen resolutions deploring the situation there and calling for democratic change. Since 1993, the Secretary-General has been mandated to use his good offices to help in their implementation, and since 1995, three successive special envoys have made over two dozen visits to Myanmar, in addition to visits by the special rapporteur on human rights and others.29 Since September 2006, the Security Council has also become seized of the matter by formally including Myanmar on its agenda. In general, Beijing considers the UN a neutral actor, unthreatening to its influence in Myanmar, and one which it can influence through its role on the Security Council.
1. The Security Council veto Beijing’s frustration with the regime peaked in January 2007. China exposed itself to intense international criticism by casting its first non-Taiwan-related veto in the Security Council since 1973 to defeat a U.S.-UK sponsored Security Council draft resolution on the situation in Myanmar. The draft resolution condemned Myanmar’s human rights situation, expressed strong support for the efforts of the Secretary-General and his representatives to implement his “good offices” mission, called on the government to permit international humanitarian organisations to operate without restrictions to address humanitarian needs and to begin a substantive political dialogue with all stakeholders, including ethnic group representatives.30 Having failed to block the issue from the agenda,31 10161383851/; “中国最近 20 年对外发生的鲜为人知的军事冲 突内幕！” [“The Untold Insiders’ Stories of Military Confrontation between China and Foreign Countries in the Past Twenty Years”], 精 品 文 化 [High Society], 28 June 2009, www. 009bbs.com/read.php?fid=15&tid=2153. 28 Pro-democracy protests (commonly known as the 8-8-88 Uprising) were started by students in Yangon on 8 August 1988 and spread throughout the country. Hundreds of thousands of monks, young children, university students, housewives and professionals marched in the streets demonstrating against the government. The protests ended on 18 September after a military coup by the State Law and Order Restoration Council (SLORC) and a bloody crackdown by the army. Human rights groups estimate that at least 3,000 people were killed. For more information, see David Steinberg, Burma: State of Myanmar (Georgetown, 2002); Maung Maung, The 1988 Uprising in Burma (New Haven, 1999). 29 For more on Myanmar and the United Nations, see Crisis Group Report, Burma/Myanmar: After the Crackdown, op. cit., pp. 6-8. 30 UN Security Council, S/PV.5619, 12 January 2007; UN Security Council Draft Resolution, S/2007/14, 12 January 2007.
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China cast its veto as forewarned. China, along with Russia, stated that human rights problems were not the purview of the council unless they endangered regional or international peace and security, which the situation in Myanmar did not.32
regimes, including in Sudan, by groups advocating boycotts. Beijing’s message to Myanmar was that it expected not to be put in a similar situation again; the military government needed to at least be seen to be cooperating more with the international community.36
At the same time, China’s ambassador to the UN, Wang Guangya, called on the regime to “listen to the call of its own people ... and speed up the process of dialogue and reform”.33 Beijing then reinforced Wang’s message by sending State Councillor Tang Jiaxuan to Myanmar to tell Senior General Than Shwe that it expected more cooperation with international demands and that the government should speed up reforms.34
By mid-2007, this pressure had generated limited results. Shortly after Tang Jiaxuan’s visit, the Myanmar government accepted a new agreement with the International Labour Organization (ILO), which had been on the verge of being ejected from the country. 37 And following Prime Minister Thein Sein’s May 2007 trip to Beijing, Myanmar announced a resumption of the long-stalled constitutional national convention.38
China’s increased demands were rooted in its deep unease at having had to expose itself so publicly in the Security Council against the West. While it was in the company of Russia on the veto (with South Africa opposing and Congo, Indonesia and Qatar abstaining), its image suffered and it also took heat bilaterally from several Western countries.35 This took place during the lead-up to the 2008 Olympics, a sensitive time for China, when it was being labelled a supporter of repressive
At the same time, China became more involved in helping the military government improve some of its thorniest relationships: with the ethnic groups, the democratic opposition, and the U.S. China’s hope was that once these tensions were eased, the government might be able to concentrate more on improving the domestic situation. China convened the leaders of various armed ethnic groups in the capital of Yunnan province, Kunming, and pressed them to consider disarming.39 It urged the government to hold direct talks with Aung San Suu Kyi40 and reached out to the opposition by inviting their representatives to discuss their concerns. In July 2007, Beijing hosted two days of “secret” talks between U.S. Deputy Assistant Secretary of State for Southeast Asian Affairs Eric John and three senior envoys from Myanmar, the first such discussion since 2003.41
The vote was nine in favour, three against (China, Russia, South Africa), with three abstentions (Congo, Indonesia, Qatar). 31 The U.S. engaged in months of diplomatic activity, particularly with elected members of the Security Council, to ensure that nine of fifteen Security Council members voted to place the item on the agenda. In the end, ten ended up voting for, with Russia, the Congo and Qatar voting against. Crisis Group interview, U.S. official, Washington DC, August 2007. 32 UN Security Council, S/PV.5619, 12 January 2007. Whenever China speaks about Myanmar in the Council, it underlines that it does not consider the country to be a threat to international peace and security. This is the case even if China ultimately agrees on action such as press statements. 33 Ibid. 34 Crisis Group interview, Bangkok, July 2007. “China sincerely hopes that Myanmar could have political stability, economic development, ethnic harmony and a well-off situation for its people”. “SPDC chairman met Tang Jiaxuan”, People’s Daily, 27 February 2007, http://politics.people.com.cn/GB/ 1024/5419742.html. 35 Crisis Group interviews, Beijing, 23 March, 7 July 2009; Washington DC, February and July 2008. The International Federation for Human Rights (FIDH) president expressed disappointment that China and Russia were “signing a blank check to the Burmese military regime, enabling the continuation of blatant human rights violations, affecting all Burmese people and the Southeast Asian region, in almost complete impunity”. “Russia/China veto on Myanmar condemned”, Human Rights Tribune, 15 January 2007, at www.humanrightsgeneva.info/Russia-China-veto-on-Myanmar,1030; Shah Paung, “China, Russia Failed Burma, Says Opposition”, The Irrawaddy, 15 January 2007; Howard LaFranchi, “Freedom’s ring not reaching new ears”, The Christian Science Monitor, 17 January 2007.
36
Crisis Group interview, Washington DC, February 2008. By contrast, Chinese authorities in Kunming welcome Security Council initiatives concerning Myanmar. See Section IV.D, “Beijing Policy Undercut by Local Actors”. 37 Diplomats cited Chinese pressure as a major factor in the government’s decision. China continues to provide support to the ILO in Myanmar, at the same time publicly defending Myanmar when it comes under criticism by the ILO Governing Body. Crisis Group interviews, UN official, Geneva, 6 February 2009; Bangkok, July 2007; Yangon, February 2009; Beijing, July 2009. 38 The national convention is the first step of the country’s seven-stage roadmap to democracy that is supposed to lead to new elections and what the junta calls a disciplined form of democratic rule. The national convention was formally resumed in May 2004 after an eight-year-long suspension, and in May 2007 it was reconvened to approve guidelines for a new constitution. Myanmar has had no constitution since its 1974 charter was abrogated in 1988. 39 Stephanie Kleine-Ahlbrandt and Andrew Small, “China’s New Dictatorship Diplomacy: Is Beijing Parting with Pariahs?” Foreign Affairs, vol. 87, no. 1 (January-February 2008), p. 50. 40 Crisis Group interview, Washington DC, 15 February 2008. 41 The talks – during which both sides repeated their standard claims – led nowhere, in part because the Saffron Revolution
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2. Beijing’s reaction to the Saffron Revolution When protests broke out following an unannounced hike in fuel prices on 15 August 2007, Beijing was forced to move more quickly than it would have liked in pressuring the Myanmar government. As demonstrations led by monks gathered momentum in late September and the military government followed through on its threat to use force to end them, China faced international criticism and pressure to take a tougher stance.42 Beijing both publicly and privately urged restraint on the generals.43 It supported an 11 October Security Council statement and a 2 October resolution in the UN Human Rights Council deploring the violence against peaceful protesters, a relatively major step.44 As soon as Beijing realised it was isolated in opposing the statement, it gave in.45 Before the resolution was adopted, however, Chinese diplomats ensured that it was far softer than the original.46 Outside of the UN, Beijing called for democratic progress and political dialogue. 47 It urged the
followed shortly thereafter. Crisis Group interviews, Bangkok, July 2007 and January 2009. 42 The European Parliament’s vice-president Edward McMillanScott said, “China is the puppet master of Myanmar”. Lucia Kubosova, “Call for EU to boycott China Olympics over Myanmar”, EU Observer, 28 September 2007. The army opened fire on demonstrators, killing both monks and civilians. The number of casualties is unclear. The UN Human Rights Council’s Special Rapporteur Paulo Sérgio Pinheiro has estimated that 31 were killed while the Democratic Voice of Burma puts the number at 138, basing its figure on a list compiled by the 88 Student Generation group in Myanmar. Thousands of protesters were also arrested and detained. 43 Crisis Group interviews, Washington DC, February 2008. A foreign affairs ministry spokeswoman said, “We call on related parties in Myanmar to exercise restraint and solve the current problem properly”. MOFA press conference, 27 September 2007, www.china.com.cn/international/txt/2007-09/ 27/content_8963293.htm. 44 UN Security Council Presidential Statement, S/PRST/2007/ 37, 11 October 2007; Human Rights Council, “Human Rights Situation in Myanmar”, 5th Special Session. Resolution S5/1, 2 October 2007. 45 Crisis Group interview, New York, 10 June 2008. China’s aversion to being isolated is linked to its desire to minimise the opprobrium and reputational costs of its actions. Alastair Iain Johnston, Social States: China in International Institutions, 1980-2000 (Princeton, 2008), pp. 131, 136. 46 Dropped from the final draft at China’s urging were demands for the release of Aung San Suu Kyi; inclusive dialogue “without conditions”; access for international humanitarian organisations; and mention of the important role played by Myanmar’s neighbours. Crisis Group interviews, New York, October 2007. 47 State Councillor Tang Jiaxuan informed Myanmar Foreign Minister Nyan Win, “China whole-heartedly hopes that [Myanmar] will push forward a democracy process that is appropri-
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government to receive the Secretary-General’s special adviser Ibrahim Gambari and grant him access to senior generals and Aung San Suu Kyi.48 Chinese officials worried that the government might be unable to ensure stability and were relieved to see the relatively swift way the protests were ended. 49 While pushing Myanmar to handle its opposition in a more moderate manner, China ensured that the protests received scant coverage at home.50 Since 2007, Chinese influence has failed to provide as much as hoped, with Gambari’s diplomatic efforts encountering mostly disappointment against high expectations. Despite Chinese support to the good offices mission,51 including by facilitating visits by the special adviser and visa arrangements, it was unable to ensure Gambari access to Than Shwe after his third visit.52 Although Gambari has had access to both the government and the opposition, including Aung San Suu Kyi and the NLD on all his visits, by his fifth visit from 6-10 March 2008
ate for the country”. “China urges Myanmar to push forward ‘democracy process’”, Reuters, 14 September 2007. 48 From 29 September to 2 October 2008, Gambari visited Yangon where he met Senior General Than Shwe and Aung San Suu Kyi, among others. Beijing was helpful both in securing him a visa and extending his program beyond what was initially permitted by the military government including two meetings with Aung San Suu Kyi. Gambari has been trying to secure further Chinese cooperation in achieving the goals set by his mandate. Crisis Group interviews, New York, 9 October 2007 and 8 January 2009. According to Gambari, “With regard to China, in concrete terms, yes, they have been helpful in getting me a visa for the two times that I went to Myanmar last year”. Lalit Kjha, “UN Security Council Condemns Myanmar’s Lack of Progress”, The Irrawaddy, 18 January 2008. 49 Crisis Group interview, Beijing, February and June 2009. 50 On 27 September 2007, while China made its first public call for restraint in Myanmar, no mention of the protests appeared on Chinese state television. The day’s official newspapers carried only a report by Xinhua on the inside pages. By contrast, Chinese media covered the concurrent Pakistan crisis in hourly detail. The difference in coverage was reportedly due to a belief that the Pakistan crisis was inflicted in a top-down manner, contrasting with the bottom-up nature of events in Myanmar, which were being called a “colour revolution”. Crisis Group interview, Beijing, October 2008. 51 Crisis Group interviews, New York, 10 June 2008 and January 2009; Bangkok, 26 January 2009. 52 Wang Guangya stated of the fourth visit, “We have noted that the Special Adviser was unable to meet the top leader of Myanmar, which gave rise to various speculations by media. However, in our view, the benchmarks to evaluate whether the visit is a success or not should not be subject to whom had been met or where he has been visited”. Statement by H.E. Ambassador Wang Guangya at Security Council Debate on Myanmar, Permanent Mission of the People’s Republic of China to the UN, 13 November 2007.
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(which took place a month earlier than anticipated53), he returned frustrated, having been unable to meet with the top leadership, representatives of the ethnic minorities or certain domestic opposition groups.54 Some of his suggestions in the aftermath of the demonstrations were followed up, including a relaxation of security measures and the appointment of a liaison minister to start dialogue with Aung San Suu Kyi. But his subsequent proposals for creating a more inclusive constitution and referendum, allowing international observers during the referendum and releasing 1,900 political prisoners were all ignored.55 Some observers claim that Beijing’s influence in getting Gambari a visa was diminished after it joined action in the UN condemning Myanmar, as Naypyidaw punished Beijing for having given in to the West. According to a Chinese diplomat, “It is not risk-free for China to be part of the Western alliance – these countries are all watching very carefully what China does to them. They say, ‘you side with them’. China can undermine its credibility by doing this”. 56 Nevertheless, China continues to provide consistent support to the Secretary-General’s good offices and his special adviser and fully endorses the UN’s five-point agenda.57 Beijing prefers a route to UN engagement that does not involve the Security Council. Gambari has been received four times in Beijing at high levels, including by the state councillor and foreign minister.58 China provided strong support for the Secretary-General’s visit
53
Myanmar sent a special envoy to Beijing in January 2008 to explain that the visit had been put on hold until May and to update Beijing on the political process. Beijing pressed the government, which ended up issuing a visa for March. Crisis Group interview, Washington DC, 15 February 2008. 54 See Department of Public Information, press release SC/ 9278, “Latest visit to Myanmar/Myanmar yielded no immediate tangible outcome, Secretary-General’s Special Adviser tells Security Council”, UN Security Council 5854th Meeting (PM), 18 March 2008. Myanmar’s senior leadership further snubbed the UN by meeting with Thai Prime Minister Samak Sundaravej just a few days later. “Futile diplomacy: Myanmar scorns a U.N. envoy”, Washington Post, 24 March 2008. 55 The UN’s five-point agenda on Myanmar stipulates: the release of political prisoners including Aung San Suu Kyi; dialogue with Aung San Suu Kyi; a credible political process; avenues for addressing socio-economic conditions; and the regularisation of the good offices role (including UN representation on the ground in Myanmar). See Situation of human rights in Myanmar: Report of the Secretary General, A/63/35617, September 2008, para. 17. 56 Crisis Group interview, Washington DC, February 2008. 57 See fn. 55. Crisis Group email correspondence, UN official, 9 September 2009. 58 Gambari visted Beijing in July 2007, October-November 2007, February 2008 and February 2009.
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to Myanmar in July 2009 and has maintained outspoken participation (albeit at a slightly lower level than others) in supporting the Secretary-General’s “Group of Friends of the Secretary-General on Myanmar”.59 Such participation has attracted criticism from the Myanmar government, which complained to China after a meeting of the “Group of Friends” that called on the government to release Aung San Suu Kyi and other political prisoners.60 China has also provided significant diplomatic support to the visits of the last two UN special rapporteurs on the human rights situation in Myanmar, who encountered similar obstacles to Gambari.61 On its overall support to the UN, a Western diplomat remarked, “China has really gone to bat for the UN on several occasions. They tell Burma that they need to be seen to be cooperating with the UN. They really ‘turned things over’ on the junta on UN issues”.62 With regard to the seven-step roadmap,63 China supported a 17 January 2008 Security Council statement expressing regret for the slow progress in meeting objectives set
59
Crisis Group email correspondence, UN official, 9 September 2009. The Group of Friends, founded in December 2007, was established to hold informal discussions and develop shared approaches to support UN efforts. Its members are Australia, China, the European Union, France, India, Indonesia, Japan, Norway, Russia, Singapore, the Republic of Korea, Thailand, the UK, the U.S. and Vietnam. China has also participated from the outset in an informal regional “focus group” on Myanmar led by Indonesia which includes Myanmar and the UN (and formerly India). Crisis Group Report, Burma/Myanmar: After the Crackdown, op. cit., p. 6, fn. 29. 60 Crisis Group interview, Beijing, August 2009. After meeting with the Group of Friends on 5 August 2009 following his visit to Myanmar, Ban Ki-moon stated: “While noting the recent actions taken by the Government of Myanmar, members of the Group also further encouraged it to work more closely with and respond more positively with the United Nations good offices to address key issues of concern to the international community, especially the release of prisoners, including Daw Aung San Suu Kyi, and the initiation of an all-inclusive dialogue between the Government and the opposition”. “Ban briefs Group of Friends on Myanmar on latest developments”, UN News Service, 5 August 2009. 61 Crisis Group interviews, Geneva, 24 November 2008; Beijing, 11 December 2008. 62 Crisis Group interview, Bangkok, 28 January 2009. 63 In 2003, the Myanmar government announced a seven-step roadmap to “disciplined democracy”, which included the completion of the national convention process, the drafting of a new constitution, the adoption of the constitution through a national referendum, and the holding of elections for the legislative bodies. The roadmap was conceived by Khin Nyunt, who as prime minister gave rise to hope that there might be some liberalisation. He was removed from power in 2004, after which the government announced it was still committed to carrying out the roadmap.
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out by the military government in October 2007, including democratic reforms, full respect for human rights and an end to forced labour and the repression of ethnic minorities.64 On 9 February 2008, the generals announced a timeline for implementing its roadmap, with a nationwide referendum on the draft constitution to be held in May, followed by ratification and then multiparty democratic elections in 2010.65 China was satisfied by this announcement, which it considered a rare sign of progress.66 Beijing supports the roadmap, which it perceives as a viable way to overcome the stalemate and to improve Myanmar’s relations with the outside world.67 It hopes that the process will bring gradual change and eventually achieve reconciliation. While acknowledging that the roadmap is anything but perfect, and can hardly be termed “genuinely democratic”, it is “much better than not having such a roadmap”.68 Beijing has been encouraging Myanmar to make it more credible and transparent, at the same time explaining to outsiders that they should give the process a chance; it would be impossible to ask the government to “commit suicide” by giving up its status. China hopes that the roadmap will legitimise the government while reinforcing dialogue to support stability and development. To this end, it simultaneously encourages the participation of opposition and ethnic groups in the elections while pushing the government to accommodate some of their concerns (see Section II.D, “China and the ethnic groups”).
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areas by the authorities.70 U.S. Secretary of State Condoleezza Rice made a direct appeal for China to press the military government to accept more external disaster assistance.71 China supported another presidential statement that focused on the constitutional referendum,72 then ended up playing a critical role along with ASEAN member countries in convincing the military government to accept international aid and coaxed it to receive Admiral Timothy J. Keating, Commander of the U.S. Pacific Command at Yangon airport.73 China regarded this compromise as an “inexpensive” way to reduce international pressure.74 China then sent Foreign Minister Yang Jiechi to the ASEAN-UN International Pledging Conference on Cyclone Nargis co-chaired by the SecretaryGeneral in Yangon on 25 May 2008. It supported the Secretary-General’s personal role in the conference as well as his visit to address the humanitarian situation.75 Towards the end of the year, with the spread of the global economic crisis, China started to focus more on its own domestic situation. During a meeting with Than Shwe on 5 December 2008, Chinese Foreign Minister Yang Jiechi urged him to do more for his country. 76 Noting that China was facing costs of its own, from the Olympics, the Sichuan earthquake recovery and the global economic crisis, he said that Beijing would not be in a position to provide endless support to Myanmar. China was concerned about Myanmar’s spending on non-priority programs, and warned that the government
3. Ensuring aid after Cyclone Nargis “Myanmar junta still blocking much cyclone aid”, The New York Times, 12 May 2008; Kenneth Denby, “Burma junta kicks out aid foreign workers”, The Times, 15 May 2008. 71 “Rice says Myanmar crisis ‘not a matter of politics’”, Agence France-Presse, 8 May 2008; Glenn Kessler and Dan Eggen, “Bush plans call to Chinese leader over Myanmar’s stance on aid”, Washington Post, 10 May 2008. 72 UN Security Council Presidential Statement, SC/9320, 2 May 2008. While Cyclone Nargis coincided with the constitutional referendum, this presidential statement sought to address the referendum – not the humanitarian situation caused by the cyclone which struck on the same day but whose impact only became clear later. As was the case with the presidential statement during the Saffron Revolution, as soon as China was isolated in the Council, it gave in. 73 Crisis Group interviews, Western diplomat, Yangon, February 2009; Kunming, March 2009. On 12 May, Keating, along with Henrietta Fore, USAID administrator, and Bill Berger, U.S. Disaster Assistant Team Leader, flew in on the first U.S. relief flight after waiting a week for visas. Susan Cornwell and Paul Eckert, “U.S concerned as its aid leaves Yangon airport”, Reuters, 12 May 2008. 74 Crisis Group interview, April 2009. With the Olympics around the corner, the political cost of justifying the regime’s actions were heightened. 75 Crisis Group email correspondence, UN official, 9 September 2009. 76 Crisis Group interview, Bangkok, 30 January 2009. 70
Cyclone Nargis struck in early May 2008.69 From Beijing’s point of view, the timing – coupled with the military government’s response – could not have been worse, coming just three months before the Olympics and at the same time as Myanmar’s constitutional referendum. Pressure and global outrage mounted as international agencies and aid workers were denied access to the affected
“UN council upbraids Burma/Myanmar for slow reforms”, Reuters, 17 January 2008. 65 In early May 2009, despite the humanitarian crisis created by Cyclone Nargis, the government went ahead with the referendum, announcing an approval rate of over 92 per cent on an incredible turnout of over 98 per cent. 66 Crisis Group interview, Washington DC, February 2008. 67 Renaud Egreteau & Larry Jagan, “Back to the Old Habits: Isolationism or the Self-Preservation of Myanmar Military Regime”, The French Research Institute on Contemporary South East Asia, December 2008, p. 65. 68 Crisis Group interview, Chinese official, Yangon, March 2009. 69 See Crisis Group Report, Burma/Myanmar After Nargis: Time to Normalise Aid Relations, op. cit. 64
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would face problems in failing to ensure economic growth and the delivery of social services.77 Referring to the 65-year sentences that had just been handed down to pro-democracy activists, Yang apparently said that China also had to deal with such problems, but rather sent such individuals to jail for only three or four years to reduce international attention.78 This typifies a Chinese method of trying to influence the government – pointing out how Beijing might proceed given similar circumstances.79 According to one Western diplomat, “The Chinese are actively trying to ensure the regime doesn’t go too far. China doesn’t want a U.S.-oriented state on its border, but neither does it want the world’s pariah on its border”.80
4. Detention and trial of Aung San Suu Kyi Myanmar was once again in the headlines in May 2009 when National League for Democracy (NLD) leader Aung San Suu Kyi was put on trial for allegedly violating the terms of her house arrest after an American man swam across a lake to her home and stayed there secretly for two days. International opinion on the trial was unanimously critical.81 China supported a Security Council press statement expressing concern over the political impact of developments relating to Aung San Suu Kyi.82 This time, Russia put up the most resistance.83 News on August 11 of her sentencing to eighteen months under house arrest caused further international outrage. A Chinese official spokesperson said that the world should respect
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Myanmar’s judicial sovereignty. 84 Then at a Security Council meeting to discuss a draft presidential statement circulated by the U.S., UK and France deploring the verdict, a majority of Council members voiced support for the statement, but China said it would oppose it.85 In a compromise, the Security Council adopted a press statement simply expressing “serious concern” over the verdict and calling for the release of all political prisoners.86 In the 9th Asia-Europe foreign ministers meeting on the same day, China expressed its dissatisfaction and “concern about the recent development relating to Daw Aung San Suu Kyi”. The ministers “called for the early release of those under detention and the lifting of restrictions placed on political parties”. 87 China also joined with the Group of Friends in calling on the government to release Aung San Suu Kyi and other political prisoners.88 Chinese officials have indicated privately that they would favour a deal, including release of Aung San Suu Kyi and dialogue with the opposition, as long as stability could be preserved and the current political process continued.89
C. CHINA AND THE OPPOSITION China has for some time been pursuing talks with the democratic opposition, including the NLD.90 These meetings, which intensified after the 2003 attack on Aung San Suu Kyi and 2004 purge of Khin Nyunt, serve as a mix of intelligence gathering, reassurance and relationship building.91 While most take place in Kunming, in recent
“Respect Myanmar sovereignty, China says after trial”, Reuters, 12 August 2009. 85 The Chinese argued that a) this was an internal affair not within the purview of the UN Security Council and that such a statement from the Council would interfere with a decision of the national judiciary; and b) such a statement was not constructive and would not help to advance positive progress on the roadmap. Crisis Group interviews, New York, 11-12 August 2009. 86 UN Security Council Press Statement on Myanmar, SC/ 9731, 13 August 2009. 87 “9th Asia-Europe Foreign Minister Meeting Chair’s Statement”, Hanoi, Vietnam, 26 May 2009, available at www. aseminfoboard.org/Calendar/MinisterialMeetings/?id=228. 88 See fn. 60. 89 However, the Chinese are unwilling to be the broker between the SPDC and NLD. They are willing to provide support, but not play a direct role. If ASEAN, or Thailand, for example, took the opportunity to reconcile between groups, China would support it. Crisis Group interviews, New York, July 2009; Beijing, August 2009. 90 See Kleine-Ahlbrandt and Small, “China’s New Dictatorship Diplomacy: Is Beijing Parting with Pariahs?”, op. cit., pp. 49-50. 91 Information sought by the Chinese includes: basic information about the group, how they are funded, what links they have to the U.S. or other Western countries, information on U.S. 84
77
Ibid. 78 Apparently, Than Shwe went silent. Ibid. 79 Crisis Group interview, Beijing, August 2009. According to another diplomat, “We provide very sound advice to the junta, not trying to impose our will. We tell them what is in their best interests. They are not taking our advice”. Crisis Group interview, Washington DC, July 2008. 80 Crisis Group interview, Yangon, 6 February 2009. 81 David Gollust, “Clinton calls trial of Aung San Suu Kyi outrageous”, VOA News, 20 May 2009; “Ban Ki Moon demands release of Aung San Suu Kyi”, The Times, 21 May 2009. 82 UNSC Press Statement on Myanmar, SC/9662, 22 May 2009. 83 The U.S. had initially put forward a “strong” draft that the Chinese agreed to with only very minimal changes. Russia indicated that they would oppose the draft on their own if need be. The Russian position was that the situation did not constitute a threat to international peace and security. China eventually joined Russia in asking for changes, possibly in order not to be seen as siding with the U.S. against Russia and Myanmar. Russia asked for a text that was more or less a repetition of previous statements and without a reference to the release of Aung San Suu Kyi. The result was a much softer and truncated version of a text that China had originally agreed to. Crisis Group interviews, Security Council member state diplomats, New York, 30 June and 2 July 2009.
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years some opposition representatives have been invited to Beijing. Chinese officials themselves frequently travel to Mae Sot and Chiang Mai in Thailand and Ruili on the Myanmar-China border to maintain contacts. 92 In these interactions, Beijing has tried to convince the opposition that the best way to maximise their impact would be by participating in the 2010 elections.93 At the same time, it urges the military government to engage in dialogue and reconciliation with opposition groups.94 China’s value-free diplomacy dictates that it will deal with whatever government is in power.95 Following the landslide victory by the NLD in the May 1990 election, China’s ambassador was the first to welcome the party to power, angering the military.96 Some in China have expressed discomfort with the possibility of a Westernleaning democratic NLD government.97 They fear that a
policy towards Myanmar, information on Thai policy toward Myanmar, existence of links to the NLD, and the groups’ stances on various issues with the government. They have also asked the groups’ opinions on China’s engagement in Myanmar, offering an explanation of the relationship in return. They try to build confidence by venting their own frustration with the SPDC. Chinese officials say that they want Myanmar to copy their model and, if the economic situation improves, further suggest there may be room for some political activities. They have said that they do not want the West to be more involved in the country. The groups are treated very well during trips to Kunming or Beijing, hosted in top hotels and treated to tourist attractions. The opposition groups note that the level of sophistication of the dialogue is much greater in Beijing than in Kunming. Crisis Group interviews, Chiang Mai, 29-30 January 2009. 92 Ibid. 93 Crisis Group interviews, Beijing, 18 February 2009; Kunming, 4 March 2009; Yangon, 11 March 2009. At one point, the Chinese asked the NLD through a go-between if Aung San Suu Kyi could be flexible and whether she might be able to accept a role less than head of state, in which she could exercise influence but could also be reconciled with the army’s position. Crisis Group interviews, Bangkok, 29 January 2009; Chiang Mai, 30 January 2009. 94 Crisis Group interviews, Yangon, 19 July 2007; Washington DC, 15 February 2008; Bangkok, 29 January 2009. 95 Commenting on China’s increasing contacts with opposition and rebel groups on his continent, an African diplomat remarked, “the closer the rebels get to the capital the more you can see the Chinese”. Crisis Group interview, Beijing, 24 December 2008. 96 Crisis Group interview, Beijing, August 2009. 97 Crisis Group interview, Beijing, March 2009. Chinese views on Aung San Suu Kyi are generally negative. They think that she is too stubborn and would be unable to effectively govern the country. According to one Chinese businessman living on the border, “China despises Aung San Suu Kyi. Her husband is an Englishman of Swedish descent and his focus was Tibet, so they dislike her even more”. However, another Chinese made a comparison between her and Chairman Mao (brave, smart)
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democratic government would be able to draw on much broader international support and would work more closely with other democracies (primarily the U.S., but also India and members of ASEAN). (For China’s views on a possible U.S.-Myanmar rapprochement, see Section IV, “Implications for International Approaches”.) On the other hand, geostrategic realities would ensure that any government in Myanmar would have to maintain good relations with China. As one Chinese official asked, if Aung San Suu Kyi were to come to power, “which capital do you think she would visit first?” 98 In the near term, however, Beijing sees little chance of an opposition government in Myanmar.99
D. CHINA AND THE ETHNIC GROUPS China maintains a balance of power between border ethnic groups and the military government to ensure that neither side gains the upper hand.100 Given China’s own challenges in dealing with minority tensions, it has a clear interest in preventing Myanmar’s ethnic groups from gaining full autonomy. China opposes such a precedent because it fears that this would stir up nationalist sentiment among groups on its side of the border.101 Most groups along the border areas of China and Myanmar are related, such as the Shan and Yunnan’s Dai people, the Kachin and Yunnan’s Jinpo people, and the Wa on both sides of the border.102 For centuries they have travelled freely between the two countries and intermingled, often maintaining stronger affinities to their ethnic groups than to national identities. Yunnan officials and intelligence agents103 maintain close, but largely informal, contacts with certain ceasefire groups,
and the struggle of the Long March. Crisis Group interviews, Chiang Mai, 30 January 2009; Ruili, 7 March 2009. 98 According to a Chinese official, even if Aung San Suu Kyi were to come to power, China would not have a problem with a democratic Myanmar. Crisis Group interview, March 2009. 99 China sees the NLD leadership as very weak, too old and incapable of maintaining stability and coping with the ethnic groups. Crisis Group interview, Beijing, February 2009. 100 Crisis Group interview, Yangon, 10 March 2009. 101 Crisis Group interview, Ruili, 7 March 2009. 102 Xiaolin Guo, “Towards Resolution: China in the Myanmar Issue”, Silk Road Paper, Central Asia-Caucasus Institute & Silk Road Studies Program, March 2007. 103 The central government in Beijing does not directly maintain contacts with ethnic groups along Myanmar’s border regions, rather it delegates this to the Yunnan provincial government. This allows Beijing to maintain plausible deniability and avoid inconsistency in its relationship with Myanmar’s central government. While some of Yunnan’s interests converge with those of Beijing, many do not. This divergence in interests has led to significant tensions between Beijing, local Yunnan governments and businessmen, and provoked tensions in the bilateral relationship between Beijing and Myanmar. See Section IV.D.
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including the Kachin, Wa and Kokang. 104 China helps to ensure the survival of these groups by providing economic assistance and allowing the borders to stay open to trade. The income of some ceasefire groups is supplemented by illicit activities targeted at Chinese consumers such as drug trafficking and gambling.105 China also controls the border crossings on which the groups depend for supplies, transport routes and border trade, all of which is conducted in renminbi regardless of which side of the border. Many of Myanmar’s border towns rely on China for essentials such as electricity, water and telecommunications.106 China uses its relationship with the ethnic groups as a buffer and a lever in managing its relationship with the government.107 China’s closest relationship is with the Wa, which has the largest army and is the most feared by the generals in Naypyidaw.108 The Myanmar government has frequently expressed displeasure with China’s
104
Crisis Group interviews, Xi Shuang Ban Na, Yunnan, March 2009; Ruili, March 2009; Bangkok, 27 January 2009; Chiang Mai, 29-30 January 2009. The National Democratic Army-Kachin (NDA-K), Kachin Independence Organization (KIO), Shan State Army (SSA), Myanmar National Democratic Alliance Army (Kokang), United Wa State Army (UWSA) and National Democratic Alliance Army-Eastern Shan State (Mongla) control areas adjoining China’s Yunnan province. Official contacts are also held. For example, district and county level Chinese officials as well as a representative of the Yunnan Foreign Affairs office attended the 17 April 2009 Wa celebration in Panghsang of the 20th anniversary of the coup against the Communist Party of Burma. On the occasion, Bao YouXiang, a UWSA commander and the chairman of its political wing, expressed gratitude for China’s twenty years of support. Crisis Group interview, Ruili, 8 June 2009; Wai Moe, “UWSA leader calls for ‘solid, united’ Wa State”, The Irrawaddy, 17 April 2009. 105 Crisis Group interviews, Xi Shuang Ban Na, Yunnan, March 2009; Ruili, March 2009. 106 Should the Chinese government ever wish to completely cut them off by closing the borders, it could. Crisis Group interview, Ruili, 5 March 2009. 107 Crisis Group interviews, Chiang Mai, 29 January 2009; Ruili, 5 March 2009. For instance, while Chinese officials and businessmen have access to ceasefire regions, Burmese officials do not and must ask for their help to access to these areas. 108 See Crisis Group Report, Myanmar Backgrounder: Ethnic Minority Politics, op. cit.; Tom Kramer, “The United Wa State Party: Narco-Army of Ethnic Nationalist Party?” EastWest Center, policy studies no. 38, 2007. The UWSA has an estimated 15,000-20,000 fighters, the National Democratic Alliance Army-Eastern Shan State (NDAA-ESS) around 2,500, the SSA-N up to 10,000 men, and the KIO/Army between 3,000 and 5,000 soldiers in Kachin State. Brian McCartan, “Democracy plan fuels war in Myanmar”, The Asia Times, 2 February 2009.
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relations with the ceasefire groups.109 For example, when General Shwe Mann visited in 2008, he asked the Chinese government for help in persuading the ceasefire groups to surrender their arms. The Chinese reportedly feigned ignorance and skirted the issue.110 When Chinese Foreign Minister Yang Jiechi went to Myanmar in December 2008 to meet Than Shwe, the latter expressed his dissatisfaction.111 Than Shwe then reportedly invited nuclear experts from Russia in order to irritate China.112 Another important element is China’s arms sales.113 While officials deny that it is China’s policy to sell weapons to the Wa, they admit that a few “rogue elements” from the People’s Liberation Army (PLA) have done so.114 One long-time military analyst has noted that given the heavier nature of the equipment the Wa currently possess – 120-mm howitzers, 130-mm field artillery, antiaircraft artillery and surface-to-air missiles such as the Chinese-made HN-5 MANPADS – the weapons cannot have just “fallen off the back of a truck”.115 Nor is there any prohibition on Chinese state-owned companies selling such arms.116 Due to its concern about stability on the border, Beijing played a role in pressuring several ethnic group armies to sign ceasefire agreements with the government in 1989, which allowed them to retain their arms and a degree of autonomy over their areas, known as the special regions.117
109
Crisis Group interview, Kunming, 4 March 2009. Chinese influence and cross-border links in the borderlands have complicated the military’s pursuit of state and nation building. Jurgen Haacke, “China’s role in the pursuit of security by Myanmar’s State Peace and Development Council: Boon and Bane?” The Pacific Review, vol. 22, no. 5 (2009, forthcoming). 110 Maj. Aung Lunn Htut, “The Myanmar people should not hesitate on their country’s cause”, 29 May 2009. Document on file with Crisis Group. Aung Lynn Htut served in the Myanmar army’s Light Infantry Battalion No. 81 from 1979 to 1983 and then as a major in the military intelligence service. After serving for five years as deputy chief of mission at the Myanmar embassy in Washington DC, he defected to the U.S. in 2005. 111 Ibid. 112 Ibid. 113 For information on Chinese arms sales to the Myanmar government, see Section III.C.2. 114 Crisis Group interview, Kunming, 4 March 2009. 115 Crisis Group interview, Chiang Mai, 29 January 2009. Jane’s Defense Weekly asserts that the military build-up of the UWSA has been supported by China, from whom the UWSA has acquired new T-81 assault rifles, heavy machine guns, and mortars. Tony Davis and Edo Asif, “UWSA prepares for confrontation”, Jane’s Defense Weekly, 25 October 2006; Tony Davis, “Lords of war: Running the arms trafficking industry”, Jane’s Intelligence Review, 18 April 2008. 116 Crisis Group interview, Beijing, 29 January 2009. 117 The ceasefire agreements, which were never meant to be a political solution to the civil war, have not brought about
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However, as the 2010 elections approach, serious challenges to border stability are expected, particularly given the groups’ dissatisfaction with the constitution and the government’s determination to follow through with its roadmap.118 In April 2009, the government proposed a plan to ceasefire groups to surrender their arms and transform into political parties for the electoral process.119 Under this plan, the armed groups would become border guard forces. None of the ethnic ceasefire groups would retain the right to manage their day-to-day affairs and their commands would either share or be subordinated to the military’s regional commanders. 120 The ethnic groups unsurprisingly rejected the proposal. The ceasefire groups remain highly distrustful of the generals in Naypyidaw and are unwilling to surrender their weapons because they believe that without them it will be impossible to negotiate a final settlement on acceptable terms.121 In a December 2008 letter addressed
peace or a political settlement. The agreements merely delayed a political resolution until a later date, which is now approaching. For more information see Crisis Group Reports, Myanmar Backgrounder: Ethnic Minority Politics and Myanmar: Towards the Elections, both op. cit.; Win Min and Zaw Oo, “Assessing Myanmar’s Ceasefire Accords”, Institute of Southeast Asian Studies, 30 September 2007. 118 In December 2007 and January 2008, when the government tried to give out temporary national ID cards in the Wa region as part of voter registration process, Wa leaders said accepting them would be tantamount to surrender. Crisis Group interview, Yangon, 3 February 2009. 119 Crisis Group interview, Ruili, 7 March 2009; Brian McCartan, “Democracy plan fuels war in Myanmar”, Asia Times (online), 2 February 2009; Tom Kramer, “The Wa-Burmese ceasefire looks shakier”, The Nation, 24 April 2009; Thomas Fuller, “Ethnic groups in Myanmar hope for peace, but gird for fight”, The New York Times, 11 May 2009; “Ceasefire groups in Shan State face renewed pressure to surrender”, Mizzima News, 4 September 2008. 120 On 28 April 2009, simultaneous meetings were held between Myanmar military commanders and representatives of every major ethnic ceasefire army in the country’s north and north east. The ethnic insurgents were all given the same three options: surrender; become a border guard force under the Myanmar army; or elderly leaders must retire and establish a political party to contest the 2010 elections. Brian McCartan, “China drawn into Myanmar’s border strife”, The Asia Times, 27 May 2009; Brian McCartan, “Democracy plan fuels war in Myanmar”, The Asia Times, 2 February 2009; Min Lwin, “Junta Commanders Court Ceasefire Groups”, The Irrawaddy, 29 April 2009; Wai Moe, “Generals call the ceasefire groups’ hands”, The Irrawaddy, 8 May 2009. 121 There are other reasons for the hesitation to surrender arms. Karen Peace Army (KPA) leaders in northern Shan State, for example, see the constitution as a threat, given that they require arms to protect poppy growers and extort money from the local population. Crisis Group interview, Yangon, 3 February 2009.
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to President Hu Jintao from Wa and Kachin leaders, they appealed for investment and aid, and asked China to pass along the message to the generals that the 2010 election should ensure that the leaders of the special regions are a part of the new government.122 Their main demands, which are unlikely to be met, include the right to retain their arms, militias and policing role; a degree of autonomy on issues such as language and education; and more equitable distribution of the profits from natural resources. To prevent a return to fighting, China has been encouraging both the government and the ethnic groups to find better ways to deal with their differences. It has urged the generals to adopt a more inclusive political process that takes into account some of the groups’ demands. 123 It has urged the ethnic groups to engage in the political process and not to return to fighting.124 Nevertheless, as of May, tensions increased and clashes broke out between the army and ethnic groups along both the Chinese and Thai borders.125 In June, the Myanmar army, together with the Democratic Kayin Buddhist Army, launched an assault on the Karen National Union, resulting in the flight of thousands of refugees to Thailand.126
122
The Wa and the Kachin also asked for the normalisation of border trade, the opening of the border, expansion of the scale of crop substitution, more infrastructure construction, human resources training, and welcomed Chinese companies to explore and develop natural resources in the special regions. Letter from the Wa and Kachin to President Hu Jintao, document on record with Crisis Group, December 2008. 123 China has held separate meetings with Myanmar officials and ethnic armed groups in recent months. At one meeting, Myanmar officials reportedly told their Chinese counterparts that the armed groups could be a potential threat to the gas and oil pipelines deal that Beijing and Naypyidaw signed last year. For their part, representatives of the armed ethnic groups told Chinese officials that they were unhappy with the new constitution, which calls for the disarmament of ceasefire groups in the post-election period. Wai Moe, “Shan State ‘extremely unstable’: Researchers”, The Irrawaddy, 9 April 2009. 124 Ibid. 125 “Rebel forces shoot, kill 12 Burmese soldiers”, Bangkok Post, 5 May 2009; “KIA troops take to forests for possible war with Burmese Army”, Kachin News Group, 16 June 2009; Hseng Khio Fah, “Wa leaders meet on Thai-Burma border”, Shan Herald, 23 June 2009; Hseng Khio Fah, “Intensive recruiting for army in Shan State”, Shan Herald, 22 July 2009. 126 Upwards of 4,000 fleeing villagers crossed into Thailand, joining camps holding more than 120,000 refugees. Thomas Fuller, “Myanmar military gains on rebels as villagers flee to safety”, International Herald Tribune, 20 August 2009. This situation on the Thai-Myanmar border is an ongoing source of friction between the two countries.
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China is now in a difficult position. It has been unable to persuade the Myanmar government to refrain from launching fresh offensives against the ethnic groups. Beijing was not even forewarned about the late August raid against the Myanmar National Democratic Alliance Army (MNDAA), a Kokang ceasefire group. During his visit to China in June 2009, Chinese officials told General Maung Aye to handle border area conflicts among the ethnic ceasefire groups peacefully, and in early August Yunnan officials again warned a military commander not to create instability in Shan State.127 As tensions between the Burmese army and MNDAA increased in early August, a first wave of refugees fled to China.128 When fighting erupted between the MNDAA and a Kokang faction, the United Kokang State Army, which is allied with the Myanmar army, an estimated 37,000 Kokang and Chinese residents also fled across the border.129 In response, China deployed 700 troops to the border130 and launched a rapid diplomatic offensive, sending its public security minister, Meng Jianzhu, to the region. 131 After the Myanmar army took control of the Kokang capital of Laogai, China sent its PLA chief of staff, General Chen Bingde, to the border to reiterate its position to senior Burmese military commanders. The meeting was inconclusive.132
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Tensions continue to rise, and the possibility of conflict between the Myanmar army and the remaining ethnic groups is the highest it has been in twenty years. Despite repeated calls by China’s foreign ministry urging Myanmar to safeguard the stability of its border area and protect the safety and legal rights of Chinese citizens in the country, 133 the Myanmar army has sent reinforcements into Wa territory. 134 Thousands of Chinese and Myanmar civilians have also fled in anticipation of further clashes. 135 Should the Myanmar army launch attacks against the Wa and/or Kachin, in addition to armed combatants travelling over the border, China would have to deal with another humanitarian crisis on its border.136 Yet it is unclear whether Beijing will be able to dissuade the generals from undertaking further offensives.
127
China indicated to both the ethnic rebels as well as to the military government that it was opposed to any fresh offensives along the border, and that the rebels could not expect any backing if the Myanmar army attacked them. Crisis Group interview, Beijing, September 2009; Crisis Group correspondence, 18 August 2009; “Junta’s ploy: Push Kokang to shoot first”, Shan Herald Agency, 14 August 2009; Lawi Weng, “China warns commander to avoid instability in Shan state”, The Irrawaddy, 14 August 2009. 128 “Thousands flood into China after Myanmar army standoff”, Reuters, 26 August 2009. 129 At the latest reports, almost all of the people in Laogai have fled into China’s Mansan Township. Thousands of Burmese army troops are reportedly taking positions in Kokang area, and security from Kunlong and Laogai has been tightened by the Burmese military. Lawi Weng, “China warns commander to avoid instability in Shan state”, The Irrawaddy, 14 August 2009; Hseng Khio Fah, “Tension sparks people to flee into China”, Shan Herald Agency, 24 August 2009; “缅甸境内武 装对峙重创中缅边贸 华商排长队逃离”[“Sino-Myanmar border trade hit hard by the military confrontation, Chinese businessmen fleeing the country”]，经济参考报 [Economic Observer], 25 August 2009. 130 “PLA moves to the Kokang border”, Shan Herald Agency, 25 August 2009. 131 Qiu Yongzheng and Qiu Wei, “Myanmar conflict subsiding”, Global Times, 31 August 2009. 132 “Top Chinese and Burmese military officers in one-day meet”, Kachin News Group, 2 September 2009.
“China says Myanmar promises border stability”, Associated Press, 1 September 2009. 134 “Another 3,000 Burmese civilians head for China border”, Kachin News, 1 September 2009. 135 Ibid; “Transport fare in Panghsang increased, high demand”, Shan Herald, 4 September 2009. 136 Even as the Chinese government encouraged people to return to Myanmar on 2 September, many refugees expressed fear of returning home with the Myanmar army in control. “China says Myanmar promises border stability”, Associated Press, 1 September 2009. 133
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III. DRIVERS OF CHINESE POLICY A. BORDER STABILITY China’s foremost concern with regard to Myanmar is to ensure the stability of its shared border. 137 Nothing makes China’s leadership as nervous as regional or border disputes with the potential to incite internal instability.138 The flight of more than 30,000 refugees to China during the August 2009 conflict in Myanmar’s Shan State underlined this fear.139 The various illicit activities which take place along the border only contribute to instability.
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China has been fast and far-reaching, particularly in Yunnan, first ravaged by heroin addiction.143 According to statistics of the 1.1 million registered drug users in the province, the use of “designer drugs” increased from 1.7 per cent in 2004 to 11.1 per cent in 2007.144 The age of narcotics users has rapidly dropped.145 The central government considers problems related to drug abuse as potential challenges to social stability.146 Drug use and crime are directly correlated. Armed confrontations between drug dealers and Chinese police are common in border areas, with drug dealers equipped with grenades, shot guns, and often machine guns.147 In Yun-
1. Narcotics Myanmar served as a passageway for opium and heroin from the Golden Triangle in the 1980s, bringing drug addiction into China’s southern provinces and producing China’s first HIV epidemic (see below). Now, more than 95 per cent of the heroin sold in China comes from this region.140 Drugs enter Yunnan through the border, from where they are trafficked along established routes to Sichuan, Tibet, Gansu, Guangdong and as far as Shanghai.141 Yunnan is the key to arresting the influx of drugs, and the central government expends significant efforts to try to ensure that local governments address this problem. While poppy cultivation and opium production in Myanmar decreased in mid-2000, a marked rise has occurred in the production of amphetamine-type stimulants (ATS) entering China from Myanmar.142 The spread of ATS in
137
See fn. 10. Wen Liao, “China’s Black Cat, White Cat Diplomacy”, Foreign Policy, 10 July 2009. 139 For more on this issue, see Section II.D. 140 Tom Kramer, Martin Jelsma and Tom Blickman, “Withdrawal Symptoms in the Golden Triangle: A Drugs Market in Disarray”, Transnational Institute, Amsterdam, January 2009; Lee Chen Yang, “21 世纪初的金三角毒品问题及其对我 国的影响”[“Golden Triangle Drug Issue and Its Implication for China”], 2 August 2006, Government Website of Yunnan, www.ynjd.gov.cn/pubnews/doc/read/yxwx/63634825. 176206202/index.asp. 141 Crisis Group interviews, Hong Kong, 27 March 2009; Beijing, 23 July 2009. 142 The past five years have seen significant declines in poppy cultivation and opium production in Myanmar’s Shan state due to Chinese and Myanmar government efforts to crack down on opium production, and even more significantly the opium ban by some ceasefire groups in key opium cultivating areas. Various sources claim that the opium bans have simply resulted in opium cultivation being moved to other regions in Shan state or that these groups have merely moved into methamphetamine production. Moreover, a 2008 United Nations Office on Drugs and Crime (UNODC) report has warned that 138
though there has been a dramatic fall in the area under poppy cultivation and opium production in the past few years, there has been a reversal in the past two years due to falling prices of alternative crops such as maize, tea, rubber and fruit, soaring market prices for opium, and increasing political instability, which has lured former poppy growers back into opium cultivation. For a comprehensive study of the narcotics trade in the Golden Triangle, see Kramer, Jelsma and Blickman, “Withdrawal Symptoms in the Golden Triangle: A Drugs Market in Disarray”, op. cit.; Larry Jagan, “Eradicating opium has become a pipe dream”, Bangkok Post, 15 February 2009; “Opium Poppy Cultivation in South East Asia”, UNODC Report, December 2008, p. 11. 143 “Drug-ravaged province to open 22 new methadone clinics in southwest China”, Xinhua, 11 January 2007; Kramer, Jelsma and Blickman, “Withdrawal Symptoms in the Golden Triangle: A Drug Market in Dismay”, op. cit. 144 These drugs include methamphetamine, ecstasy and ketamine. Kramer, Jelsma and Blickman, “Withdrawal Symptoms in the Golden Triangle: A Drug Market in Dismay”, op. cit., p. 64; “Opium Poppy Cultivation in South East Asia”, UNODC Report, op. cit., p. 11. 145 According to a government study, 72 per cent of drug users in China are under the age of 30. Lee Chen Yang “21 世 纪初的金三角毒品问题及其对我国的影响 ”[“The Golden Triangle Drug Problem and Its Implications for China”], Government Website of Yunnan Provincial Government, 2 August 2006, at www.ynjd.gov.cn/pubnews/doc/read/yxwx/63634825. 176206202/index.asp. 146 Drug users are seen as are seen as burdens on society and economic liabilities. Crisis Group interview, Beijing, 26 July 2009. Furthermore, Chinese have a historical intolerance of drugs. During the latter part of the eighteenth and nineteenth century, opium addiction had become widespread in China, particularly in coastal cities, due to British merchant ships which plied their trade. Chinese authorities efforts to rid the country of the drug led to the two Opium Wars. The experience left an indelible mark on the Chinese psyche regarding the dangers of drug addiction. 147 Drug trafficking is a capital offence in China, and drug dealers usually choose to fight to the death rather than surrender. “ 警察讲述危险禁毒人生:力量悬殊多次放走运毒者 ” [“Police tell the story of the war on drugs”], New Beijing Newspaper, 26 June 2007. In Yunnan alone, from 1982 to 2008, 40 narcotics police were killed and more than 200 wounded in the
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nan’s south-west border county of De Hong, more than 60 per cent of criminal offences are drug-related.148 China has engaged in aggressive efforts to combat transnational drug trafficking, launching a three-year “People’s War against Drugs” in 2005. 149 A law was passed requiring local authorities to include anti-narcotics campaigns into their overall plans for social and economic development.150 When meeting with his Burmese counterpart Soe Win in 2006, Premier Wen Jiabao discussed tougher action against cross-border drug trafficking.151 That same year, China invested 100 million RMB ($12 million) to support border guards, railway, civil aviation, customs and postal services in their efforts to prevent drugs from entering the country.152 China launched a substantial crop substitution program in Myanmar in 2006.153 Chinese troops also periodically tighten checks at border transit points and along major roads to the border. However, these efforts have mostly been ineffective due to widespread corruption among local narcotics authorities as well as the Myanmar government and ceasefire groups.154 Drug traffickers with strong ties to local authorities are protected, while the others can usually bribe their way to freedom.155 While most cases of corruption in China involve lower-level district and county officials, the quantity of drugs trafficked within China raises suspicions that high-level corruption is a factor in certain provinces bordering drug-producing regions, such as Yunnan, Guangdong and Fujian. 156
line of duty. Pang Li, “China’s thirty years war on drugs”, www.china.org.cn, 1 November 2008, at www.china.org.cn/ china/features/content_16699091.htm. See also Jagan, “Eradicating opium has become a pipe dream”, op. cit.; Brian McCartan, “Manhunt is on for Mekong Robin Hood”, The Asia Times, 7 April 2009. 148 “德宏打响禁毒‘人民战争’” [“People’s War on Drugs in De Hong”], Government Website of De Hong, 26 June 2006, at www.ypncc.gov.cn/pubnews/doc/read/yxwx/149918100.173 003891/index.asp. 149 三年禁毒人民战争, launched in April 2005 by Hu Jintao and Wen Jiabao, www.gov.cn/wszb/zhibo250/content_1026902.htm 150 Pang Li, “China’s thirty years war on drugs”, op. cit. 151 Khun Sam, “The Latest Casualties in China’s War on Drugs”, The Irrawaddy, 29 March 2007. 152 “Anti-drug work should be a long-term task”, Xinhua, 25 June 2008. 153 See Appendix D. 154 “Hard to be innocent in Burma”, Shan Herald, 25 June 2008. 155 Khun Sam, “The Latest Casualties in China’s War on Drugs”, The Irrawaddy, 29 March 2007; Crisis Group interview, Ruili, 7 March 2009. 156 2006 INCSR Volume I: Drug and Chemical Control, U.S. State Department, U.S. Embassy of Beijing, http://beijing. usembassy-china.org.cn/incsr06_chn.html.
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2. HIV/AIDS Intravenous drug use and commercial sex have fuelled the spread of HIV/AIDS in Yunnan. The border town of Ruili is known as the “ground zero” of China’s AIDS epidemic.157 An estimated 85,000 people are infected in Yunnan alone,158 with 90 per cent of drug users infected in certain places. 159 Most worrying is that infections have spread beyond high-risk populations and are rates rising in the general population. The phenomenon has been driven by increasing migration and improved road transport within and across the border, carrying the virus further into China and back into Myanmar, particularly along trafficking and labour migration routes.160 It is also being spread by high-risk behaviour and persistent lack of knowledge about HIV prevention.161 In a government report published in February 2009, figures showed AIDS to be the leading cause of death among infectious diseases in the country,162 with an estimated 700,000 people in China infected as of October 2007.163 The UN has warned that China could have ten million HIV cases by 2010 unless it takes stronger steps to educate the public and fight the epidemic.164 If China is to effectively tackle the problem within its borders, it must also enlist the Myanmar government to
Wang Zhuoqiong, “A new weapon in the war to halt HIV”, China Daily, 19 February 2009; Khun Sam, “The latest casualties in China’s war on drugs,” The Irrawaddy, 29 March 2007. 158 Wang Zhuoqiong, “A new weapon in the war to halt HIV”, op. cit. 159 Kramer, Jelsma and Blickman, “Withdrawal Symptoms in the Golden Triangle: A Drug Market in Dismay”, op. cit., p. 76. 160 The massive drain of a growing HIV/AIDS epidemic on China’s resources could set back its economic development by years. David Arnott, “China–Myanmar relations” in “Challenges to Democratisation in Myanmar: Perspectives on Multilateral and Bilateral Responses”, Institute for Democracy and Electoral Assistance, 2003. See also 2008 Report on the Global AIDS Epidemic, UNAIDS. 161 Crisis Group interview, Aaron Diamond AIDS Center, Kunming, 3 March 2009. 162 7,000 people died in the first nine months of 2008. Malcolm Moore, “China facing HIV ‘plague’ as new cases leap 45 per cent”, The Telegraph, 30 March 2009. 163 David Arnott, “China–Myanmar relations” in “Challenges to Democratization in Myanmar: Perspectives on Multilateral and Bilateral Responses”, op. cit. 164 Ibid; Clifford Coonan, “China admits that cases of HIV/ Aids have risen 45 per cent”, The Independent, 23 February 2008. Based on 2007 populations and HIV rates per hundred thousand, Chinese rates of infection are still relatively low, at 52.629; compared with Myanmar, 502.531; India, 209.059; Thailand, 931.393; Japan, 7.541; U.S., 394.964; France, 218.552; and Germany, 64.344. Information available at www.globalhealthfacts.org. 157
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address the epidemic on its territory. 165 The military government has finally acknowledged the existence of the problem, but accords it a very low priority.166 Due to its sparse presence in the border regions, its capacity to address the issue remains very limited. At the same time, foreign donors are largely absent.
3. Gambling The casinos along the Myanmar side of the border – some run by the ethnic groups and some by Chinese businessmen167 – have been associated with widespread illicit activity and have long drawn in Chinese government officials, some gambling with state funds.168 Efforts by Beijing to close them down have been unsuccessful.169 Gambling has led to the kidnapping, torture and murder of gamblers unable to repay their debts, including businessmen and the sons of high-ranking government officials. A series of such abductions made headlines in early 2009. The Yunnan government responded by cutting off water, telecommunications, power and 165
See Crisis Group Issues Report N°1, HIV/AIDS as a Security Issue, 19 June 2001; Crisis Group Briefing, Myanmar: Update on HIV/AIDS Policy, op. cit. 166 Myanmar has one of the most serious AIDS epidemics in Asia. It also spends the least amount of any country on its national health budget – just 0.3 percent of GDP, of which a small amount goes toward AIDS. For more on the AIDS/ HIV epidemic in Myanmar, see Crisis Group Briefing, Myanmar: Update on HIV/AIDS Policy, op. cit.; “Out of Control 2: the HIV/AIDS Epidemic in Myanmar”, Southeast Asia Information Network (SAIN),; Chelala Cesar and Beyrer Chris, “Drug use and HIV/AIDS in Myanmar; statistical data included”, The Lancet, 25 September 1999. 167 For example, Maijayang Casino, one of the largest casinos in the border area before its closure during a March 2009 raid, was owned by Chinese businessmen in Maijayang border business village in an area controlled by the KIO. Nawdin Lahpai, “The dark world of Chinese casinos on Sino-Myanmar border”, Kachin News Group, 22 January 2009, at www. bnionline.net/news/kng/5731-the-dark-world-of-chinesecasinos-on-sino-Myanmar-border-special.html. 168 Crisis Group interview, Special Region 4 of Shan State East, March 2009. In 2004, Wu Guanzheng, a member of the Politburo of the CCP Central Committee for Discipline Inspection, stated that the practice infringed on the party’s governing capacity. More than 40 opinions on the issue were then issued by the government. In 2005, the central government launched an anti-gambling campaign and shut some of them down. “大规模禁赌决策内幕：中央领导批示 40 多次” [“Decision-Making on Anti-Gambling Campaign: Over 40 Guidelines from the Central Leaders”], 瞭 望 东 方 周 刊 [LiaoWang Eastern Weekly], 9 February 2009, at www.city. china.com.cn/chinese/law/783759.htm. 169 This campaign was unsuccessful, with casinos reopening for business in areas slightly further from the border. Business is facilitated by local Chinese businessmen who smuggle gamblers across the border.
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roads to the Myanmar town of Maijayang to pressure the local authorities to shut it down.170 Chinese troops have closed border crossings to casino towns and raided casinos across the border, arresting and fining all Chinese, including casino operators and gamblers. 171 The foreign ministry in Beijing has also taken the unusual measure of issuing a statement warning Chinese nationals against going to Myanmar to gamble due to the risk of scams and kidnappings.172 No shortage of formal agreements have been concluded between the Chinese and Myanmar governments to address cross-border issues, including memoranda of understanding on narcotics control and illegal logging.173 But illicit activities continue unabated. Ethnic groups depend on them as a source of revenue in their struggle against what they perceive as a hostile central government. Many in the Myanmar army also profit considerably from these activities. While publicly avowing to wage war on illicit activities, the military government looks the other way, fearing that implementation might provoke violence.174 As one Wa commander said, “Relations between us is like an axe without the handle and vice versa. As the handle, they used to manipulate us, the axe, in the past. But they can no longer enjoy that privilege”.175
“All young people kidnapped to Myanmar released”, Xinhua, 23 January 2009; “China cuts off telecommunication and electricity in KIO’s area over casino fiasco”, Kachin News Group, 6 February 2009. 171 Crisis Group interview, Ruili, 6 March 2009; “中国警方清 剿 边 境 赌 城 迈 扎 央 : 参 赌 者 均 为 中 国 人 ” [“Chinese police cleared border casino town Maizhayang: Gamblers are all Chinese”], NanDu Weekly, 17 March 2009, http://news.sina.com. cn/c/sd/2009-03-17/101117423397.shtml. 172 “China warns of kidnappings at Myanmar casinos”, Javno, 25 February 2009. 173 Commitments have been made at high levels to work together to fight cross-border crimes such as drug trafficking, smuggling and illegal border-crossing. Chinese authorities also conduct training workshops for Myanmar law enforcement personnel in drug trafficking. China and Myanmar Bilateral Relations, Xinhua, 23 October 2003, at http://news.xinhuanet.com/ english/2006-10/12/content_5195560.htm; “China, Myanmar to step up anti-drugs intelligence exchange”, Xinhua, 9 March 2002. 174 For example, a fifteen-year drug eradication program was launched in 1999 with the goal that Myanmar be completely free of narcotics by 2014. “Message from Chairman of the Central Committee for Drug Abuse Control Minister for Home Affairs Col Tin Hlaing on International Day Against Drug Abuse and Illicit Trafficking”, The New Light of Myanmar, 26 June 2003. 175 Hseng Khio Fah, “Wa leaders meet on Thai-Burma border”, Shan Herald Agency, 23 June 2009. 170
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B. ECONOMIC CALCULATIONS Economic relations are another key component of China’s policy toward Myanmar. China’s export-oriented economy benefits from a very limited coastline for such a large country. Coupled with a vast wealth disparity between coastal areas and the interior – which the government needs to equalise to retain legitimacy – Myanmar is an important outlet for the economic development of interior provinces, in particular Yunnan and Sichuan. Beijing also views the country as a potential source of and trans-shipment route for energy in the case of interruption of shipping through the Malacca Strait.
1. Chinese investment and economic assistance The greatest areas of cooperation between China and Myanmar are in mining, oil, gas and hydropower. 176 Additionally, Myanmar has been a major recipient of economic assistance over the past decade, generally provided in the form of grants, interest-free loans, concessional loans or debt relief. 177 China has also provided assistance in the construction of plants and equipment, investment in mineral exploration, hydropower, oil and gas production, and agricultural projects.178 Chinese economic assistance and cooperation programs are usually tied to Chinese state-owned enterprises, and are therefore often indistinguishable from state commercial investments. This makes it impossible to account for the full extent of China’s economic assistance and investments in Myanmar. Nor do official figures reflect the reality of the economic relationship between the two countries: Chinese investments are grossly underestimated by Myanmar’s official figures and, to a lesser extent, Chinese official figures.179
Myanmar’s foreign investment in 2008 reached $975 million. The top investors are Thailand, followed by Britain and Singapore. “Statistics: Myanmar foreign investment rises sharply in 2008”, Xinhua, 18 March 2009. 177 China is not a member country of the Development Assistance Committee (DAC) of the Organisation for Economic Cooperation and Development (OECD), and so does not disclose the full extent of its assistance programs, and the military government stays similarly silent on the assistance it receives. 178 David Steinberg, “Myanmar: Feel-Good U.S. Sanctions Wrongheaded”, 2004, at www.narinjara.com/Reports/ BReport.ASP. 179 Various factors make it difficult to accurately calculate the total amount of Chinese direct investment in Myanmar. Firstly, investment figures compiled by the Myanmar government include only investments approved by the Myanmar Investment Commission (MIC), only a fraction of which go forward, and no statistics exist for disinvestment. However, many of the small and medium Chinese-financed projects do not go through the MIC and so are not reflected in its figures. 176
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Infrastructure development is another significant aspect of economic cooperation. Backed by low-interest loans and export credits, Chinese companies are building roads, dams, bridges and ports.180 Chinese enterprises are building dams all over Myanmar to increase electric power generation, the largest project being the 7,100 megawatt (MW) Tasang Dam on the Salween River, which the Asian Development Bank will integrate into the Greater Mekong sub-region power grid. 181 When completed, it will be the highest dam in South East Asia, taller than the Three Gorges. In 2006, Sinohydro signed a memorandum of understanding (MOU) with Myanmar for the Hat Gyi Dam along the Thai border. In April 2007, Farsighted Group and China Gold Water Resources Co. signed MOUs for a hydropower project on the upper Salween.182 While these dams provide thousands of megawatts of electricity generating capability, most of the energy is to be sent to Thailand and China, bringing little benefit to the people of Myanmar.183 In return for its investment in infrastructure, Myanmar has granted China privileges in the exploitation of oil and gas.184 This forms part of China’s resource-driven “go
A large number of Chinese investments and business ventures are in the names of relatives of Chinese businessmen who hold Myanmar citizenship. Moreover, the military government is obsessed with secrecy, especially regarding investment, money and business deals made by the military. 180 For example, the Ayeyarwaddy Transportation Project provides a transport line from Yunnan to Thilawa Port in Yangon. The project, which began in October 1999, consists of constructing a container port near Bhamo, upgrading the road from the new container port to Muse/Lwejel on the Chinese border, and dredging the river to secure a vessel lane. Toshihiro Kudo, “Myanmar’s Economic Relations with China: Can China Support the Myanmar Economy?”, Economic and Technical Cooperation Studies Group, Inter-Disciplinary Studies Center, Japan, discussion paper no. 66, July 2006. 181 There are known to be at least 45 Chinese companies involved in 63 hydropower projects throughout Myanmar. “China in Myanmar: The increasing investment of Chinese multinational corporations in Myanmar’s hydropower, oil & gas, and mining sectors”, Earthrights International, Myanmar Project, updated September 2008; Thailand comes a distant second with three firms engaged in dam work. Myanmar Rivers Network, www.Myanmarriversnetwork.org. 182 “China in Myanmar: The increasing investment of Chinese multinational corporations”, Earthrights International, op. cit. 183 Myanmar Rivers Network, op. cit; “Monsoon leave over, Chinese workers back in Myitsone project”, Kachin News, 11 November 2008. 184 As of January 2009, Burma’s proven reserves of crude oil were 50 million barrels and its natural gas reserves estimated to range from 283 billion cubic metres (Bcm) to 600 Bcm. This is according to Oil & Gas Journal, though another reputable industry publication, World Oil, put their estimate of Myanmar’s proven reserves at year-end 2006 at 197 million barrels. On a global scale, this is quite small. Neighbouring
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out” strategy, which has encouraged energy companies to secure equity investments abroad.185 This policy reflects China’s perception of its vulnerability in accessing energy supplies. By providing generous government support including preferential loans, it also helps Chinese stateowned companies become more competitive with established multinationals. The “go out” strategy has enjoyed continued state support as this sense of insecurity has been accentuated by price rises and fears about disruptions in the supply of oil from key supply states;186 acute local fuel shortages; and concerns about access to Western markets.187 (For information on the pipeline being constructed from Kyaukphyu (Sittwe) to Kunming, see Section III.C.1.) Though Myanmar is not a major energy supplier to China, Chinese state oil companies and the government have demonstrated increased interest in Myanmar’s energy resources in recent years. For example, CNPC, Sinopec and CNOOC have all started oil exploration projects.188 China has competed fiercely with other countries such as Korea and India to secure access to potential reserves of gas off the west coast. Chinese companies are also heavily invested in Myanmar’s growing mining sector.189 The joint Tagaung Taung nickel deposit, the country’s largest mining project, was approved by the Myanmar government in September
Thailand’s oil reserves are several times that of Myanmar. However, proven reserves means reserves that have a 90 per cent probability of being there under current economic and technological conditions. Myanmar may have larger oil reserves that are so far unproven. The government has claimed higher reserves figures of as much as 3.2 billion barrels. 185 In 1999, the Central Committee of the Communist Party announced the “go out” (走出去, zouchuqu) strategy, offering investment incentives for companies, including reform and liberalisation of regulatory systems, financial regimes and administrative rules. Xu Xiaojie, “Chinese NOCs’ Overseas Strategies: Background, Comparison and Remarks”, The James A. Baker III Institute for Public Policy, Rice University, March 2007. For more information, see Crisis Group Report, China’s Thirst for Oil, Section III, “How and Where China Invests”, op. cit. 186 Such as Iran, Iraq, Saudi Arabia, Nigeria and Venezuela. 187 For more information, see Crisis Group Report, China’s Thirst for Oil, op. cit. 188 “China in Myanmar: The increasing investment of Chinese multinational corporations”, op. cit. 189 According to Myanmar’s Central Statistical Organisation, there was a sharp increase in foreign investment in the mining sector to $861 million in 2008, drawing more than 88 per cent of foreign investment in 2008. Of this amount, 99 per cent, or over $856 million, came from China. “Statistics: Myanmar foreign investment rises sharply in 2008”, Xinhua, 18 March 2009. However, China’s total mining investments, including those not reported to the MIC, are likely to be higher because many mining projects are small in scale and therefore are less visible, attracting less publicity.
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2008.190 The $800-million project, financed by Chinese state banks, has been called “one of the greatest collaborative efforts in the history of Sino-Burmese mining.191 Other Chinese mining companies with a presence in Myanmar include Northern Star, Sea Sun Star and the Standing Company Limited, involved in numerous smallerscale mining projects in Kachin and Shan States.192
2. Yunnan and the “Go West” campaign Located on China’s south-west frontier, Yunnan is the most influential provincial player in China’s Myanmar policy. Bordering Laos and Vietnam as well as Myanmar, Yunnan serves as the gateway for China’s economic interactions with South East Asia and South Asia.193 Promoting the economic development of China’s interior western provinces has been a primary objective of the central government since the launch of the “Go West” campaign in early 2000. 194 The campaign aims to eliminate poverty and close the wide economic gap between China’s coastal provinces and the western provinces within 50 years. Yunnan’s GDP per capita ranking has lingered at the bottom for many years, and in 2007 its economic competitiveness ranked in the bottom five
190
The project is run by state-owned China Non-Ferrous Metal Group (CNMC) in cooperation with the Third Mining Company of Myanmar’s Ministry of Mining. The general manager of CNMC said that the project would lift Myanmar’s gross domestic product by more than 2 per cent, and upon completion, would have an annual production capacity of 80,000 tons of nickel iron. “China group says US$800 million Myanmar mine on track”, Mining Journal, 22 April 2009. 191 The project has received “the highest levels of attention from Myanmar and Chinese government leaders”. Ibid. 192 Other major projects include the Mwetaung nickel deposit in Sagaing Division; the undeveloped Letpadaung copper deposit, which is the third deposit of the Monywa Copper Project in Monywa, Sagaing Division; the Mount Popa Coal Coke Mine & Plant in Mandalay Division; and the Tigyit Coal Fired Power Plants and Mine in Tigyit, Pin Laung Township, Shan State. “China in Myanmar: The increasing investment of Chinese multinational corporations”, op. cit. 193 “2007 年中国省域综合经济竞争力 ”[“Provincial Economic Competitiveness Survey 2007”], Xinhua, 10 March 2009. 194 China launched the “Go West” (西部大开发, xibu dakaifa) campaign in 2000 to reduce regional disparities by promoting the development of six provinces (Gansu, Guizhou, Qinghai, Shaanxi, Sichuan and Yunnan), five autonomous regions (Guangxi, Inner Mongolia, Ningxia, Tibet and Xinjiang), and one municipality (Chongqing) in Western China. “China’s premier invites foreigners to invest”, Asia Pulse, 16 March 2000. State Council Information Office, available at www.chinawest. gov.cn/english; “Premier Wen Urges to Step up Effort to Build West”, People’s Daily, 11 June 2003.
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among China’s 31 provinces.195 To promote Yunnan’s economic development, Beijing has granted Yunnan significant autonomy in managing border relations.196 Myanmar is currently Yunnan’s largest trading partner among the ASEAN countries. In 2008, the YunnanMyanmar trade volume reached $1.19 billion,197 almost half of China and Myanmar’s total trade of $2.4 billion.198
C. STRATEGIC INTERESTS 1. The “Malacca dilemma” and the Indian Ocean Equally important to China is its desire to expand its strategic presence into the Indian Ocean and protect its sea lines of communication threatened by the “Malacca dilemma”. According to Chinese analysts, an overreliance on the strait poses two threats: piracy and maritime terrorism in the region and the attempts of powerful states, notably the U.S., to dominate the strait through joint naval exercises with India and Japan and through such programs as the Container Security Initiative, the Proliferation Security Initiative and the Regional Maritime Security Initiative.199 In a November 2003 speech to the Chinese Communist Party (CCP) leadership, President Hu Jintao hinted that “certain major powers” were bent on controlling the strait, and called for the adoption of new strategies to mitigate the perceived vulnerabil-
“2007 年中国省域综合经济竞争力” [“2007 Provincial Economic Competitiveness Survey”] Xinhua, 10 March 2009. 196 Crisis Group interviews, Beijing, Kunming, Yangon, February-March 2009. 197 “2008 年 云 南 对 东 盟 贸 易 回 落 ” [“Yunnan trade with ASEAN dropped in 2008”], Xinhua, 25 January 2009. 198 “2007/08 财 年 中 缅 贸 易 额 比 上 年 增 60%” [“ChinaMyanmar Bilateral Trade Rose 60 per cent in 2007-08 Fiscal Year”], Ministry of Commerce, 27 November 2008, http:// mm.mofcom.gov.cn/aarticle/zxhz/tjsj/200811/200811058789 17.html. China’s main exports to Myanmar include textiles, chemical raw materials, machinery and medicines, while the main imports from Myanmar include agricultural products such as rice and fruits, seafood, timber, gems, minerals and livestock products. 199 Xuegang Zhang, “China’s energy corridors in Southeast Asia”, Jamestown Foundation, China Brief, vol. 8, no. 3 (2008), www.jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_ news%5D=4693; Zhang Xuegang, “Southeast Asia and energy: gateway to stability”, China Security, vol. 3, no. 2 (2007), pp. 18-35, www.wsichina.org/cs6_2.pdf; Marc Lanteigne, “China’s maritime security and the Malacca dilemma, Asian Security, vol. 4, no. 2 (2008), pp. 143-161; You Ji, “Dealing with the Malacca Dilemma: China’s effort to protect its energy supply”, Strategic Analysis, vol. 31, no. 3 (2007), pp. 467-489. 195
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ity.200 Following longstanding calls by Chinese strategists for a blue water navy that can protect maritime interests and support long-distance operations,201 the government has ordered the navy to prioritise the development of an ocean security strategy.202 China has helped develop port facilities in cities stretching from the South China Sea through the Straits of Malacca, across the Indian Ocean, on towards the Persian Gulf: Gwadar, Pakistan; Chittagong, Bangladesh; Hambantota, Sri Lanka; Sittwe and Kyaukphyu, Myanmar; Laem Chabang, Thailand; and Sihanoukville, Cambodia.203 The trajectory of these ports has given rise to the “string of pearls” theory according to which China is increasing access to foreign ports and airfields and developing special diplomatic and strategic relationships in order to project its power overseas and protect its oil shipments.204 Within Myanmar itself, China has provided assistance in the construction of radar, communications
Ian Storey, “China’s ‘Malacca Dilemma’”, Jamestown Foundation, China Brief, vol. 6, no. 8 (April 2006). 201 郝廷兵 (PLA Navy) [Hao Tingbing] and 杨志荣 (PLA Navy) [Yang Zhirong], “海上力量与中华民族的伟大复兴” [“Sea Power and the Chinese Nation’s Mighty Resurgence”], National Defence University, Beijing, 2005; 顾 祖 华 [Gu Zuhua], “维护海上石油安全须有强大海上编队 ” [In Order to Safeguard Energy Security, A Massive Naval Fleet is Necessary], 当代海军 [Modern Navy], August 2004; “中国海军发展 战略设”[China’s Naval Development Strategy]，纪念中国海 军成立 60 周年 [Commemorating the 60th Anniversary of the PLAN’s Establishment], 22 April 2009, at http://blog. chinamil.com.cn/user1/sgk8390756/archives/2009/443062.html. 202 According to China’s 2008 White Paper on National Defence: “Since the beginning of the new century … the Navy has been striving to improve in an all-round way its capabilities of integrated offshore operations, strategic deterrence and strategic counterattacks, and to gradually develop its capabilities of conducting cooperation in distant waters and countering non-traditional security threats”. White Paper on China’s National Defence in 2008, Information Office of the State Council, January 2009; “Chinese navy spells out long-range ambitions”, Reuters, 15 April 2009. 203 Chris Devonshire-Ellis, “China’s String of Pearls Strategy”, China Briefing, 18 March 2009. 204 The “string of pearls” strategy first appeared in the internal report “Energy Futures in Asia” produced by defence contractor Booz Allen Hamilton for Defense Secretary Donald H. Rumsfeld. Though Chinese officials deny that there is such a strategy, Chinese scholars are nonetheless forbidden to publish about it. Bill Gertz, “China builds up strategic sea lanes”, The Washington Times, 17 January 2005; Andrew Erickson, “Chinese Naval Analysts Consider the Energy Security Question”, paper presented at the annual meeting of the American Political Science Association, Chicago, Illinois, 30 August 2007. 200
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upgrade, and refuelling facilities at ports in Hainggyi, Coco, Sittwe, Zadetkyi Kyun, Myeik and Kyaukphyu.205
for military expansion – with a particular emphasis on warships – to counter China’s influence in the region.210
China may make use of these ports for commercial and other reasons (subject to permission), but they are not naval bases designed to support PLA Navy deployments into the Indian Ocean, as some Indian analysts and “China threat” proponents have claimed. 206 India has issued alarming reports about Chinese military intentions in the region, for example, going so far as to assert that China established a large Chinese signals intelligence (SIGINT) station on Myanmar’s Great Coco Island to monitor Indian naval activity in the Andaman and Nicobar Islands. While this was later proven untrue,207 it was a factor that led to India’s decision in 1993 to reverse its critical policy and strengthen ties with Myanmar.208 India has made diplomatic and public representations to Myanmar to express concerns over growing Chinese presence in the region.209 It is also aggressively pushing forward with its own plans
In addition to developing port facilities, Chinese companies are building oil and gas pipelines from the Myanmar south-western port of Kyaukphyu to Kunming.211 While Myanmar will not supply its own crude oil to China through the pipeline, it will transport oil from the Middle East and Africa, bypassing the Straits of Malacca, through which nearly 80 per cent of China’s imported oil must pass.212 Proponents of the pipeline argue that it will reduce China’s reliance on the strait for oil transportation by at least one third,213 reducing shipping time from Africa and the Persian Gulf, providing easier access to crude oil for new inland refineries.214 Given the pipeline’s projected path through territory controlled
210
Ravi V. Sharada Prasad, “The String of Pearls”, Indian Express, 27 April 2009; “China eyeing base in Bay of Bengal?” Asianews, 10 September 2008. 206 “Myanmar’s Chinese Connection”, International Defense Review, November 1994. For information on the “China threat” theory, see 李小华 [Li Xiaohua], “解析’中国威胁论’与’中国崩 溃论’的神话” [“Analysis of the Myths of the ‘China Threat Theory’ and the ‘China Collapse Theory’”], 当代亚太 [Contemporary Asia-Pacific Studies], no. 7 (1999). For more on image-building as a response to the China threat theories, see Simon Rabinovitch, “The Rise of an Image-Conscious China”, China Security, vol. 4, no. 3 (Summer 2008), pp. 33-47. 207 India’s chief of naval staff withdrew the claim, stating that India had “firm information that there is no listening post, radar or surveillance station belonging to the Chinese on Coco Islands”. “No report of anti-India activity at Coco Island”, Indiainfo.com, 25 August 2005; Andrew Selth, “Myanmar’s Coco Islands: rumours and realities in the Indian Ocean”, Southeast Asia Research Centre, working paper series no. 101, November 2008. 208 For more information on India’s Myanmar policy, see Section V.B, “Exploiting Bilateral Competition”. 209 India’s navy chief has expressed concern that “each pearl in the string is a link in a chain of the Chinese maritime presence”. Indian intelligence officials express further fears that Chinese-built ports will be used as naval bases to control the “world energy jugular” and interdict Indian ships. “Myanmar’s Chinese Connection”, International Defense Review, November 1994; “Gwadar port has strategic implications for India: Navy chief”, Intellibriefs, 22 January 2008, at http:// intellibriefs.blogspot.com/2008/01/gwadar-port-has-strategicimplications.html. An Indian analyst and government adviser at the Institute for Defence Studies in New Delhi has said that a permanent Chinese naval presence in the Indian Ocean would be a “red line” for India. David Blair, “India ‘must not show weakness to China’”, The Telegraph, 16 September 2008; “China eyeing base in Bay of Bengal?” op. cit. 205
In February 2009 the Indian government said its defence budget would increase by 34 per cent to 1.4 trillion rupees ($30 billion). India has announced plans to have a fleet of aircraft carriers and nuclear submarines at sea in the next decade and recently tested nuclear-capable missiles that put China’s major cities well within range. It is also reopening air force bases near the Chinese border. The Indian navy has stepped up its joint exercises with the U.S. navy and bought an American warship, the 36-year-old USS Trenton (re-christened INS Jalashwa), in 2007. Gavin Rabinowitz, “Hambantota harbour and Indo-China ocean war”, The Sunday Times, 8 June 2008; Siddharth Srivastava, “India’s nuclear submarine plan surfaces”, The Asia Times, 20 February 2009. 211 China’s National Development and Reform Commission (NDRC) approved the plan to construct a crude oil pipeline to Yunnan province in April 2006. Work on the pipeline began the first part of 2009 and it is expected to be completed by 2013. The oil and gas pipelines will stretch from Myanmar’s deepwater port at Sittwe through Mandalay to the Chinese border city of Ruili, and then on to Kunming. Sinopec, the contractor on the pipeline, will invest over $1 billion as well as provide an $83 million loan to Myanmar for the pipeline. Simon Wardell, “Chinese Government Reportedly Approves Myanmar-China Crude Pipeline Plans”, Global Insight Daily Analysis, 17 April 2006. 212 Prof. James Holmes, U.S. Naval War College, “China’s Energy Consumption and Opportunities for U.S.-China Cooperation To Address the Effects of China’s Energy Use”, Testimony before the U.S.-China Economic and Security Review Commission, 14 June 2007, at www.uscc.gov/hearings/ 2007hearings/transcripts/june_14_15/holmes_prepared_ remarks.pdf; Sudha Ramachandran, “China secures Myanmar energy route”, The Asia Times, 3 April 2009. 213 Zhang, “Southeast Asia and energy”, op. cit. 214 This pipeline would shorten the import route by about 1,200 km. Chen Zhaohe, “ 从能源角度探析中国对外战略 ” [“Interpreting Chinese Foreign Strategy from Energy Perspective”], 15 April 2009, at www.studa.net/guoji/090415/ 15520382.html.
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by ethnic groups, China’s interests in Myanmar’s stability have grown commensurately.215
2. Arms sales and technical assistance216 At the end of the 1980s, the Myanmar government turned to Beijing to help fulfil its ambitious plan to enlarge and modernise its armed forces. 217 Currently the largest supplier of weapons to Myanmar,218 the PLA also provides the Burmese army with training in the technical use of weapons and weapon systems.219 Goods bought from China over the years have included armoured personnel carriers, tanks, fighter aircraft, radar systems, ammunition, surface-to-air missiles and short-range airto-air missile systems. 220 Much of the weaponry, such as an August 2008 batch of 200 military trucks, were observed crossing into Myanmar through Ruili on the China-Myanmar border.221 When opposition and ethnic groups have questioned Chinese officials about arms sales, they replied that China only provides major military equipment, not small arms: “the heavy weapons that cannot kill your people”.222
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ponry,223 but also due to the belief that it would be better to rely on numerous sources in case one supplier cut them off.224 Currently, the government continues to buy low-level equipment such as trucks and ammunition primarily to maintain good neighbourly relations, but also because China offers a better price – at times almost half market rate.225 (For information on other suppliers, see Section V.B, “Exploiting Bilateral Competition”.) Chinese arms sales to Myanmar satisfy several strategic motivations. They reinforce the bilateral relationship, strengthening China’s foothold in and possible access to the Indian Ocean while putting it in a better position to protect its sea lines of communication. Second, arms sales to Myanmar – like to Pakistan – complicate India’s security environment.226 However, the Chinese take into consideration the regional balance of power and concerns of Myanmar’s other neighbours, in particular Bangladesh and Thailand, when determining what to sell. According to a Chinese official, “We do not just give them whatever they want”.227
Since the mid-1990s the generals have diversified their weapons suppliers. This was partially a response to dissatisfaction with the quality of Chinese military wea-
215
Crisis Group interview, Kunming, 5 March 2009. See also, “Myanmar activists urge China to halt pipeline project”, Reuters, 7 September 2009. Although the precise path of the pipeline has not been made public, it must traverse Shan States, substantial parts of which are controlled by ethnic groups. 216 For information on reports of Chinese weapons reaching the ethnic groups, see Section II.D. 217 Restrictions on selling military equipment to Myanmar are self-imposed. The tightest embargoes are maintained by the U.S. and EU, while several other nations, such as South Korea, have informal or less sweeping sanctions. The U.S. and EU restrictions ban sales and re-sales of virtually all militaryrelated equipment to Myanmar, but it is difficult to stop third parties from selling used equipment and licensed technology. Grant Peck, “Arms easy to buy for Myanmar junta”, Associated Press, 12 October 2007. 218 Most of the weapons sales occur through barter deals or interest-free loans. “Myanmar: Ongoing Misuse of Arms Transfer”, International Action Network on Small Arms, 27 November 2008, www.iansa.org/un/documents/CaseStudyMyanmar.doc. 219 Crisis Group interview, Ruili, 5 March 2009. 220 China does not regularly report its arms transfers to the UN Register on Conventional Arms and does not publicise information about its arms transfers. 221 “200 more military trucks delivered from China”, Democratic Voice of Myanmar, 26 August 2008. 222 The groups replied that these are arms nonetheless and they threaten and suppress the people. Crisis Group interview, Chiang Mai, 30 January 2009.
223
Crisis Group interview, Ruili, 5 March 2009. Ibid; Michael Black and William Couchaux, “Myanmar Finds Willing Arms Suppliers in Energy-Hungry Neighbors”, World Politics Review, 3 January 2007. 225 Crisis Group interview, Ruili, 5 March 2009; Myo Gyi, “China provides more military trucks to Burma”, Mizzima News, 14 January 2009. 226 Daniel Byman and Roger Cliff, “Explaining China’s Arms Transfers”, China’s Arms Sales Motivations and Implications, RAND, 2003. 227 Crisis Group interview, Yangon, March 2009. 224
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IV. RISKS OF CHINESE POLICY Beijing’s policies in Myanmar present challenges to its own interests in the country. Not only is Beijing increasingly doubtful about the military government’s ability to maintain stability on the border, but the generals’ mismanagement of their country is compromising Chinese economic interests. An assessment of the risks presented by current Chinese policy shows that it is firmly in China’s interests to prod the Myanmar government toward meaningful economic and political reform.
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Most of the problems can be linked to a fundamental lack of knowledge and expertise on economic planning and policy. For instance, at China’s encouragement, Myanmar’s government announced in 2007 that it would enact a new special economic zones (SEZ) law by the end of the year.233 Several Burmese entrepreneurs were consulted with regard to the drafting of the law.234 However, once work began on the specifics of the law, confusion emerged about the required use of foreign currency. At one meeting, a participant said, “But we are in Myanmar; we are not supposed to use foreign currency”.235 The deal evaporated, more due to a lack of understanding of the SEZ concept and economic expertise than any political consideration.236
A. WEAK GOVERNANCE IN MYANMAR In addition to expanding border trade and gas pipelines, China has broader aspirations for an open market economy in Myanmar where Chinese businesses can sell more of their goods. Yet excessively weak governance in the country continues to undercut political and social stability, which in turn impacts Chinese investments. The military government’s failure to implement an effective economic development plan and other reforms significantly limits commercial potential and reduces confidence in the investment environment. 228 After meeting with Myanmar’s leadership in June 2009, Singapore’s former Prime Minister Goh Chok Tong indicated that Singapore investors are likely to wait until after Myanmar’s 2010 elections before significantly expanding their investments there.229 Chinese investors share these concerns.230 In 2005, the China Export and Credit Insurance Corporation (SINOSURE) placed Myanmar in the most risky category for investment. 231 Small Chinese businesses are ready to invest more fully in Myanmar, depending on how the next steps go. Yunnan officials express significant frustration with the repeated delay or non-implementation of cross-border cooperation agreements by the Myanmar government.232
228
Crisis Group interview, Beijing, 24 February 2009. “Singapore investors wait on Myanmar polls”, Associated Press, 12 June 2009. 230 Chinese investors in Vietnam, for example, are watching closely to see whether they should transfer their investments should the situation improve. Crisis Group interview, Bangkok, 27 January 2009. 231 Myanmar was given an eight out of nine ranking, where one indicating the safest countries for investment and nine the riskiest. Toshihiro Kudo, “Myanmar’s economic relations with China: who benefits and who pays?”, in Monique Skidmore and Trevor Wilson (eds.), Dictatorship, disorder and decline in Myanmar (Canberra, 2008). 232 Crisis Group interviews, Kunming, Xi Shuang Ban Na, 2, 6 March 2009; Ruili, 5 March 2009; telephone interview, 3 April 2009. 229
For now, China is content to focus on infrastructure projects in Myanmar to be eventually repaid by the military government. 237 Absent funds to repay the debt, China counts on being reimbursed with resources.238 However, given the current political climate, the repayment of loans through resource extraction is not guaranteed either. Many of Myanmar’s natural resources are located in areas currently controlled by ethnic groups, whose cooperation must be secured. From a day-to-day perspective, corruption, the weak judicial system,239 lack of transparency240 and accountability as well as other governance issues make it difficult for Chinese to do business in Myanmar. Chinese businessmen struggle with how to properly “handle”
“Myanmar on road to establishing special economic zones”, Xinhua, 13 March 2007; “Myanmar to set up six special economic zones”, Xinhua, 14 August 2007. 234 Ibid. 235 Crisis Group interview, Yangon, 2 February 2009. 236 Ibid. 237 Crisis Group interview, Yangon, 12 March 2009. 238 Crisis Group interviews, Yangon, 11-12 March 2009. 239 “In Myanmar, law enforcement officials, particularly at the regional and local levels, have limited expertise in laws and enforcement techniques, particularly with regard to more complex issues such as money laundering, human trafficking and corruption. Similarly, judges and prosecutors have limited technical skills to implement new legal provisions in areas ranging from mutual legal assistance to institutionalised corruption. Furthermore, salaries are often low, providing an incentive for some officials, and indeed members of the general population, to participate in corrupt practices”. UNODC website on Myanmar, 2007, www.unodc.org/myanmar/en/ corruption.html. 240 According to the 2008 Corruption Perception Index published by Transparency International, Myanmar ranks 178th among all the 180 countries in the world, on par with Iraq and above only Somalia. 2008 Corruption Perception Index, Transparency International, 2008 www.transparency.org/ news_room/in_focus/2008/cpi2008/cpi_2008_table. 233
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Myanmar officials, and complain that their appetite for bribes is much worse than that of Chinese officials.241
B. THE COST OF INVOLVEMENT IN EXTRACTIVE RESOURCES Chinese investments and economic assistance support short-term Chinese strategic interests as well as prop up the government in Myanmar. Because they are for the most part based on the extraction and export of natural resources, they have not promoted wider economic development. Chinese companies pay little attention to the sustainability of Myanmar’s export commodities or to their environmental impact.242 With regard to logging, environmentalists have warned that unless effective controls are implemented, Myanmar will lose one of its major exports in the near future.243 (See Appendix D.) The lack of transparency and available information on land acquisition, environmental impact and displacement caused by Chinese hydropower and mining projects as well as oil and gas explorations underscore the concerns of environmental and human rights groups. Chinese companies that operate abroad often do not conduct the required assessments that are standard for international operations.244 Chinese infrastructure and construction projects are often accompanied by increased military presence in project areas, frequently leading to large scale forced labour,
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forced relocation and human rights abuses.245 Consisting of mainly mining and hydropower projects, they have provoked widespread resentment and anger towards investors – and China in general.246 Local Chinese businessmen openly admit that what they are doing is no better than previous colonial powers.247 For the most part, large construction and infrastructure projects within Myanmar are carried out by bringing in thousands of labourers from China.248 Few benefits accrue to the local population. Occasionally, locals are employed as short-term workers, but they are warned not to report any information about project activities to others.249 Policymakers in Beijing are slowly beginning to acknowledge that these policies are not sustainable. 250 The Chinese Academy for Environmental Planning (CAEP) is now working with the Global Environmental Institute (GEI) and the University of International Business and Economics to draft more stringent environmental standards for Chinese companies to improve their environmental impact overseas.251 This is a useful first step, but Beijing needs to ensure that Chinese companies at the local and provincial levels actually adhere to these guidelines. Beijing needs to exert greater control, whether by increasing penalties, suspending or rescinding licenses to operate, or issuing a “black list” of offenders.252
See Shyamal Sarkar, “Kachin hydropower projects to spell doom”, Kachin News Group, 31 January 2008; Myanmar Rivers Network, at www.myanmarriversnetwork.org; letter from activists protesting the Tasang dam to Khalid Rahman, Director of Infrastructure Division, Mekong Region, Asian Development Bank, 9 October 2005, at www.shanland.org/ oldversion/index-2067.htm; “A Choice for China: Ending the destruction of Myanmar’s northern frontier forests”, Global Witness, October 2005; “Forced labor continues in Arakan”, The Irrawaddy, 3 August 2006; “Abuses rampant along gas pipeline”, The Irrawaddy, 7 May 2009. 246 Crisis Group interview, Yangon, 6 February 2009. 247 Crisis Group interviews, Xi Shuang Ban Na, March 2009. 248 “Construction projects help to boost our employment, our big construction companies, as well as the export of Chinese technologies and machines”. Crisis Group interview, Yangon, 11 March 2009. 249 Nawdin Lahpai, “Saviours sought to halt Irrawaddy River dam project”, Kachin News Group, 14 March 2009; “Over 1,000 Chinese workers in Myanmar’s Chipwi hydropower project”, Kachin News Group, 13 January 2009; “Camps for 15,000 Chinese labourers at Irrawaddy River hydropower project”, Kachin News Group, 4 March 2009. 250 Crisis Group interviews, Beijing, May-June 2009. 251 “Environmental guidelines for firms investing abroad”, China Daily, 12 September 2008. 252 China’s State Environmental Protection Administration (SEPA) issues a blacklist of the country’s top 30 polluters 245
One Myanmar businessman observed, “With enough money and the right connections, almost any business venture is possible in Myanmar.” Crisis Group interviews, Ruili, 5 March 2009; Yangon, 12 March 2009. 242 For instance, wild animals in Kachin state such as reptiles, birds, as well as leopards and tigers in danger of extinction, are known to be exported to China, where the demand is high for exotic animals. Local environmentalists report that Kachin state authorities have not shown any concern for the damage being caused to the ecology and the environment in Myanmar by the rampant capture and export of wild animals to China. “Thousands of snakes exported to China as food seized”, Kachin News Group, 6 December 2008. 243 Toshihiro Kudo, “Myanmar’s economic relations with China: who benefits and who pays?”, op. cit. 244 A report recently released by Arakan Oil Watch (AOW) noted that seismic and oil explorations by a consortium led by CNOOC had deeply scarred the land on Ramree Island, home to about 400,000 people, and made land uninhabitable. Marwaan Macan-Markar, “Myanmar: China’s Thirst for Oil Ignores Environment, Rights”, IPS News, 31 October 2008. Parts of Kachin state where dam projects are currently underway also face the prospect of “irrevocable damage” to the environment and ecosystem. Shyamal Sarkar, “Kachin hydropower projects to spell doom”, Kachin News Group, 31 January 2008. 241
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C. RESENTMENT TOWARDS CHINA China’s political and economic support of Myanmar has generated resentment in opposition parties and ethnic groups, as well as in the general public. China is seen as propping up an abusive, authoritarian government.253 Following the January 2007 Security Council veto, many in Myanmar have looked even more unfavourably on China and Chinese people.254 Some in China consider close ties with Myanmar to be a double-edged sword, and that if the current policies continue, there could be backlash against China in Myanmar. Resentment towards ethnic Chinese living in Myanmar is rising.255 The safety of ethnic Burmese-Chinese and the thousands of recent Chinese immigrants is a prominent
that have failed environmental assessments or failed to implement green regulations. They are barred from receiving bank loans. Sun Xiaohua, “Blacklist of polluters distributed”, China Daily, 31 July 2007; “China sets up pollution blacklist”, BBC, 30 July 2007; Crisis Group interview, Beijing, 28 July 2009. 253 “Chinese officials say they want a prosperous and democratic Myanmar, but their actions do not show this. They only care about the government to government relationship; they are not looking out for the people. They have told me that they know the government is not supported by the people. They know how corrupt the government is. But China still profits”. Crisis Group interview, Ruili, 7 March 2009. 254 Crisis Group interview, Ruili, 7 March 2009; Mandalay, 10 February 2009. 255 Ethnic Chinese officially comprise 3 per cent of the population, but the percentage is believed to be higher due to intermarriage and widespread discrimination against minorities. Crisis Group interview, Ruili, 5 March 2009. It is impossible to give an accurate count of how many Burmese of Chinese origin, or Chinese nationals live in Myanmar. The government of Burma does not recognise Burmese Chinese, Panthay, Burmese Indians, Anglo-Burmese or Rohingya as being among the list of 135 officially recognised ethnic groups. No one, not even the Burmese, really knows how many Chinese are now resident in Myanmar. In the last census of 1983, there were several hundred thousand listed, although the criteria for such a categorisation was obscure, and there is an extensive Sino-Burman population of unknown size but considerable influence (witness, for example, General Ne Win, Brigadier Aung Gyi). According to statistics supplied by the Chinese embassy in Myanmar, there are 2.3 million Chinese in Myanmar while other estimates put the figure at 3 million. Senior Burmese officials have noted the marked influx of Chinese from Yunnan Province who are both conspicuous and relatively wealthy compared to the poverty of the average Burmese. Some estimates by highly placed Burmese officials indicate there may be two million Chinese illegally in Myanmar and perhaps half a million Chinese registered with the government. This would be about 5 per cent of the population. David Steinberg, “Burma/Myanmar: The Chinese Dilemma”, e-International Relations, 20 February 2008, at www.e.ir.info.
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concern of the Chinese government. Given the history of anti-Chinese sentiment and prevalence of policies that discriminate against them,256 it is likely that they would be targeted in an outbreak of violence in Myanmar, as they have been in the past.257 Beginning in the early 1960s, the government in Myanmar introduced the Burmese Way to Socialism, a staunchly anti-foreign ideology that introduced state control of the economy by nationalising private enterprises, targeting Indian, Chinese, Anglo-Burmese and Western businesses.258 These “foreigners” were “encouraged” to leave.259 Similar nationalistic and protectionist tendencies persist today in unfavourable policies towards Chinese businesses. 260 Chinese have difficulties operating businesses, and Burmese can drive them out of business and transfer ownership and franchise to businesses owned by families of government officials.261 Burmese of Chinese origin and those Chinese who have more recently migrated from Yunnan are viewed as two distinct groups. The recent immigrants are seen as the “top of the chain”, and are widely resented by Burmese and often Burmese Chinese as well.262 The new immi-
256
Ethnic Burmese-Chinese (and Burmese-Indians) in Myanmar are subject to various forms of discrimination by the government. They do not have full citizenship rights which inter alia prevents them from enrolling in higher education institutions, such as medical and technical colleges. Most depend on remittances from family members living abroad. Crisis Group interview, Ruili, 7 March 2009. 257 Crisis Group interviews, Yangon, February 2009; Ruili, 7 March 2009. 258 Fred Von Der Mehden, “The Burmese Way to Socialism”, Asian Survey, vol. 3, no. 3 (April 1963), pp. 129-135, cited in Egreteau and Jagan, “Back to the Old Habits: Isolationism or the self-preservation of Burma’s military regime”, op. cit. 259 By the end of the 1960s, an estimated 100,000 Chinese as well as 400,000 Indians and Ango-Burmans had left Myanmar due to widespread discrimination. Mya Than, “Ethnic Chinese in Myanmar and their Identity” in Leo Suryadinata (ed.), Ethnic Chinese as Southeast Asians (New York, 1997); Thant Myint-U “What to do about Burma”, London Review of Books, 8 February 2007. 260 Crisis Group interviews, Yangon and Mandalay, February 2009; Ruili, 7 March 2009. 261 Crisis Group interviews, Mandalay, 10 February 2009; Beijing, 30 April 2009. This phenomenon is particularly popular in the jade and logging industry. Local officials develop policies that favour local Burmese and drive non-citizen Chinese businessmen out of business, then sell these businesses or franchise them to people chosen by government officials. 262 Many Burmese-Chinese feel more Burmese than Chinese, and have little sympathy for the more newly immigrated Chinese from Yunnan. Crisis Group interviews, Yangon, 2-3 February 2009; Mandalay, 10 February 2009. There are three types of Chinese in Burma, listed from poorest to the richest: those who have lived in the country since the Mandalese
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grants in particular make few efforts to integrate into local society, frequenting mostly Chinese establishments and living – to the greatest extent possible – an entirely Chinese way of life.263 Adding further to local resentment is the widespread practice of recent Chinese immigrants buying citizenship cards from corrupt officials.264 Myanmar citizens in the north see China as an economic ogre, to which their government is selling their country.265 Central Mandalay has been dubbed a “Chinatown,” where Burmese feel outnumbered.266 Mandarin is widely spoken and an increasing number of signs are written in Chinese.267 Burmese feel that they are being pushed from the prime areas of town,268 and that they are second-class citizens in their own country.269 Indeed, most businesses in almost all of Myanmar’s major cities have some form of Chinese investment.270 It has been estimated that 60 per cent of Myanmar’s economy is in Chinese hands, taking into account the holdings of both ethnic BurmeseChinese as well as more recent immigrants.271 According to a Myanmar citizen, “Burma is the backyard of China”.272
kings, coming mostly from Fujian and Guangzhou; those that immigrated to Burma after 1949, when Taiwan withdrew its troops from Shan state; and the most recent wave of Chinese businessmen coming from Yunnan and other Chinese provinces since the 1990s. “Long friendship between China and Myanmar”, “福建侨联” [Fujian Qiaolian] available at www. fjql.org/cgzn/jyzt/y19.htm. 263 Even older groups of Chinese immigrants tend to live in Chinese enclaves. 264 Crisis Group interviews, Mandalay, 10 February 2009; Ruili, 7 March 2009. 265 A common sentiment is that everything in Myanmar is in the hands of cronies and Chinese. Crisis Group interviews, Yangon, 4 February 2009; Ruili, 7 March 2009. 266 On the edge of town, many tall buildings built by Chinese are often empty while their owners are buying things in Taiwan and Yunnan. Crisis Group interview, Mandalay, 10 February 2009. 267 Crisis Group interviews, Myanmar and Yunnan, FebruaryMarch 2009; “If you want to see and hear Burmese, you should go outside of Mandalay”, a famous Burmese cartoonist commented in one of his drawings. Wai Moe, “Myanmar crackdown could be convenient for China”, The Irrawaddy, 27 November 2008. 268 Crisis Group interview, Mandalay, 10 February 2009. 269 Crisis Group interviews, Yangon, 2-3 February 2009; Mandalay, 10 February 2009. 270 Maung Aung Myoe, “Sino-Myanmar Economic Relations Since 1988”, Asia Research Institute, National University of Singapore, working paper series no. 86, April 2007. 271 Crisis Group interview, Ruili, 5 March 2009. For more on Chinese investments in Myanmar, see Section III.B.1 and Appendix C. 272 Crisis Group interview, Yangon, 2 February 2009.
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While it is now possible to acquire cheap Chinese products otherwise unavailable in Myanmar, many are dissatisfied with their quality.273 Furthermore, once the products make it to the cities in Myanmar’s interior, they are prohibitively expensive due to the accumulation of bribes and fees.274 According to a Burmese shopkeeper in Ruili, “After 100 years of colonisation by the British, we had so many things left, but after twenty years of colonisation by China, we have nothing”.275
D. BEIJING POLICY UNDERCUT BY LOCAL ACTORS In many cases, China’s goals of stability and development are being undercut by the actions of local actors. While several of Yunnan’s interests and perspectives converge with those of Beijing, including the need to develop the province economically, Kunming has stronger incentives than Beijing to deepen relations with Myanmar and often goes too far in single-mindedly pursuing its own economic interests.276 Operating under the Chinese adage, “heaven is high and the emperor is far away”, local actors (many commercial) regard Beijing as “ignorant” of local needs, making local “adaptation” of policies “smart and necessary”.277 This practice, from Beijing’s perspective, is “unhealthy”, undermining Beijing’s policy of good neighbourly relations and its international reputation.278 Tensions between Beijing and Kunming surface when Beijing is called to account for illicit activities of its local businessmen and officials, the extent of which it is often unaware.279 Operations by Chinese logging companies, for example, approved by the Yunnan provincial government or local governments without Beijing’s knowledge, have led to friction between Beijing and Naypyidaw.280 Local Chinese companies have also significantly undermined Beijing’s crop substitution policy.
“Most of the products for export to Myanmar are made in Yunnan, not the special economic zones, so their quality is inferior. The special economic zones only export to the West”. Crisis Group interview, Mandalay, 10 February 2009. 274 For example, in Ruili, a Chinese made motorcycle costs 2,000 CNY. But by the time it gets to Yangon, it will sell for 6,000-7,000 CNY. Crisis Group interview, Ruili, 7 March 2009. 275 Crisis Group interview, Ruili, 5 March 2009. 276 Kunming has a pronounced desire to become an “international corridor” and “continental bridge”. Crisis Group interview, Kunming, 2 March 2009. 277 Crisis Group interviews, China-Myanmar border, March 2009. 278 Crisis Group interview, Beijing, 23 July 2009. 279 Crisis Group interview, Beijing, August 2009. See also Appendix D. 280 Crisis Group interview, Yangon, 12 March 2009. 273
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(See Appendix D for the cases of logging and crop substitution). In addition to increasing Myanmar’s suspicions about China’s strategic intentions, these activities damage China’s reputation among local Burmese.281 Many of Myanmar’s natural resources – minerals, oil and gas, timber – are located in the special regions controlled by ethnic groups, leading to tensions between the government, ethnic groups and Chinese investors. In the past, ethnic groups directly negotiated projects with Yunnan businessmen for timber and mineral resources, but Naypyidaw has since imposed the requirement that all projects be approved by the government and include a government representative. However local Chinese businessmen still continue to independently negotiate deals with ceasefire groups in the special regions, 282 aggravating tensions between Beijing and Kunming and creating problems for Beijing’s bilateral relationship with Myanmar. Kunming authorities have expressed satisfaction with Security Council initiatives against Myanmar that pressure the military government.283 They prefer a weak central government in Myanmar with fewer controls over economic and commercial activities, allowing them to engage with local actors with fewer constraints. Anything that weakens the power of the military government, therefore, is welcomed.284
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V. LIMITS TO CHINESE INFLUENCE The view that China could force political change in Myanmar if only it were willing to use its influence is overstated. Beijing can extract certain minor concessions, but they have never led to fundamental changes. It has helped secure “favours” from Myanmar, such as accepting UN envoys’ visits or international aid after cyclone Nargis, but in most cases, these moves just relieved international pressure on China. A recent test of Chinese influence was the Myanmar army’s raid against the Kokang ceasefire group in August, which resulted in the flight of 37,000 refugees into China. Despite having strongly warned the government against such a move, Beijing was not able to dissuade it, nor was China informed before the operation took place.285 China’s influence is limited by several factors. The generals in Naypyidaw harbour a profound distrust of China due to its past support to the Communist Party of Burma (CPB) and continuing ties with border ethnic groups, which prevents them from consolidating control over their territory. Although the military government relies on Beijing’s support, it still follows a foreign policy of non-alignment and pragmatism in order to balance China’s influence with that of other regional powers. The Myanmar government is also intensely nationalistic, unpredictable and sensitive to outside interference. Finally, China uses ASEAN as a shield against more robust action, which limits how far China is willing to go in pushing Myanmar.
A. HISTORICAL DISTRUST Myanmar’s deep distrust of China and its political and territorial ambitions is rooted in the regime’s strong resistance to all foreign intervention. Burmese school curricula include the Chinese invasions of the thirteenth and eighteenth centuries.286 There has long been a Chinese perception that parts of present day Myanmar
285
See Section II.D. Chinese empires and dynasties invaded Myanmar in the thirteenth century (the Mongol Empire led by Kublai Khan invaded in 1277, 1287 and 1300) and the Qing dynasty (Manchu) launched four expeditions against Myanmar in 1765-69. The Qing dynasty then kept a heavy military buildup in the border areas of Yunnan for about a decade in an attempt to wage another war while banning inter-border trade for two decades. Yingcong Dai, “A Disguised Defeat: The Myanmar Campaign of the Qing Dynasty”, Modern Asian Studies, vol. 38, no. 1 (2004), pp. 145-189. 286
281
Crisis Group interview, Yangon, March 2009. Ibid. 283 Crisis Group interview, Beijing, July 2009. 284 Ibid. 282
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are part of “greater” China,287 and the borders of present day Shan state and western Yunnan have advanced and retreated with competing sovereignty claims. 288 In the mid-1950s, soon after establishing diplomatic relations, Chinese Premier Zhou Enlai and Burmese Prime Minister U Nu agreed on the demarcation of the border.289 The military government’s long, protracted struggle with the CPB intensified its distrust of China.290 Chinese support enabled the CPB to sustain the most formidable insurgency campaign among all insurrectionist groups.291 Trained in Yunnan province, it included several hundred PLA advisers and thousands of Chinese “volunteers”.292 In the late 1960s when support for the insurgency and fervour for the Cultural Revolution in China was at its peak among Myanmar’s ethnic Chinese population, Chinese propaganda praised the “revolutionary armed struggle led by the CPB” and urged the Burmese people to join it in overthrowing Ne Win’s regime.293
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This led to violent clashes between pro-government Burmese and pro-CPB ethnic Chinese students, and culminating in anti-Chinese riots in 1967 in Yangon.294 Generals Than Shwe and Maung Aye are said to harbour deep resentment of China. They personally fought against the CPB for many years, witnessing the death of many of their comrades. Maung Aye would allegedly instruct his regional and division commanders to watch China’s moves, stating “We will have to fight these guys again one day. So prepare yourselves for that”.295 This resentment persists despite the military government’s present reliance on China. A former CPB soldier noted, “Their hatred is like a scar in their heart, but as they have become more isolated, they have had to depend on China more and more”.296 According to a Western diplomat, “This Burmese regime wants to stay in power any way it can. China is just a tool it uses to this end”.297 Wideranging military-to-military cooperation has not significantly diminished the Myanmar government’s suspicion of Chinese strategic intentions.298
287
Myanmar has appeared as such in Chinese maps. Crisis Group email correspondence, Thant Myint-U, 18 August 2009. 288 Ibid. 289 “ 周 恩 来 总 理 在 缅 甸 仰 光 华 侨 欢 迎 大 会 的 讲 话 “ [Prime Minister Zhou Enlai’s Speech at the Overseas Chinese Association in Yangon, Myanmar]，中华人民共和国外交部档案 [PRC Foreign Ministry Case Files]，Case Number:105-0051008（1）, 18 December 1956. 290 The CPB almost brought down the government in the late 1940s. In 1950-1951, the government launched a major clampdown on the CPB, forcing its guerrillas to retreat into the jungle, and in October 1953 declared it an illegal organisation. Xiaolin Guo, “Towards Resolution: China in the Myanmar Issue”, op. cit. 291 Though professing support for the principle of noninterference, the Chinese government sought to export revolution by supporting communist insurgencies in several of its neighbouring countries including Indonesia, India, Thailand, the Philippines as well as Myanmar. The CPB received Chinese weaponry including tanks, trucks and communication equipment. Casualties were also routinely evacuated across the border to Yunnan for treatment. Crisis Group interviews, Yunnan, March 2009; Xiaolin Guo, “Towards Resolution: China in the Myanmar Issue”, op. cit.; Jürgen Haacke, “Myanmar’s Foreign Policy: Domestic influences and international implications”, International Institute for Strategic Studies, Adelphi paper no. 381, June 2006, p. 25. 292 These Chinese “volunteers” made up 30 to 40 per cent of the CPB’s fighting force. They included Yunnan local youths, sent-down youths from other cities and some Burmese Chinese that had fled during the anti-Chinese riots. Crisis Group interviews, Yunnan, March 2009; Xiaolin Guo, “Towards Resolution: China in the Myanmar Issue”, op. cit. 293 For example, Peking Radio broadcasted a CPB message on 30 September 1964 implying the need for a new government; Chinese leaders met with the leaders of insurgent groups in Beijing in March 1965; and CPB leaders exiled in Beijing openly declared that they would “overthrow” the Yangon government on 6 November 1966. “Ten Years of Chinese Com-
While China downgraded its support to the CPB in the 1980s,299 ceasing it by 1989, the Myanmar government resents China’s support for the border ethnic groups that splintered off the CPB. They have watched as these hostile groups have maintained or increased their strength with Chinese support, which they see as the primary obstacle to resolving the political stalemate.300 Even some Chinese scholars consider Beijing’s involvement with these groups to be interference in Myanmar’s internal affairs. 301 The Myanmar government regularly makes complaints to Beijing about the issue.302
munist Foreign Policy: South and Southeast Asia”, CIA Intelligence Report, 4 April 1968, RSS No. 0026/68, at www. foia.cia.gov/CPE/POLO/polo-17.pdf. 294 In response, China suspended its diplomatic relations with Burma in 1967 and the Chinese ambassador was recalled. Robert A. Holmes, “China-Burma Relations since the Rift”, Asian Survey, vol. 12, no. 8 (August 1972), pp. 686-700; Xiaolin Guo, “Towards Resolution: China in the Myanmar Issue”, op. cit. 295 Maj. Aung Lynn Htut, op. cit. 296 Crisis Group interview, Ruili, 5 March 2009. 297 Crisis Group interview, Bangkok, 28 January 2009. 298 Crisis Group interview, Ruili, 5 March 2009. 299 China stopped providing the CPB with arms and ammunition in 1982, and in the mid-1980s, the Chinese began “encouraging” CPB fighters to lay down their arms and retire in China. Crisis Group interview, Ruili, 5 March 2009; Xiaolin Guo, “Towards Resolution: China in the Myanmar Issue”, op. cit. 300 Crisis Group interview, Special Region 4 of Shan State East, Myanmar, March 2009. See Section II.D. 301 Crisis Group interviews, Beijing, Kunming, Xi Shuang Ban Na, Yunnan, Yangon, February-March 2009. 302 Crisis Group interview, Yunnan, March 2009.
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B. EXPLOITING BILATERAL COMPETITION The generals in Naypyidaw also fear Chinese domination and growing political and economic influence. 303 Even Chinese officials note that Myanmar has become a Chinese economic colony, particularly its northern regions.304 Myanmar sees its interests as best served by minimising military, political and economic dependence on China.305 Pursuing a foreign policy of non-alignment and multilateralism to balance Chinese influence, Myanmar has successfully managed to rely on its strategic location and resources to attract and sustain the interest of many other countries, which have lined up to improve ties with Myanmar.306 The government exploits this competition to diversify its trade channels, sources of international aid, and bidders for oil field exploration rights. Competition between China and India for resources and influence is the most intense, and Myanmar has wooed India as an important counterweight to China. According to a Western diplomat, “Burma is the prom queen that both China and India want to dance with”. 307 India has readily abandoned its ideological differences with Myanmar in the interest of pragmatic calculations.308 Strategically, India believes that strengthened ties with Myanmar are the key to containing China’s expansion into
303
Crisis Group interview, Yangon, 5 February 2009; Bertil Lintner, “China no sure bet on Myanmar”, The Asia Times, 8 November 2007. 304 One local Chinese official said, “We want Burma’s natural resources and cheap labour. Now it’s our turn to do what the British did 150 years ago”. Crisis Group Interview, Xi Shuang Ban Na, 6 March 2009. 305 Haacke, “Myanmar’s Foreign Policy: Domestic influences and international implications”, op. cit. 306 Myanmar’s leaders have long known that its location as a bridge between South, South East and East Asia makes it strategically important to other countries. Britain, as colonial power, regarded Rakhine as critical to safeguarding eastern India, while the Tanantharyi was vital to protecting entry into the Malacca Strait. During the Second World War, Myanmar became a major theatre of operations as the Allies strove to support Chinese nationalist forces. In the early Cold War, Myanmar was seen as a springboard to re-penetrating China. Ibid. 307 Crisis Group interview, Yangon, 5 February 2009. 308 Over the past twenty years, India’s foreign policy has moved from support for the democracy movement to a more pragmatic “Look East” policy of engagement. The three primary factors behind this dramatic shift were to secure the regime’s support in dealing with insurgency problems in India’s north east, to counter China’s growing influence, and economic and energy considerations. It was also becoming clear within Indian policymaking circles that the democracy movement would not come to power in the foreseeable future. Crisis Group interviews, New Delhi, 9 January 2009.
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South Asia.309 India has sought cooperation from Myanmar in its counterinsurgency operations in the north-east along their border and held several joint military operations.310 The country is also important for India’s “Look East Policy” which includes closer links with South East Asia, including trade routes.311 India has also supplied the military government with weapons and has become involved in various fields such as agriculture and telecommunications.312 India and China also compete for energy resources. A notable case involved the rights to substantial gas reserves off Myanmar’s west coast: India lost out to China three days after its veto of the January 2007 Security Council resolution on Myanmar, despite being the highest bidder.313 Chinese diplomats are acutely aware that India is poised to exploit any tougher stance it might take with the government in Myanmar to better position itself for future energy deals.314
309
Crisis Group interview, Kunming, March 2009. Crisis Group interview, New Delhi, January 2009. 311 Haacke, “Myanmar’s Foreign Policy: Domestic influences and international implications”, op. cit., p. 23. In April 2008, the two countries signed a $120 million agreement to improve the transportation system along Kaladaan River and reform the port of Sittwe. Once completed, ships from India’s landlocked Mizoram province will be able to sail directly to Sittwe, thus opening new trade routes for Indian products into South East Asia and allowing India to bypass Bangladesh. “Burma and India sign on new Burmese port”, Portworld, 4 April 2008; “India and Burma in transport deal”, Associated International Press, 5 April 2008. 312 In an attempt to counter China’s influence in Myanmar, India stepped up both military assistance and energy deals with the military government in 2006. While visiting Naypyidaw, Indian air force chief S.P. Tyagi presented an assistance package which included light helicopters capable of being modified to launch aerial assaults, avionics upgrades for fighter jets and naval surveillance aircraft. However, when the package drew strong international condemnation, Indian officials confirmed to the U.S. in December 2007 that arms sales to Myanmar had ceased. However, sales of military equipment including artillery shells, bullets and guns have continued. Rahul Bedi, “Indian Arms Sales to Myanmar Remain under Scrutiny”, Jane’s Defence Weekly, 16 January 2008; Glenn Kessler, “India’s halt to Burma arms sales may pressure junta”, The Washington Post, 30 December 2007. 313 China secured the gas sales from blocks A-1 and A-3 despite a higher price offered by Indian and South Korean companies. “China Defends Burma/Myanmar and Gas Deals”, International Gas Report, 29 January 2007; “Burma/Myanmar favours China gas pipeline over LNG – Seoul”, Reuters, 26 February 2007; UN Security Council, 5619th meeting, S/PV.5619, 12 January 2007. 314 According to Chinese diplomats, India would like nothing more than for China to heed Western calls to get tougher on Myanmar. Crisis Group interviews, Beijing, July and Octo310
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Other Asian countries provide a counterweight to China. Singapore, Indonesia, Malaysia, Vietnam, Japan, South Korea and Bangladesh all rank in the top ten in terms of bilateral trade with Myanmar.315 Thailand, which shares a long border to its east with Myanmar, is the third most important neighbour after China and India. It is a large investor and the destination of almost all of Myanmar’s gas exports.316 Singapore also maintains a close relationship, preventing Myanmar from sliding further into China’s sphere of influence. Singapore is considered the Asian “Switzerland” for the military elite, 317 who reportedly hold numerous bank accounts and have registered companies there. Singaporean companies are also heavily invested in Myanmar. 318 Government companies, such as the arms supplier Singapore Technologies, have sold guns, rockets, armoured personnel carriers and grenade launchers to the Myanmar, in addition to IT and communications equipment for the defence ministry.319 Singapore’s relationship with Myanmar has also
ber 2007. In September 2007, just as massive pro-democracy protests broke out, India’s petroleum minister, Murli Deora visited Myanmar to sign exploration agreements (after being publicly reprimanded by the prime minister’s office for losing out to China in the country’s energy stakes). 315 “Statistics: Myanmar foreign investment rises sharply in 2008”, Xinhua, 18 March 2009. 316 Thailand is Myanmar’s biggest export market, having bought $2 billion worth of gas from Myanmar in 2006 and an estimated $2.8 billion in 2007, more than 40 per cent of Myanmar’s total exports. Thomas Fuller, “Region’s energy needs enable Myanmar junta”, The New York Times, 1 October 2007. 317 Both Burmese generals and drug lords have been able to take advantage of Singapore’s liberal banking laws and money laundering opportunities. In 1991, for example, the regime laundered $400 million through a Singapore bank which it used as a down payment for Chinese arms. Elizabeth Krantz, “Singapore hypocrisy: hang the drug couriers while investing with the drug barons”, Australian News Commentary, 8 December 2005; Bertil Lintner, “Generals Hit Where it Hurts”, The Asia Times, 1 November 2007; Francesco Sisci, “Burma’s Loose Cannons”, La Stampa, 19 October 2007; Egreteau and Jagan, “Back to the Old Habits: Isolationism or the selfpreservation of Myanmar’s military regime”, op. cit. 318 In 2007, Myanmar’s official data reported Singapore as its second-largest investor with over $1.57 billion. There is substantial Singaporean investment in areas such as real estate, hotels, and tourism. This represents only 0.1 per cent of Singapore’s total trade, with Myanmar ranking 50th among Singapore’s trading partners. “Singapore denies money laundering Myanmar leaders”, Agence France-Presse, 5 October 2007; Transcript of Reply by Minister George Yeo to Questions in Parliament, Singapore Ministry of Foreign Affairs, 22 October 2007. 319 William Ashton, “Myanmar continues arms purchases”, Asia-Pacific Defence Reporter, vol. 30, no. 6 (July-August 2004). In response to questions regarding military sales, Singaporean Minister George Yeo said, “It’s been insubstantial.
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been influenced by concerns about China’s future role in the region, specifically that China’s growing hold on Myanmar’s economy and armed forces might constrain the country’s ability to act independently in the future.320 In recent years Russia has become a player in Myanmar. It is now an important commercial trading partner and arms supplier, reportedly providing training in fields such as nuclear technology and aeronautical engineering.321 Like China, Russia has a veto in the UN Security Council and was equally influential in blocking the 2007 Western-led resolution condemning the regime. While China played a facilitating role between Russia and Myanmar at the time of the veto, Beijing chafes at the growing military relationship between the two countries. The 2007 deal with Russian firm Rosatom to construct a nuclear reactor – which never materialised – irritated the Chinese.322 While Russia sees great potential in Myanmar’s energy sector, Myanmar sees Russia as another important international partner to broaden its diplomatic base. Moscow has supplied arms, agreeing to a 2001 request by the government to purchase Russianmade MIG29 and MIG27 jet fighters and a 2007 request to provide assistance with an air defence missile system.323 Reportedly, the Russian MIG military aircraft company has maintained a representative office in Myanmar since October 2006 and helped upgrade the country’s main military airstrip, Shante airbase (near Meiktila).324 There has also been increasingly close collaboration between North Korea and Myanmar after their recent resumption of diplomatic relations. 325 Both countries’ We’ve always made sure they were items which could not be used against civilians and there have been no sales in recent years.” Transcript of Reply by Minister George Yeo to Questions in Parliament, 22 October 2007, op. cit. 320 William Ashton, “Burma Receives Advances from Its Silent Suitors in Singapore”, Jane’s Intelligence Review, 1 March 1998. 321 Ko Wild, “Burma’s nuclear nexus with Russia”, Mizzima News, 22 July 2009; Aung Hla Tun, “Russian company gains right to explore for minerals in Myanmar”, The New York Times, 17 February 2008. 322 “In Myanmar, two hidden worlds”, The Wall Street Journal, 20 June 2009. 323 “Why Russia’s mum on Myanmar”, Asia Times, 10 October 2007; “Myanmar generals visit arms maker in Russia”, Reuters, 12 October 2007; Aung Hla Tun, “Russian company gains right to explore for minerals in Myanmar”, The New York Times, 17 February 2008. 324 RAC MiG/Russian Aircraft Company RSK (Mig Corp), at www.migavia.ru; Clive Parker, “Inside Myanmar’s secret capital”, The Asia Times, 26 October 2006. 325 Myanmar broke off relations with North Korea in 1983 after North Korean agents attempted to assassinate the South
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increasing isolation and common interests have strengthened the relationship. While Myanmar has the agricultural means to help North Korea, North Korea possesses the weapons and technological capabilities needed to assist Myanmar’s military. The North Koreans are reportedly helping design and build the military defence system in Naypyidaw and providing tunnelling expertise.326 In recent years, an increasing number of North Korean ships have reportedly visited Yangon, increasing speculation about the relationship, including nuclear collaboration.327 Myanmar has a host of other partners it can rely on for economic investment, arms sales and military assistance. Israel, Pakistan, Serbia and Ukraine have also been players in global arms sales to Myanmar, notwithstanding Myanmar’s poor human rights record.328 Israel in particular has a strong commercial interest in selling arms to Myanmar, and has also developed relations in other fields. In 2005 it trained 150 government employees in agriculture and provided $2 million in investment. 329 Pakistan also maintains friendly relations with Myanmar as China’s ally and India’s rival, and has developed close military connections.330
Korean president Chun Doo-hwan while he was visiting Myanmar. Diplomatic ties between Myanmar and North Korea were reestablished in April 2007. 326 “North Korea sells rocket launchers to Myanmar”, Reuters, 3 April 2008; “Myanmar strengthens military ties with DPRK”, Chosun Ilbo, 4 July 2004; Bertil Lintner, “Tunnels, Guns and Kimchi: North Korea’s Quest for Dollars – Part I”, YaleGlobal, 9 June 2009; Aung Zaw, “Asia’s ‘Axis of Evil’ Flexes its Muscles”, The Irrawaddy, 23 June 2009. 327 According to David Albright, director of the Institute for Science and International Security in Washington DC, intelligence agencies have tracked the suspicious procurement of high-precision equipment from Europe, as well as visits to Myanmar by North Korean officials associated with a company that provided assistance to Syria’s construction of a nuclear reactor. Glenn Kessler, “US concerns growing about N. Korean military ties with Burma”, The Washington Post, 22 July 2009. See also Andrew Selth, “Myanmar’s North Korean Gambit: Challenge to Regional Security?” Strategic and Defence Studies Centre, Canberra Papers on Strategy and Defence, no. 154, 2004; “Clinton warns N. Korea and Myanmar may be sharing nuclear technology”, The New York Times, 22 July 2009. 328 Grant Peck, “Despite rights record, Myanmar easily finds foreign arms suppliers”, Associated Press, 14 October 2007; “Myanmar needs a comprehensive international arms embargo”, Amnesty International, September 2007. 329 “Myanmar, Israel strengthen staff training cooperation in agriculture”, People’s Daily, 5 September 2005; William Ashton, “Myanmar and Israel Develop Military Pact”, Jane’s Intelligence Review, vol. 12, no. 3 (1 March 2000). 330 Egreteau and Jagan, “Back to the Old Habits: Isolationism or the self-preservation of Myanmar’s military regime”, op. cit.
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When asked to rank China’s influence over North Korea, Myanmar, and Pakistan, Chinese diplomats state that influence over Myanmar is higher than that on North Korea, but not even approaching that over Pakistan.331 While conceding that its influence with the military government likely eclipses that of many countries, Chinese officials unanimously assert that it is far less than believed by many in the West.332
C. CHARACTERISTICS OF THE MYANMAR GOVERNMENT The generals in Naypyidaw are intensely nationalistic and resistant to outside interference. They do not have a rational perception of foreigners and international relations, which they primarily interpret through a neo-colonial lens.333 China is hardly exempt from this xenophobia. Myanmar’s military government can afford to be impervious to outside pressures because it maintains a stranglehold on power within the country and holds the upper hand in bargaining with its regional neighbours, due to its rich natural resources and geopolitical position. This, coupled with ultra-nationalism, pushes the regime to isolate itself, reflecting an ideology inherited from the period of autarky under Ne Win from 1962-1988. The leadership’s sense of its own legitimacy is also built around the myth that the army won Myanmar’s freedom and is protecting the country from forces that threaten to tear it apart.334 The government retains an acute sense of victimisation making it hypersensitive to all perceived threats of interference. 335 Furthermore, General Than Shwe is considered to be particularly unpredictable and superstitious.336 The fear of losing power and economic privilege and the threat of being punished for crimes against humanity has only fuelled the military’s “siege mentality” that
331
Crisis Group interviews, Beijing, Kunming, Yunnan, Yangon, February-March 2009. 332 Crisis Group interviews, Washington DC, February and July 2008; Beijing, February 2009. 333 This is largely a result of colonial subjugation by the British. For more information see Crisis Group Report, Myanmar: The Military Regime’s View of the World, op. cit.; Egreteau and Jagan, “Back to the Old Habits: Isolationism or the selfpreservation of Myanmar’s military regime”, op. cit. 334 Crisis Group Report, Myanmar: The Military Regime’s View of the World, op. cit. 335 Mikael Gravers, “Nationalism as Political Paranoia in Myanmar: An Essay on the Historical Practice of Power”, Nordic Institute of Asian Studies, 1993. 336 Crisis Group interviews, Beijing, 25 February 2009; Ruili, 5 March 2009; Sudha Ramachandran and Swe Win, “Instant karma in Myanmar”, The Asia Times, 18 June 2009.
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borders on paranoia.337 This greatly affects the government’s interpretation of international policies and hampers the work of foreign agencies, organisations and companies in Myanmar.338 The unpredictable, erratic and intransigent behaviour of the leadership in turn causes Chinese officials significant frustration. 339 Beijing was baffled and angered by the decision to relocate the capital to Naypyidaw in November 2005, having not received prior notification.340 Its anger extended to the financial implications of the move, requiring the diversion of billions of dollars against the backdrop of outstanding loans owed to China. In May 2006, a statement posted on the Chinese embassy’s website criticised the extraordinary expense of building the new capital.341 This unpredictability contributes to China’s reluctance to push too hard, fearing that any misstep could backfire and jeopardise its interests and influence. That lesson was well-learned in October 2004, when Khin Nyunt was purged. Chinese officials saw the reform-minded general as someone who could gradually lead Myanmar away from isolation and towards economic reform. 342 However, Khin Nyunt’s pro-China policy led to suspicions about his loyalty. With his purge, China lost an interlocutor and network within the Burmese regime that had been built since 1988 through personal relationships and high-ranking visits.
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D. ASEAN Through its practice of deferring to regional organisations’ policy on issues within their regions, 343 China uses ASEAN as a shield against taking more robust action against Myanmar. When combined with Beijing’s sensitivity to “China threat” arguments in the region, ASEAN’s weak stance sets a de facto limit on the influence China is willing to exert on Myanmar.344 The “ASEAN way” – seeking non-confrontational, consensual, incremental and non-interventionist ways to resolve regional conflicts – perfectly complements Beijing’s longstanding policy of non-interference. Whatever limited efforts Beijing makes are certain not to go further than the ASEAN line of “constructive engagement”,345 which in the case of Myanmar has generally translated into an endeavour not to “embarrass and isolate” the military regime.346 According to one Chinese official, the reluctance to push Myanmar harder is because “we have had to rebuild confidence in ASEAN over the last years in China’s non-interference”.347 ASEAN’s growth has been fuelled by the desire to balance both growing Chinese influence over Myanmar and U.S. hegemony in the region.348 One of the very reasons that ASEAN accepted Myanmar into its ranks was to draw it away from China’s orbit.349 Beijing also worries that any attempts to marginalise the organisation could lead to its members forming an “anti-China coalition” with Japan and the U.S.350
343
Crisis Group Report, Myanmar: The Military Regime’s View of the World, op. cit., p. 5. 338 Ibid, p.iii. 339 Crisis Group interview, Washington DC, 18 February 2008. 340 Ibid. 341 The statement was quickly removed. Bernt Berger, “Why China has it wrong on Myanmar”, The Asia Times, 3 October 2007. The statement was originally posted here, http://mm. china-embassy.org/chn/default.htm. See also “Chinese diplomats criticize Myanmar’s new capital”, The New York Times, 23 May 2007. 342 Perhaps the “kiss of death” for him was when the Chinese leaders playfully dubbed him the “Deng Xiaoping of Burma”. On his final visit to China in June 2004 he reportedly told the Chinese politicians he met that he planned to be Burma’s first president under the new constitution. Egreteau and Jagan, “Back to the Old Habits: Isolationism or the self-preservation of Myanmar’s military regime”, op. cit., p. 35. 337
Chinese representatives regularly refer to the positions of regional organisations as justification for both thwarting international action and being more proactive than usual, as seen in the cases of Sudan, Somalia, Sierra Leone and Zimbabwe, in addition to Myanmar. See Crisis Group Report, China’s Growing Role in UN Peacekeeping, op. cit., pp. 23-25. 344 Crisis Group interview, Hong Kong, 27 March 2009. 345 Paul Jacob, Tan Lian Choo, Ismail Kassim, Reginald Chua, “Asean prefers soft talk to threats in dealing with Yangon”, The Straits Times, 26 August 1992. 346 Amitav Acharya, Constructing a Security Community in Southeast Asia: ASEAN and the Problem of Regional Order (London, 2001), p. 110. 347 Crisis Group interviews, Beijing, November 2007. 348 The growth of regionalism as a response to external influence is what Mark Beeson calls “reactionary regionalism”. Mark Beeson, “ASEAN plus three and the rise of reactionary regionalism”, Contemporary Southeast Asia, vol. 25, no. 2 (2003), pp. 251-268. 349 Andrew Selth, “Myanmar’s China Connection and the Indian Ocean Region”, Strategic and Defence Studies Centre, Canberra, working paper no. 377, September 2003, p. 7. 350 Pak K. Lee, Gerald Chan & Lai-Ha Chan, “China’s ‘Realpolitik’ Engagement with Myanmar”, China Security, vol. 5, no. 1 (Winter 2009), pp. 105-126.
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There have however been some indications that Beijing might be prepared to apply more pressure to Naypyidaw if ASEAN countries were to take a stronger stand. Chinese officials have urged countries seeking China’s involvement on Myanmar issues to first seek ASEAN’s support.351 According to one official, “We do not want to replace ASEAN to become the chief mediator in Burma. We still think that we are just one partner that can help the international community to resolve this issue”.352 In vetoing the January 2007 Security Council draft resolution on Myanmar, Ambassador Wang Guangya noted, “None of Myanmar’s immediate neighbours, ASEAN members or most Asia-Pacific countries believed that the current situation in Myanmar posed a threat to regional peace and security”. 353 Alternatively, in rare moments when ASEAN expressed exasperation with the situation in Myanmar, such as after the shooting of monks in Rangoon in September 2008, following cyclone Nargis in May 2008 or regarding the trial of Aung San Suu Kyi in May 2009, China has also supported critical statements at the UN.354 Over the years, some members of ASEAN have become frustrated by Myanmar’s recalcitrance and refusal to cooperate or play a constructive role in its political
351
Crisis Group interviews, Beijing, November 2007. Crisis Group interview, Washington DC, 16 July 2008. 353 UN Security Council, 5619th meeting, SC/8939, 12 January 2007. This position was echoed in China’s and Russia’s vetoes in July 2008 of a draft resolution which would have imposed sanctions on Zimbabwe. Citing African Union opposition to sanctions, China considered the resolution an effort by the Council to act beyond its powers, as Zimbabwe was not considered a threat to international peace and security by its neighbours. “No consensus in Security Council on Zimbabwe sanctions”, UN News Centre, 11 July 2008. 354 In past years, there has been a correlation between ASEAN’s and China’s actions on Myanmar. When largescale public protests broke out in August 2007, Beijing urged the generals to exercise restraint. After Singapore’s Foreign Minister George Yeo, the chair of ASEAN, wrote to the government expressing the group’s “revulsion” at the violent repression of demonstrators and “strongly urged Myanmar to exercise utmost restraint and seek a political solution”, China supported an 11 October 2007 Security Council statement and a 2 October resolution in the UN Human Rights Council deploring the violence against peaceful protesters. Following the ASEAN chairman’s statement on 19 May 2009 on developments relating to Aung San Suu Kyi, China supported a UN Security Council press statement on 22 May 2009. Crisis Group interviews, Bangkok, 26 January; Yangon, 1 February 2009. See also Kleine-Ahlbrandt and Small, “China’s New Dictatorship Diplomacy: Is Beijing Parting with Pariahs?”, op. cit., pp. 48-50. 352
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transition.355 ASEAN has been unable to come up with a common position on Myanmar.356 Even those members who have tried to raise the diplomatic stakes have ended up being burned, resulting in an overall decrease in willingness to invest much political or diplomatic capital. 357 One such effort was Indonesia’s November 2007 initiative, which established a commission with the goal of negotiating a political settlement between the government and the NLD. 358 Reportedly, Chinese Premier Wen Jiabao was fully supportive of the initiative,359 but it has since failed to gain momentum, especially after India withdrew.360
Jurgen Haacke, “ASEAN and Political Change in Myanmar: Towards a Regional Initiative?”, Contemporary Southeast Asia, vol. 30, no. 3 (December 2008). Malaysia’s foreign minister and ASEAN Chair Hamid Albar expressed the group’s frustration publicly in a Wall Street Journal op-ed piece and in a speech in which he issued a scathing criticism of Myanmar, saying there was “real concern” from most of ASEAN’s members that Myanmar was undermining the organisation’s credibility and jeopardising its relations with other countries, and Myanmar’s government had not kept its promises to embrace reforms or to release Aung San Suu Kyi. Syed Hamid Albar, “It is not possible to defend Myanmar”, Wall Street Journal, 24 July 2006; “Myanmar not eager to promote diplomacy”, Agence France-Presse, 22 July 2006; Philippine Foreign Minister Romulo said that if Myanmar followed the roadmap, “then there is no problem”, but “in the end, we have to consider the credibility of ASEAN and what is good for ASEAN”. Carlos H. Conde, “At retreat for Asean, unease over Myanmar”, The New York Times, 12 April 2005. Thai Prime Minister Abhisit Vejajjiva interview, The Far Eastern Economic Review, 16 June 2009. 356 These differences arise from considerations such as the “varying levels of commitments by governments to promote democracy and human rights”; their economic interactions with Myanmar; their geopolitical and security concerns; different views about how ASEAN should respond to international pressure on Myanmar; and how the Myanmar issue is portrayed at home and abroad. The importance of each of these factors varies from country to country. Haacke, “ASEAN and Political Change in Myanmar: Towards a Regional Initiative?”, op. cit. 357 Crisis Group interview, London, 23 April 2009. 358 “Indonesia’s president declares ‘soft power’ approach to Myanmar”, The Jakarta Post, 23 November 2007. 359 Ibid. 360 According to a close observer, the Indian sentiment was, “why should we bear the brunt of this? We are not given a permanent seat on the UNSC, so we’ll let China bear the brunt”. Crisis Group interview, New York, 28 July 2009. 355
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VI. IMPLICATIONS FOR INTERNATIONAL APPROACHES Western policies of economic sanctions and isolation have failed to produce change in Myanmar.361 Instead, Western governments have sacrificed opportunities to promote economic reform, strengthen social services, empower local communities, and support disaster prevention and preparedness. In so doing, they have allowed Chinese influence to grow and weakened the West’s ability to influence changes underway in the country. As the Myanmar government moves ahead with its roadmap, the West could remain relegated to a spectator role unless it rethinks its strategy. Tragically, after nearly twenty years the Myanmar government has become even more intransigent. But it is time to learn from the mistakes of these two decades. The most pressing issue now is not to achieve a functioning democracy that meets Western standards but to start a gradual liberalisation process and reintegrate Myanmar with the rest of the world. Myanmar’s many ills are rooted in poor government policy, massive and longstanding underinvestment in social services, chronically weak institutions, limited rule of law and a climate of impunity. Twenty years of aid restrictions have weak-
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ened, not strengthened, the forces for change.362 Progress on these issues will only be possible if there is sufficient political will and capacity. As the country’s socioeconomic crisis deepens, it will become harder and harder for any government, even with international support, to turn the situation around.363 The U.S. and other Western countries should adopt a more nuanced approach aimed at strengthening engagement efforts led by Myanmar’s neighbours in East and South East Asia. In addition to talks on Myanmar’s national reconciliation, dialogue should also address the economic and humanitarian crisis. The government ardently craves recognition and has expressed an eagerness to establish relations with the West.364 The Myanmar government has expressed an eagerness to establish relations with the West. It has sent the message to Western representatives, “be patient with us, we would like to be friends with West, but we are bordered by China and India which can crush us at any time”.365 According to a Burmese-Chinese citizen, “After Obama’s election, the generals wrote him a letter of congratulations. In their hearts they want better relations with the U.S., but because of the issue of ‘face’, they cannot publicly admit this”.366 Following the visit of U.S. Senator Jim Webb to Myanmar in mid-August 2009, speculation about improved ties abounds.367 Yet any new approach by the U.S. will also need to take into account Chinese interests and influence.
361
During a February 2009 press conference in Jakarta, U.S. Secretary of State Hillary Clinton said, “Clearly, the path we have taken in imposing sanctions hasn’t influenced the Burmese junta”, and the path adopted by its neighbours of “reaching out and trying to engage them has not influenced them, either”. Glenn Kessler, “Shift possible on Burma policy”, The Washington Post, 19 February 2009. The effectiveness of sanctions in promoting democratic change is extremely limited, especially when in place over long periods of time. Sanctions work most effectively when deployed against a country to restore democracy after a coup, and against countries with strong economic ties to the U.S. and the West (given that sanctions are almost never universally applied). In countries such as Myanmar, Cuba and Iran, the U.S. has weak levers of economic coercion.. Morten B. Pedersen, Promoting human rights in Burma: a critique of Western sanctions policy (Lanham, 2007); Richard N. Haass, “Economic Sanctions: Too Much of a Bad Thing”, The Brookings Institution, June 1998; David R. Henderson, “Why Economic Sanctions Don’t Work”, Hoover Digest, no. 4 (1998); Leon T. Hadar, “U.S. Sanctions Against Burma: A Failure on All Fronts”, Cato Institute, 26 March 1998; Ernest H. Preeg, “Sanctions and How They Don’t Work”, Fraser Forum, June 2000; Jeffrey Sachs, “Myanmar: sanctions won’t work”, The Financial Times, 28 July 2004; Ian Holliday, “Build a circle around Myanmar”, The New York Times, 4 April 2006; Brahma Chellany, “Burma sanctions don’t work”, The Japan Times, 14 March 2008; Pauline Chiou, “Analysis: Why sanctions aren’t working in Myanmar”, CNN, 5 July 2009.
362
Crisis Group Report, Burma/Myanmar After Nargis: Time to Normalise Aid Relations, op. cit. 363 Ibid. 364 According to a Western diplomat, “Sanctions matter to them a great deal. They particularly hate the visa sanctions, and repeat it in public and private. The American school has 30 per cent Burmese students, all coming from well-connected families that flash their status and links to members of the government. They could put their children in private Burmese schools, but they want to equip them with a Western education so that eventually they can go study in the West”. Crisis Group interviews, Yangon, 4 February 2009. 365 Crisis Group interview, Yangon, 5 February 2009. 366 Crisis Group interview, Ruili, 7 March 2009. 367 Senator Webb met with detained opposition leader Aung San Suu Kyi and Senior General Than Shwe, the general’s first meeting with a senior U.S. political figure. Webb also won the release of John Yettaw, who a week earlier had been sentenced to seven years of hard labour for sneaking into Aung San Suu Kyi’s home. A full-page commentary in the staterun paper said of his visit: “It is indeed the first step toward marching to a 1,000-mile destination”, and the Myanmar government “enthusiastically cooperated with (Webb) because of its stance to deepen the bilateral relations and relieve the disagreements between the countries”. “Myanmar junta’s media lauds US senator’s visit”, Associated Press, 18 August 2009; Kyaw Ye Min, “The first step of a long journey”, New Light of Myanmar, 18 August 2009.
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There is intense curiosity and wariness in China about a possible U.S.-Myanmar détente.368 Some have expressed concern about a competition for influence.369 While there are fears that China could lose some of its economic advantages, some would welcome U.S. economic engagement if it contributed to economic and regional stability. 370 The main concern is that U.S. involvement in Myanmar’s internal political affairs might result in domestic unrest that could threaten stability.371 Another of Beijing’s deep fears is that Myanmar might use the U.S to balance China.372 There was widespread speculation in Beijing policy circles that the boldness of the Myanmar government’s campaign against the Kokang in August was related to U.S. Senator Webb’s visit that month.373 It is assumed that Webb sent signals regarding U.S.-Myanmar rapprochement that emboldened the military government to launch the war despite Beijing’s admonitions. The West should emphasise to China the unsustainable nature of its current policies and continue to apply pressure in the Security Council and other fora. A correlation exists between international pressure on China and Chinese pressure on Myanmar. If Beijing’s actions to protect the country continue to undercut its relations with the West, China is more likely to exercise the limited influence it has. Within China there are growing doubts over whether it is worthwhile jeopardising important bi-
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lateral relations with Western countries – especially the U.S. – because of Myanmar. 374 At the same time, the West should exert sustained and continuous pressure on other regional states pursuing their own narrowly defined self interests by conducting “business as normal” with Myanmar’s government. ASEAN member states, which are eagerly cultivating their own bilateral relationships with Myanmar, have signalled that they will not take the lead on pressing Myanmar. They have consistently hidden behind one another and given excuses as to why they cannot take a united stance. Although there have been promising steps to exert pressure in recent months,375 they are not coming consistently from all of the ASEAN states or from the regional organisation itself. China is only one player among many. India should also be asked to take on greater responsibility in trying to facilitate political reform in Myanmar.376 Though India boasts of being the world’s largest democracy, its foreign policy has not been guided by promoting democracy in other countries. As long as Myanmar is able to exploit the eagerness of these various countries to gain access to and invest in its resources, it will be very difficult to form a coordinated international approach that
374
Crisis Group interview, Yangon, 10 March 2009. During the most recent trial of Aung Sung Suu Kyi in the middle of June, Thailand, as the current ASEAN chair, took the unusual step of denouncing the trial and calling for her immediate release. In response, the generals attacked the Thai government in state-run newspapers, saying that Thailand was interfering in the internal affairs of an ASEAN member country and disregarding the ASEAN Charter’s principle of non-interference. During this period, Singapore’s former Prime Minister Goh Chok Tong met with top Myanmar leaders where he expressed “dismay” at Aung Sung Suu Kyi’s arrest and urged the government to hold fair and transparent elections. He also spoke of the difficulty of Senior General Than Shwe’s position, saying, “He has inherited this military regime – Myanmar has been under military government since 1962, so it’s not his creation. Myanmar has come to a cul de sac, how does it make a u-turn? I think that’s not easy”. “Singapore investors wait on Myanmar polls”, Associated Press, 12 June 2009; “SM Goh urges Myanmar to continue with national reconciliation process”, Channel NewsAsia, 12 June 2009. 376 When asked why India was not tougher with Myanmar in an interview with Charlie Rose, Fareed Zakaria recalled that Indian diplomats have responded to the question as follows: “This country borders us. If it implodes we will have refugees. The place is a complete mess. Don’t think you will just go in there and you will find liberal democratic culture.” Citing U.S. support of countries such as Saudi Arabia, Egypt and Pakistan, he then asked: “How come you get to get your exceptions, but we don’t get to have ours?” Charlie Rose interview with Fareed Zakaria about his book The PostAmerican World, 1 May 2009. 375
368
Beijing has closely followed U.S. statements (including by Secretary of State Hillary Clinton, Deputy Secretary of State James Steinberg, and Kurt Campbell during his confirmation hearing for Assistant Secretary of State for East Asian and Pacific Affairs) and visits (of Director of the Office for Mainland Southeast Asia Stephen Blake in March and Senator Jim Webb in August). Crisis Group interviews, Beijing, August 2009. Chinese officials have also consistently sought information from opposition and ethnic group leaders about US policy and intentions in Myanmar. See fn. 91. 369 One Chinese official stated that the U.S. desire for warmer ties with Myanmar was part of its encirclement strategy of China, Crisis Group interview, Beijing, September 2009. 370 Crisis Group interviews, Beijing, February, July and August 2009. See also Jian Junbo, “China wary of US-Myanmar ‘detente’”, Asia Times, 17 April 2009. 371 Crisis Group interviews, Beijing, February and August 2009. 372 Ibid. 373 Crisis Group interviews, Beijing, September 2009. Some observers assert that Myanmar’s more aggressive posture was influenced by the absence of international reaction to the Sri Lankan government’s military victory over the Tamil rebels in July. Sri Lanka’s president, Mahinda Rajapaksa, met with Myanmar’s generals in June during his first overseas trip after defeating the Tamils. See Thomas Fuller, “Myanmar Forces Overwhelm Rebels”, The New York Times, 30 August 2009; “Wa leaders meet on Thai-Burma border”, Shan Herald Agency, 23 June 2009.
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takes into account the roles of all of these actors. While China is important, the more the variables or players in the equation, the less leverage Beijing has.
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VII. CONCLUSION Contrary to widespread belief, Beijing has pushed its neighbour to undertake political reforms, but not in the way the West would like. China was the first to congratulate Aung San Suu Kyi on her election win in 1990, held consultative talks with members of the exiled opposition and worked closely with Khin Nyunt to push forward the seven-step roadmap. Currently China continues to push the roadmap as a positive sign of initial transition, while backing the good offices of the UN Secretary-General. However it is reluctant to push too hard for fear of jeopardising its military, economic and energy interests. While the present situation gives China a strong foothold and comparative advantage over competitors, its policies pose political, social and economic risks, including aggravating tensions and contributing to conflict among different actors in Myanmar. Because Chinese investments and economic assistance are largely based on the extraction and export of natural resources, they have not promoted wider economic development. Chinese companies with little incentive to pay attention to the sustainability of Myanmar’s export commodities or their environmental impact are being held responsible for widespread environmental and ecological destruction as well as forced relocation and human rights abuses carried out by the Burmese military. As resentment against Chinese economic exploitation and support for an unpopular regime grows within Myanmar, China’s interests and possibly its nationals in Myanmar will suffer. Given these risks, Beijing must carefully re-evaluate its strategy and coordinate with Yunnan and local governments to follow through with consistent positions and policies, thereby reining in the activities of local actors. If China refocused on projects that truly benefit the people of Myanmar, the results would stretch beyond economic development and enhanced stability into boosting China’s image in the country. Internationally, Myanmar has posed an increasing challenge to China’s global diplomacy and image, similar to the pressures and embarrassment it faced regarding Sudan in the run-up to the 2008 Olympics. Myanmar engages in rampant human rights abuses, and has a stagnant economy and widespread internal conflict. The government is deeply unpopular with its citizens. Beijing is seen – at best – as having let this happen. As long as human rights abuses continue in Myanmar and the generals balk at political reform, Beijing will encounter pressure from international stakeholders. The pursuit of its current policy will only lead to more international
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embarrassment and criticism, further burdening Chinese diplomacy as it tries to portray China’s emergence as a great power in a positive light. China should do more to encourage Myanmar to commit to a truly inclusive dialogue with the opposition and ethnic groups. In addition to talks on national reconciliation, dialogue should also address the economic and humanitarian crisis that hampers reconciliation at all levels of society. At the same time, China should act both directly and in close cooperation with ASEAN member countries to continue support for the good offices of the United Nations as well as to persuade the military to open up.
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Myanmar is heading towards elections in 2010, which, however flawed, are a potential step towards significant constitutional and generational changes. Chinese and international policies towards Myanmar deserve careful reassessment. An effective international approach also requires a united front by regional actors as well as multilateral institutions such as ASEAN and the UN. Given China’s limited capacity to influence the domestic politics of Myanmar, the international community should continue to encourage action from China as well as other regional stakeholders to take part in a meaningful and concerted effort to address the situation in Myanmar. Beijing/Jakarta/Brussels, 14 September 2009
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APPENDIX A MAP OF MYANMAR
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APPENDIX B HIGH-LEVEL OFFICIAL VISITS BETWEEN CHINA AND MYANMAR
2003 January 7-8: SPDC Chairman Senior General Than Shwe met with President Jiang Zemin, Premier Zhu Rongji, NPC Standing Committee Chairman Li Peng, State Councilor Luo Gan, Vice President Hu Jintao in China on a state visit. January 15: SPDC Senior General Than Shwe met with visiting Chinese Vice Premier Li Keqiang. October 6: Premier Wen Jiabao met with Myanmar Prime Minister Khin Nyunt in Bali, Indonesia. December 15: Chinese Assistant Foreign Minister Shen Guofang attended the "international support for national reconciliation in Myanmar Forum" held in Bangkok, which included the Myanmar Foreign Minister U Win Aung.
2004 July 12-13: Prime Minister Khin Nyunt met with President Hu Jintao, Premier Wen Jiabao, CPC Central Committee Political Bureau Standing Committee, Luo Gan and NPC Standing Committee Chairman Wu Bangguo in Beijing.
2005 April 23: President Hu Jintao met Senior General Than Shwe in Jakarta. July 4: Premier Wen Jiabao met Myanmar Prime Minister Soe Win in Kunming during the sidelines of a Greater Mekong Sub-region (GMS) Ministerial Working Luncheon hosted by Chinese Minister of Finance Jin Renqing. December 14: Premier Wen Jiabao met with Prime Minister Soe Win in Kuala Lumpur.
2006 February 14-15: Prime Minister Soe Win met President Hu Jintao, Premier Wen Jiabao Chairman and Wu Bangguo of the Standing Committee of the National People’s Congress in Beijing. October 31: Chinese Premier Wen Jiabao met with Myanmar Prime Minister Soe Win on the sidelines of the ChinaASEAN Commemorative Summit marking the 15th anniversary of the establishment of Dialogue Relations between China and the Association of Southeast Asian Nations (ASEAN).
2007 February 26: SPDC Chairman Senior General Than Shwe met with visiting Chinese State Councilor Tang Jiaxuan in Naypyidaw. May: Prime Minister General Thein Sein visited Beijing. Mid-August: the Political Commissar of the Jinan Military Area Command stopped by Myanmar during a tour of Southeast Asian countries. June 5-6: Chinese State Councilor Tang Jiaxuan and NPC Standing Committee Chairman Wu Bangguo met with visiting SPDC Secretary-General Thein Sein in Beijing.
September 13: State Councilor Tang Jiaxuan met with Foreign Minister U Nyan Win, as the special envoy of SPDC Chairman Senior General Than Shwe in Beijing. November 19: Premier Wen Jiabao met Prime Minister Thein Sein in Singapore.
2008 January 21: State Councilor Tang Jiaxuan met with the Myanmar Prime Minister special envoy, Vice Foreign Minister U Maung Min. May 25: Foreign Minister Yang Jiechi met with Prime Minister General Thein Sein at the sidelines of an International Pledging Conference for Cyclone Nargis held in Yangon. June 25: Chinese naval delegation led by Col. Chi Ziong Feng visited Myanmar’s Coco Islands. August 2008: Thein Sein attended the Beijing Olympic Games. August 21: Myanmar Chief of Defense Industry Lt-Gen Tin Aye visited China where he met with Gen Liang Guanglie, a member of the central military commission and chief of general staff of the PLA. October 27: Gen Zhang Li, the vice chief-of-staff of the PLA met with Senior General Than Shwe in Naypyidaw. November 18-20: Zhang Gaoli, a member of the Political Bureau of the CPC Central Committee and party chief of China’s Tianjin municipality, met with Myanmar Prime Minister General Thein Sein and member of the SPDC Lieutenant-General Tin Aye in Naypyidaw. November 29: Myanmar’s Chief of the General Staff of the Armed Forces Thura Shwe Mann visited Beijing Senior and met military officials of China and Chief of the General Staff of the PLA Chen Bingde. December 4-5: Foreign Minister Yang Jiechi met the Myanmar Foreign minister U Nyan Win and SPDC Chairman Senior General Than Shwe in Naypyidaw.
2009 March 18: Chen Bingde, Chief of the General Staff of the PLA led a military delegation to Myanmar for an official goodwill visit, accompanied by Myanmar’s Chief of General Staff of the Army Thura Shwe Mann. March 25-29: CPC Central Committee Political Bureau Standing Committee member Li Changchun made a goodwill visit to Myanmar in which he met Senior General Than Shwe and first secretary of the SPDC Tin Aung Myint Oo. April 17: Premier Wen Jiabao met Prime Minister Thein Sein in Sanya on the sidelines of the Boao Forum for Asia (BFA) Annual Conference 2009. April 20: Chief of the General Staff of the PLA Chen Bingde met with Tin Aye, member of Myanmar’s SPDC in Beijing. June 15: Myanmar’s second top leader Vice Senior-General Maung Aye visited Beijing for a six-day official visit to China at the invitation of Chinese Vice-President Xi Jinping.
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APPENDIX C FOREIGN DIRECT INVESTMENT FLOWS
003 2004 2005
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APPENDIX D LOCAL INTERESTS: LOGGING AND CROP SUBSTITUTION
A. LOGGING
tried to exert more control over logging.383 This has had little effect.
Despite an official ban and agreements to strengthen bilateral collaboration to address illegal logging, Chinese logging companies have not stopped importing timber from Myanmar.377 Large quantities of timber are taken across the border by predominantly Chinese companies using Chinese labourers. Yunnan authorities, regional army commanders and ethnic ceasefire groups are all directly involved. Local businessmen admit that Chinese companies have “special cooperation and consensus with the local ethnic groups” and “will not change how they get timber resources from Myanmar”.378
The logging that occurs is inextricably linked to conflict.384 Myanmar manages its domestic and foreign relations through the control of access to natural resources, and the revenue generated from the cross-border timber trade has funded conflict in Kachin State and led to increased poverty and human rights abuse.385 Competition over territory between armed opposition groups, business interests and others seeking to control the trade has led to violence, and continues to be a source of instability with the potential to transcend the border. 386 Furthermore, local communities that most closely depend on the forest receive little or no benefits from the deals negotiated between local elites and logging companies. Logging has resulted in extensive flooding, large scale human displacement and widespread agricultural, economic and infrastructure damage.
These actions by Chinese logging companies have led to friction between Beijing and Naypyidaw. The operations are generally approved by the Yunnan provincial government or local governments without Beijing’s knowledge.379 Military, police and government offices in Kachin state are known to directly profit from the timber trade, sharing the proceeds with the leadership of local ethnic groups.380 The central government does not benefit.381 Myanmar’s forestry department was reportedly “furious” that it was not receiving anything for the logging and export of timber, raising the issue in bilateral talks in Beijing and Yunnan. 382 Myanmar’s central government has since taken a harder stance, and
At the same time, the illegal timber trade damages China’s reputation. Organisations have called attention to the fact that northern Myanmar’s ecology, one of the richest areas of biodiversity in the world, is being destroyed. 387 While a January 2009 Global Witness report tried hard not to vilify the Chinese government, instead pointing out that relevant companies were acting illegally under Chinese law, international media did not reflect this position. 388 Sustained international pressure has kept the issue on the agenda, and forced China to publicly define and defend its position,389 announcing “tough coun-
377
In 1998, following floods linked to heavy deforestation that caused widespread destruction and thousands of deaths within China, the logging of forests in China was banned. This policy has resulted in aggressive logging in Myanmar by Chinese companies. 378 “边境木材进口直线下滑 中缅打击非法木业贸易 ” [“Border Timber Import Plummeted as China and Myanmar Join Force to Fight Illegal Logging”], Chinese Architecture and Decoration “ 南 风 窗 ” [Nan Feng Chuang], 30 September 2007, www.hengannet.com/new_view.asp?id=4736. 379 Crisis Group interview, Yangon, 12 March 2009. 380 From 2004-2005, timber was the SPDC’s third most important source of foreign earnings, amounting to $428 million, 15 per cent of total foreign earnings. “A Choice for China: Ending the destruction of Myanmar’s northern frontier forests”, Global Witness, op. cit., fn. 245; “Teak from northern Myanmar enters China illegally”, Kachin News Group, 23 April 2009; Crisis Group interview, Yangon, 6 February 2009. 381 Crisis Group interview, Yangon, 6 February 2009. 382 Ibid.
383
Not long after, 400 Chinese loggers were arrested in Myanmar for illegal entry and logging. Myanmar then closed its border to loggers (at least those border posts which the government controls). Ibid. 384 “A Choice for China: Ending the destruction of Myanmar’s northern frontier forests”, Global Witness, op. cit. 385 Ibid. 386 Ibid. 387 Ibid; “Kachin state, waiting for an ecological disaster”, Kachin News Group, 31 December 2008; “Villagers arrested for blocking timber trucks on Sino-Myanmar border”, Kachin News Group, 17 January 2009. 388 The Chinese embassy in Myanmar was angered by the Global Witness report, stating, “Why couldn’t you work with us quietly on this instead of going public?” Crisis Group interview, Yangon, 6 February 2009. 389 “The position of the Chinese Government on cooperation with Myanmar is very clear. We never allow any Chinese citizen to log illegally in Myanmar. The governments of the two
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termeasures to curb the illegal cross-border timber trade”.390 While Chinese and Myanmar rhetoric about cracking down on the practice continues and timber exports are now substantially less than before, Myanmar’s inability to control local authorities and Beijing’s laxity in overseeing logging companies means that it continues.391
B. CROP SUBSTITUTION China offers development assistance to northern Myanmar under a crop substitution policy to balance the impact of the opium ban declared by the ceasefire groups and create alternatives for these communities. However, county-level actors and businesses have collaborated to distort and in some cases, subvert Beijing’s policy. Yunnan businesses invest in large commercial agricultural projects under the guise of opium substitution projects and promise to purchase the products for market prices.392 For their participation, they can apply for preferential loans from government-owned banks. But some local governments allocate import quotas to products not administered under substitution programs.393
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Chinese businessmen acknowledge their actions contradict Beijing’s goals, but argue that Myanmar is a source of plentiful raw materials and cheap labour that is begging for Chinese investment and technology.396 This development assistance to communities in poppy and former poppy-growing regions has been insufficient and inappropriate. 397 The Chinese government should re-evaluate its policies. Assuming that it is genuinely concerned about opium cultivation in Myanmar, it should invest in more sustainable and communitybased development projects. Yunnan and local governments should coordinate with other actors and existing agencies on the ground to route assistance to the local people instead of just the leaders. 398 The central government’s failure to rein in Chinese businesses results in poverty and instability in the border region, jeopardising Beijing’s longer-term strategic interests.399
As Chinese companies take advantage of crop substitution policies to further their own economic interests, they undermine the viability of the programs as a form of sustainable development. Because most contracts with Chinese companies are made with the leaders of the ceasefire groups, the benefits go to Chinese businessmen or ceasefire leaders, not the local communities.394 The programs are a disaster for farmers, who have no choice but to participate and to buy from these companies, whether or not they have been growing opium. After successive bad harvests and without the funds to service their debts, many farmers have been forced to sell their land, in many instances to the same businessmen who sold them the seeds, fertilisers and pesticides.395
countries have strengthened border management and made achievements in cracking down upon law breaches including illegal logging”. Foreign Ministry spokesperson Jiang Yu’s regular press conference, Ministry of Foreign Affairs, 31 May 2007, at www.fmprc.gov.cn/eng/yfgk/t325481.htm. 390 “China able to be self-reliant in timber consumption: forest administration”, Xinhua, 28 February 2006. 391 Crisis Group interview, Yangon, 12 March 2009; “China struggles to choke off illegal wood trade”, Reuters, 11 June 2007; “Kachin state, waiting for an ecological disaster”, Kachin News Group, op. cit.; “Teak from northern Myanmar enters China illegally”, Kachin News Group, op. cit. 392 Kramer, Jelsma and Blickman, “Withdrawal Symptoms in the Golden Triangle: A Drugs Market in Disarray”, op. cit. 393 Ibid. 394 Crisis Group telephone interview, 3 April 2009. 395 Clifford McCoy, “Seedlings of evil growing in Myanmar”, The Asia Times, 23 August 2007.
396
Crisis Group interviews, China-Myanmar border, March 2009. Kramer, Jelsma and Blickman, “Withdrawal Symptoms in the Golden Triangle: A Drugs Market in Disarray”, op. cit.; “Opium Poppy Cultivation in South East Asia”, UNODC, op. cit., p. 11. 398 Crisis Group telephone interview, 3 April 2009. 399 Tom Kramer, “From Golden Triangle to Rubber Belt: The Future of Opium Bans in the Kokang and Wa Regions, Transnational Institute, July 2009. 397
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APPENDIX E ABOUT THE INTERNATIONAL CRISIS GROUP
The International Crisis Group (Crisis Group) is an independent, non-profit, non-governmental organisation, with some 130 staff members on five continents, working through field-based analysis and high-level advocacy to prevent and resolve deadly conflict. Crisis Group’s approach is grounded in field research. Teams of political analysts are located within or close by countries at risk of outbreak, escalation or recurrence of violent conflict. Based on information and assessments from the field, it produces analytical reports containing practical recommendations targeted at key international decision-takers. Crisis Group also publishes CrisisWatch, a twelve-page monthly bulletin, providing a succinct regular update on the state of play in all the most significant situations of conflict or potential conflict around the world. Crisis Group’s reports and briefing papers are distributed widely by email and made available simultaneously on the website, www.crisisgroup.org. Crisis Group works closely with governments and those who influence them, including the media, to highlight its crisis analyses and to generate support for its policy prescriptions. The Crisis Group Board – which includes prominent figures from the fields of politics, diplomacy, business and the media – is directly involved in helping to bring the reports and recommendations to the attention of senior policymakers around the world. Crisis Group is co-chaired by the former European Commissioner for External Relations Christopher Patten and former U.S. Ambassador Thomas Pickering. Its President and Chief Executive since July 2009 has been Louise Arbour, former UN High Commissioner for Human Rights and Chief Prosecutor for the International Criminal Tribunals for the former Yugoslavia and for Rwanda. Crisis Group’s international headquarters are in Brussels, with major advocacy offices in Washington DC (where it is based as a legal entity) and New York, a smaller one in London and liaison presences in Moscow and Beijing. The organisation currently operates nine regional offices (in Bishkek, Bogotá, Dakar, Islamabad, Istanbul, Jakarta, Nairobi, Pristina and Tbilisi) and has local field representation in eighteen additional locations (Abuja, Baku, Bangkok, Beirut, Cairo, Colombo, Damascus, Dili, Jerusalem, Kabul, Kathmandu, Kinshasa, Ouagadougou, Port-au-Prince, Pretoria, Sarajevo, Seoul and Tehran). Crisis Group currently covers some 60 areas of actual or potential conflict across four continents. In Africa, this includes Burundi, Cameroon, Central African Republic, Chad, Côte d’Ivoire, Democratic
Republic of the Congo, Eritrea, Ethiopia, Guinea, GuineaBissau, Kenya, Liberia, Nigeria, Rwanda, Sierra Leone, Somalia, South Africa, Sudan, Uganda and Zimbabwe; in Asia, Afghanistan, Bangladesh, Burma/Myanmar, Indonesia, Kashmir, Kazakhstan, Kyrgyzstan, Nepal, North Korea, Pakistan, Philippines, Sri Lanka, Taiwan Strait, Tajikistan, Thailand, Timor-Leste, Turkmenistan and Uzbekistan; in Europe, Armenia, Azerbaijan, Bosnia and Herzegovina, Cyprus, Georgia, Kosovo, Macedonia, Russia (North Caucasus), Serbia, Turkey and Ukraine; in the Middle East and North Africa, Algeria, Egypt, Gulf States, Iran, Iraq, IsraelPalestine, Lebanon, Morocco, Saudi Arabia, Syria and Yemen; and in Latin America and the Caribbean, Bolivia, Colombia, Ecuador, Guatemala, Haiti and Venezuela. Crisis Group raises funds from governments, charitable foundations, companies and individual donors. The following governmental departments and agencies currently provide funding: Australian Agency for International Development, Australian Department of Foreign Affairs and Trade, Austrian Development Agency, Belgian Ministry of Foreign Affairs, Canadian International Development Agency, Canadian International Development and Research Centre, Foreign Affairs and International Trade Canada, Czech Ministry of Foreign Affairs, Royal Danish Ministry of Foreign Affairs, Dutch Ministry of Foreign Affairs, Finnish Ministry of Foreign Affairs, French Ministry of Foreign Affairs, German Federal Foreign Office, Irish Aid, Japan International Cooperation Agency, Principality of Liechtenstein, Luxembourg Ministry of Foreign Affairs, New Zealand Agency for International Development, Royal Norwegian Ministry of Foreign Affairs, Swedish Ministry for Foreign Affairs, Swiss Federal Department of Foreign Affairs, Turkish Ministry of Foreign Affairs, United Arab Emirates Ministry of Foreign Affairs, United Kingdom Department for International Development, United Kingdom Economic and Social Research Council, U.S. Agency for International Development. Foundation and private sector donors, providing annual support and/or contributing to Crisis Group’s Securing the Future Fund, include the Better World Fund, Carnegie Corporation of New York, William & Flora Hewlett Foundation, Humanity United, Hunt Alternatives Fund, Jewish World Watch, Kimsey Foundation, Korea Foundation, John D. & Catherine T. MacArthur Foundation, Open Society Institute, Victor Pinchuk Foundation, Radcliffe Foundation, Sigrid Rausing Trust, Rockefeller Brothers Fund and VIVA Trust.
September 2009
China’s Myanmar Dilemma Crisis Group Asia Report N°177, 14 September 2009
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APPENDIX F CRISIS GROUP REPORTS AND BRIEFINGS ON ASIA SINCE 2006
CENTRAL ASIA Uzbekistan: In for the Long Haul, Asia Briefing N°45, 16 February 2006 (also available in Russian) Central Asia: What Role for the European Union?, Asia Report N°113, 10 April 2006 Kyrgyzstan’s Prison System Nightmare, Asia Report N°118, 16 August 2006 (also available in Russian) Uzbekistan: Europe’s Sanctions Matter, Asia Briefing N°54, 6 November 2006 Kyrgyzstan on the Edge, Asia Briefing N°55, 9 November 2006 (also available in Russian) Turkmenistan after Niyazov, Asia Briefing N°60, 12 February 2007 Central Asia’s Energy Risks, Asia Report N°133, 24 May 2007 (also available in Russian) Uzbekistan: Stagnation and Uncertainty, Asia Briefing N°67, 22 August 2007 Political Murder in Central Asia: No Time to End Uzbekistan’s Isolation, Asia Briefing N°76, 13 February 2008 Kyrgyzstan: The Challenge of Judicial Reform, Asia Report N°150, 10 April 2008 (also available in Russian) Kyrgyzstan: A Deceptive Calm, Asia Briefing N°79, 14 August 2008 (also available in Russian) Tajikistan: On the Road to Failure, Asia Report N°162, 12 February 2009 Women and Radicalisation in Kyrgyzstan, Asia Report N°176, 3 September 2009
NORTH EAST ASIA China and North Korea: Comrades Forever?, Asia Report N°112, 1 February 2006 (also available in Korean) After North Korea’s Missile Launch: Are the Nuclear Talks Dead?, Asia Briefing N°52, 9 August 2006 (also available in Korean and Russian) Perilous Journeys: The Plight of North Koreans in China and Beyond, Asia Report N°122, 26 October 2006 (also available in Korean and Russian) North Korea’s Nuclear Test: The Fallout, Asia Briefing N°56, 13 November 2006 (also available in Korean and Russian) After the North Korean Nuclear Breakthrough: Compliance or Confrontation?, Asia Briefing N°62, 30 April 2007 (also available in Korean and Russian) North Korea-Russia Relations: A Strained Friendship, Asia Briefing N°71, 4 December 2007 (also available in Russian) South Korea’s Election: What to Expect from President Lee, Asia Briefing N°73, 21 December 2007 China’s Thirst for Oil, Asia Report N°153, 9 June 2008 (also available in Chinese) South Korea’s Elections: A Shift to the Right, Asia Briefing N°77, 30 June 2008
North Korea’s Missile Launch: The Risks of Overreaction, Asia Briefing N°91, 31 March 2009 China’s Growing Role in UN Peacekeeping, Asia Report N°166, 17 April 2009 (also available in Chinese) North Korea’s Chemical and Biological Weapons Programs, Asia Report N°167, 18 June 2009 North Korea’s Nuclear and Missile Programs, Asia Report N°168, 18 June 2009 North Korea: Getting Back to Talks, Asia Report N°169, 18 June 2009
SOUTH ASIA Nepal: Electing Chaos, Asia Report N°111, 31 January 2006 Pakistan: Political Impact of the Earthquake, Asia Briefing N°46, 15 March 2006 Nepal’s Crisis: Mobilising International Influence, Asia Briefing N°49, 19 April 2006 Nepal: From People Power to Peace?, Asia Report N°115, 10 May 2006 (also available in Nepali) Afghanistan’s New Legislature: Making Democracy Work, Asia Report N°116, 15 May 2006 India, Pakistan and Kashmir: Stabilising a Cold Peace, Asia Briefing N°51, 15 June 2006 Pakistan: the Worsening Conflict in Balochistan, Asia Report N°119, 14 September 2006 Bangladesh Today, Asia Report N°121, 23 October 2006 Countering Afghanistan’s Insurgency: No Quick Fixes, Asia Report N°123, 2 November 2006 Sri Lanka: The Failure of the Peace Process, Asia Report N°124, 28 November 2006 Pakistan’s Tribal Areas: Appeasing the Militants, Asia Report N°125, 11 December 2006 Nepal’s Peace Agreement: Making it Work, Asia Report Nº126, 15 December 2006 Afghanistan’s Endangered Compact, Asia Briefing Nº59, 29 January 2007 Nepal’s Constitutional Process, Asia Report N°128, 26 February 2007 (also available in Nepali) Pakistan: Karachi’s Madrasas and Violent Extremism, Asia Report N°130, 29 March 2007 Discord in Pakistan’s Northern Areas, Asia Report N°131, 2 April 2007 Nepal’s Maoists: Purists or Pragmatists?, Asia Report N°132, 18 May 2007 (also available in Nepali) Sri Lanka’s Muslims: Caught in the Crossfire, Asia Report N°134, 29 May 2007 Sri Lanka’s Human Rights Crisis, Asia Report N°135, 14 June 2007 Nepal’s Troubled Tarai Region, Asia Report N°136, 9 July 2007 (also available in Nepali)
China’s Myanmar Dilemma Crisis Group Asia Report N°177, 14 September 2009
Elections, Democracy and Stability in Pakistan, Asia Report N°137, 31 July 2007 Reforming Afghanistan’s Police, Asia Report N°138, 30 August 2007 Nepal’s Fragile Peace Process, Asia Briefing N°68, 28 September 2007 (also available in Nepali) Pakistan: The Forgotten Conflict in Balochistan, Asia Briefing N°69, 22 October 2007 Sri Lanka: Sinhala Nationalism and the Elusive Southern Consensus, Asia Report N°141, 7 November 2007 Winding Back Martial Law in Pakistan, Asia Briefing N°70, 12 November 2007 Nepal: Peace Postponed, Asia Briefing N°72, 18 December 2007 (also available in Nepali) After Bhutto’s Murder: A Way Forward for Pakistan, Asia Briefing N°74, 2 January 2008 Afghanistan: The Need for International Resolve, Asia Report N°145, 6 February 2008 Sri Lanka’s Return to War: Limiting the Damage, Asia Report N°146, 20 February 2008 Nepal’s Election and Beyond, Asia Report N°149, 2 April 2008 (also available in Nepali) Restoring Democracy in Bangladesh, Asia Report N°151, 28 April 2008 Nepal’s Election: A Peaceful Revolution?, Asia Report N°155, 3 July 2008 (also available in Nepali) Nepal’s New Political Landscape, Asia Report N°156, 3 July 2008 (also available in Nepali) Reforming Pakistan’s Police, Asia Report N°157, 14 July 2008 Taliban Propaganda: Winning the War of Words?, Asia Report N°158, 24 July 2008 Sri Lanka’s Eastern Province: Land, Development, Conflict, Asia Report N°159, 15 October 2008 Reforming the Judiciary in Pakistan, Asia Report N°160, 16 October 2008 Bangladesh: Elections and Beyond, Asia Briefing N°84, 11 December 2008 Policing in Afghanistan: Still Searching for a Strategy, Asia Briefing N°85, 18 December 2008 Nepal’s Faltering Peace Process, Asia Report N°163, 19 February 2009 (also available in Nepali) Afghanistan: New U.S. Administration, New Directions, Asia Briefing N°89, 13 March 2009 Pakistan: The Militant Jihadi Challenge, Asia Report N°164, 13 March 2009 Development Assistance and Conflict in Sri Lanka: Lessons from the Eastern Province, Asia Report N°165, 16 April 2009 Pakistan’s IDP Crisis: Challenges and Opportunities, Asia Briefing N°93, 3 June 2009 Afghanistan’s Election Challenges, Asia Report N°171, 24 June 2009 Sri Lanka’s Judiciary: Politicised Courts, Compromised Rights, Asia Report N°172, 30 June 2009 Nepal’s Future: In Whose Hands?, Asia Report N°173, 13 August 2009 Afghanistan: What Now for Refugees?, Asia Report N°175, 31 August 2009
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SOUTH EAST ASIA Papua: The Dangers of Shutting Down Dialogue, Asia Briefing N°47, 23 March 2006 (also available in Indonesian) Aceh: Now for the Hard Part, Asia Briefing N°48, 29 March 2006 Managing Tensions on the Timor-Leste/Indonesia Border, Asia Briefing N°50, 4 May 2006 Terrorism in Indonesia: Noordin’s Networks, Asia Report N°114, 5 May 2006 (also available in Indonesian) Islamic Law and Criminal Justice in Aceh, Asia Report N°117, 31 July 2006 (also available in Indonesian) Papua: Answers to Frequently Asked Questions, Asia Briefing N°53, 5 September 2006 Resolving Timor-Leste’s Crisis, Asia Report N°120, 10 October 2006 (also available in Indonesian) Aceh’s Local Elections: The Role of the Free Aceh Movement (GAM), Asia Briefing N°57, 29 November 2006 Myanmar: New Threats to Humanitarian Aid, Asia Briefing N°58, 8 December 2006 Jihadism in Indonesia: Poso on the Edge, Asia Report N°127, 24 January 2007 (also available in Indonesian) Southern Thailand: The Impact of the Coup, Asia Report N°129, 15 March 2007 (also available in Thai) Indonesia: How GAM Won in Aceh, Asia Briefing N°61, 22 March 2007 Indonesia: Jemaah Islamiyah’s Current Status, Asia Briefing N°63, 3 May 2007 Indonesia: Decentralisation and Local Power Struggles in Maluku, Asia Briefing N°64, 22 May 2007 Timor-Leste’s Parliamentary Elections, Asia Briefing N°65, 12 June 2007 Indonesian Papua: A Local Perspective on the Conflict, Asia Briefing N°66, 19 July 2007 (also available in Indonesian) Aceh: Post-Conflict Complications, Asia Report N°139, 4 October 2007 (also available in Indonesian) Southern Thailand: The Problem with Paramilitaries, Asia Report N°140, 23 October 2007 (also available in Thai) “Deradicalisation” and Indonesian Prisons, Asia Report N°142, 19 November 2007 (also available in Indonesian) Timor-Leste: Security Sector Reform, Asia Report N°143, 17 January 2008 (also available in Tetum) Indonesia: Tackling Radicalism in Poso, Asia Briefing N°75, 22 January 2008 Burma/Myanmar: After the Crackdown, Asia Report N°144, 31 January 2008 Indonesia: Jemaah Islamiyah’s Publishing Industry, Asia Report N°147, 28 February 2008 (also available in Indonesian) Timor-Leste’s Displacement Crisis, Asia Report N°148, 31 March 2008 The Philippines: Counter-insurgency vs. Counter-terrorism in Mindanao, Asia Report N°152, 14 May 2008 Indonesia: Communal Tensions in Papua, Asia Report N°154, 16 June 2008 (also available in Indonesian) Indonesia: Implications of the Ahmadiyah Decree, Asia Briefing N°78, 7 July 2008 (also available in Indonesian)
Thailand: Political Turmoil and the Southern Insurgency, Asia Briefing N°80, 28 August 2008 (also available in Thai)
China’s Myanmar Dilemma Crisis Group Asia Report N°177, 14 September 2009
Indonesia: Pre-election Anxieties in Aceh, Asia Briefing N°81, 9 September 2008 (also available in Indonesian) Thailand: Calming the Political Turmoil, Asia Briefing N°82, 22 September 2008 (also available in Thai) Burma/Myanmar After Nargis: Time to Normalise Aid Relations, Asia Report N°161, 20 October 2008 (also available in Chinese) The Philippines: The Collapse of Peace in Mindanao, Asia Briefing N°83, 23 October 2008 Local Election Disputes in Indonesia: The Case of North Maluku, Asia Briefing N°86, 22 January 2009 Timor-Leste: No Time for Complacency, Asia Briefing N°87, 09 February 2009 The Philippines: Running in Place in Mindanao, Asia Briefing N°88, 16 February 2009 Indonesia: Deep Distrust in Aceh as Elections Approach, Asia Briefing N°90, 23 March 2009 Indonesia: Radicalisation of the “Palembang Group”, Asia Briefing N°92, 20 May 2009 Recruiting Militants in Southern Thailand, Asia Report N°170, 22 June 2009 Indonesia: The Hotel Bombings, Asia Briefing N°94, 24 July 2009 Myanmar: Towards the Elections, Asia Report N°174, 20 August 2009 Indonesia: Noordin Top’s Support Base, Asia Briefing N°95, 27 August 2009
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OTHER REPORTS AND BRIEFINGS For Crisis Group reports and briefing papers on:
Africa Asia Europe Latin America and Caribbean Middle East and North Africa Thematic Issues CrisisWatch
please visit our website www.crisisgroup.org
China’s Myanmar Dilemma Crisis Group Asia Report N°177, 14 September 2009
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APPENDIX G INTERNATIONAL CRISIS GROUP BOARD OF TRUSTEES
Co-Chairs Lord (Christopher) Patten Former European Commissioner for External Relations, Governor of Hong Kong and UK Cabinet Minister; Chancellor of Oxford University
HRH Prince Turki al-Faisal
Swanee Hunt
Former Ambassador of the Kingdom of Saudi Arabia to the U.S.
Former U.S. Ambassador to Austria; Chair, The Initiative for Inclusive Security and President, Hunt Alternatives Fund
Kofi Annan Former Secretary-General of the United Nations; Nobel Peace Prize (2001)
Anwar Ibrahim
Thomas R Pickering
Richard Armitage
Mo Ibrahim
Former U.S. Ambassador to the UN, Russia, India, Israel, Jordan, El Salvador and Nigeria; Vice Chairman of Hills & Company
Former U.S. Deputy Secretary of State
Founder and Chair, Mo Ibrahim Foundation; Founder, Celtel International
President & CEO Louise Arbour Former UN High Commissioner for Human Rights and Chief Prosecutor for the International Criminal Tribunals for the former Yugoslavia and for Rwanda
Executive Committee Morton Abramowitz Former U.S. Assistant Secretary of State and Ambassador to Turkey
Emma Bonino* Former Italian Minister of International Trade and European Affairs and European Commissioner for Humanitarian Aid
Cheryl Carolus
Lord (Paddy) Ashdown Former High Representative for Bosnia and Herzegovina and Leader of the Liberal Democrats, UK
Shlomo Ben-Ami Former Foreign Minister of Israel
Wim Kok
Zbigniew Brzezinski
Aleksander Kwaśniewski
Former U.S. National Security Advisor to the President
Kim Campbell Former Prime Minister of Canada
Naresh Chandra Former Indian Cabinet Secretary and Ambassador to the U.S.
Wesley Clark
Member of the Board, Petroplus, Switzerland
Former NATO Supreme Allied Commander, Europe
Yoichi Funabashi
Pat Cox
Editor-in-Chief & Columnist, The Asahi Shimbun, Japan
Former President of the European Parliament
Frank Giustra
Former Foreign Minister of Denmark
Chairman, Endeavour Financial, Canada
Gareth Evans
Stephen Solarz Former U.S. Congressman
President Emeritus of Crisis Group; Former Foreign Affairs Minister of Australia
George Soros
Mark Eyskens
Former President of Mozambique
Uffe Ellemann-Jensen
Former Prime Minister of Belgium
Joschka Fischer Former Foreign Minister of Germany
Yegor Gaidar Former Prime Minister of Russia
Other Board Members Adnan Abu-Odeh
Carla Hills
Former Political Adviser to King Abdullah II and to King Hussein, and Jordan Permanent Representative to the UN
Lena Hjelm-Wallén
Kenneth Adelman Former U.S. Ambassador and Director of the Arms Control and Disarmament Agency
James V. Kimsey
Former Special Adviser to the UN SecretaryGeneral and Foreign Minister of Algeria
Maria Livanos Cattaui
Former Foreign Minister of Finland *Vice Chair
UN Special Rapporteur on the Freedom of Religion or Belief; Chairperson, Human Rights Commission of Pakistan Founder and Chairman Emeritus of America Online, Inc. (AOL)
Joaquim Alberto Chissano
Pär Stenbäck
Asma Jahangir
Lakhdar Brahimi
Former South African High Commissioner to the UK and Secretary General of the ANC
Chairman, Open Society Institute
Former Deputy Prime Minister of Malaysia
Former U.S. Secretary of Housing and U.S. Trade Representative Former Deputy Prime Minister and Foreign Affairs Minister of Sweden
Former Prime Minister of the Netherlands Former President of Poland
Ricardo Lagos Former President of Chile
Joanne Leedom-Ackerman Former International Secretary of International PEN; Novelist and journalist, U.S.
Jessica Tuchman Mathews President, Carnegie Endowment for International Peace, U.S.
Moisés Naím Former Venezuelan Minister of Trade and Industry; Editor in Chief, Foreign Policy
Ayo Obe Chair, Board of Trustees, Goree Institute, Senegal
Christine Ockrent CEO, French TV and Radio World Services
Victor Pinchuk Founder of EastOne and Victor Pinchuk Foundation
Fidel V. Ramos Former President of Philippines
Güler Sabancı Chairperson, Sabancı Holding, Turkey
Ghassan Salamé Former Lebanese Minister of Culture; Professor, Sciences Po, Paris
Thorvald Stoltenberg Former Foreign Minister of Norway
Ernesto Zedillo Former President of Mexico; Director, Yale Center for the Study of Globalization
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PRESIDENT’S COUNCIL Crisis Group’s President’s Council is a distinguished group of major individual and corporate donors providing essential support, time and expertise to Crisis Group in delivering its core mission. BHP Billiton Canaccord Adams Limited Mala Gaonkar Alan Griffiths Iara Lee & George Gund III Foundation
Frank Holmes Frederick Iseman George Landegger Ford Nicholson Royal Bank of Scotland
StatoilHydro ASA Ian Telfer Guy Ullens de Schooten Neil Woodyer
INTERNATIONAL ADVISORY COUNCIL Crisis Group’s International Advisory Council comprises significant individual and corporate donors who contribute their advice and experience to Crisis Group on a regular basis. Rita E. Hauser (Co-Chair)
Elliott Kulick (Co-Chair)
Hamza al Kholi Anglo American PLC APCO Worldwide Inc. Equinox Partners Ed Bachrach Stanley Bergman & Edward Bergman
Harry Bookey & Pamela Bass-Bookey David Brown John Chapman Chester Chevron Richard Cooper Neil & Sandy DeFeo John Ehara Seth Ginns Joseph Hotung
H.J. Keilman George Kellner Amed Khan Zelmira Koch Scott Lawlor Jean Manas Marco Marazzi McKinsey & Company Najib Mikati Harriet Mouchly-Weiss Yves Oltramare
Donald Pels and Wendy Keys Anna Luisa Ponti & Geoffrey Hoguet Michael Riordan Tilleke & Gibbins Vale VIVATrust Yapı Merkezi Construction and Industry Inc.
SENIOR ADVISERS Crisis Group’s Senior Advisers are former Board Members who maintain an association with Crisis Group, and whose advice and support are called on from time to time (to the extent consistent with any other office they may be holding at the time). Martti Ahtisaari (Chairman Emeritus)
George Mitchell (Chairman Emeritus)
Hushang Ansary Ersin Arıoğlu Óscar Arias Diego Arria Zainab Bangura Christoph Bertram Alan Blinken Jorge Castañeda Eugene Chien Victor Chu Mong Joon Chung
Gianfranco Dell’Alba Jacques Delors Alain Destexhe Mou-Shih Ding Gernot Erler Marika Fahlén Stanley Fischer Malcolm Fraser I.K. Gujral Max Jakobson Todung Mulya Lubis Allan J. MacEachen Graça Machel Barbara McDougall
Matthew McHugh Nobuo Matsunaga Miklós Németh Timothy Ong Olara Otunnu Shimon Peres Surin Pitsuwan Cyril Ramaphosa George Robertson Michel Rocard Volker Rühe Mohamed Sahnoun Salim A. Salim Douglas Schoen
Christian SchwarzSchilling Michael Sohlman William O. Taylor Leo Tindemans Ed van Thijn Simone Veil Shirley Williams Grigory Yavlinski Uta Zapf
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CHINA IN BURMA: THE INCREASING INVESTMENT OF CHINESE MULTINATIONAL CORPORATIONS IN BURMA’S HYDROPOWER, OIL AND NATURAL GAS, AND MINING SECTORS UPDATED: September 2008
ACKNOWLEDGEMENTS EarthRights International would like to thank All Arakan Student & Youth Congress, Arakan Oil Watch, Burma Relief Center, Courier Research Associates, Images Asia E-Desk, Kachin Development Networking Group, Kachin Environmental Organization, Karen Rivers Watch, Karenni Development Research Group, Lahu National Development Organization, Mon Youth Progressive Organization, Palaung Youth Network Group, Salween Watch Coalition, Shan Sapawa and Shwe Gas Movement, for providing invaluable research assistance and support for this report.
Free reproduction rights with citation to the original. EarthRights International (ERI) is a non-government, nonprofit organization that combines the power of the law and the power of people in defense of human rights and the environment, which we define as “earth rights.” We specialize in fact-finding, legal actions against perpetrators of earth rights abuses, training grassroots and community leaders, and advocacy campaigns. Through these strategies, ERI seeks to end earth rights abuses, to provide real solutions for real people, and to promote and protect human rights and the environment in the communities where we work.
Southeast Asia Office P.O. Box 123 Chiang Mai University Chaing Mai, Thailand 50202 Tel: 66-1-531-1256
[email protected]
U.S. Office 1612 K Street NW, Suite 401 Washington, D.C. 20006 Tel: 1-202-466-5188 Fax: 1-202-466-5189
[email protected]
For more information about ERI, visit www.earthrights.org
TABLE OF CONTENTS
INTRODUCTION ............................................................................................................................................... 1
CHINA’S INTEREST IN BURMA .................................................................................................................... 3
HYDROPOWER ................................................................................................................................................. 5
OIL AND NATURAL GAS ................................................................................................................................ 7
MINING ............................................................................................................................................................... 8
LIST OF CHINESE MULTINATIONAL CORPORATIONS INVOLVED IN BURMA’S HYDROPOWER, OIL AND NATURAL GAS, AND MINING SECTORS .................................................10
MAP OF COMPLETED, CURRENT AND PLANNED HYDROPOWER, OIL AND NATURAL GAS, AND MINING PROJECTS IN BURMA WITH CHINESE INVOLVEMENT .................................12
MAP OF COMPLETED, CURRENT AND PLANNED HYDROPOWER PROJECTS IN BURMA WITH CHINESE INVOLVEMENT ................................................................................................................14
MAP OF COMPLETED, CURRENT AND PLANNED OIL AND NATURAL GAS, AND MINING PROJECTS IN BURMA WITH CHINESE INVOLVEMENT .....................................................................15
SUMMARY OF COMPLETED, CURRENT AND PLANNED HYDROPOWER, OIL AND NATURAL GAS, AND MINING PROJECTS IN BURMA WITH CHINESE INVOLVEMENT ............16
INTRODUCTION Amidst recent international interest in China’s moves to secure resources throughout the world and recent events in Burma1, the international community has turned its attention to China’s role in Burma. In September 2007, the violent suppression of a peaceful movement led by Buddhist monks in Burma following the military junta’s decision to drastically raise fuel prices put the global spotlight on the political and economic relationships between China and neighboring resource-rich Burma. EarthRights International (ERI) has identified at least 69 Chinese multinational corporations (MNCs) involved in at least 90 hydropower, oil and natural gas, and mining projects in Burma.2 These recent findings build upon previous ERI research collected between May and August 2007 that identified 26 Chinese MNCs involved in 62 projects. These projects vary from small dams completed in the last two decades to planned oil and natural gas pipelines across Burma to southwest China. With no comprehensive information about these projects available in the public domain, the information included here has been pieced together from government statements, English and Chinese language news reports, and company press releases available on the internet. While concerned that details of the projects and their potential impacts have not been disclosed to affected communities or the general public, we hope that this information will stimulate additional discussion, research, and investigation into the involvement of Chinese MNCs in Burma. Concerns over political repression in Burma have led many western governments to prohibit new trade with and investment in Burma, and have resulted in the departure of many western corporations from Burma; notable exceptions include Total of France and Chevron3 of the United States. Meanwhile, as demand for energy pushes many Asian countries to look abroad for natural resources, Burma has been an attractive destination. India, Thailand, Korea, Singapore, and China are among the Asian countries with the largest investments in Burma’s hydropower, oil and natural gas, and mining sectors.4 Foreign direct investment (FDI) in Burma’s oil and natural gas sectors, for example, more than tripled from 2006 to 2007, reaching US$ 474.3 million, representing approximately 90% of all FDI in 2007.5
1
In 1989, the military regime changed the name of the country from Burma to Myanmar, the historical, Burmese-language name. The name Myanmar is not accepted by most opposition groups, who believe that the regime lacks legitimacy to engage in any government function, including changing the name of the country. This opposition includes the democratically elected National League for Democracy, headed by Nobel Peace Prize winner Aung San Suu Kyi, who refers to the country as Burma. The United States refers to the country as Burma, while the United Nations refers to it as Myanmar. 2 Research for all three sectors was compiled by conducting an English and Chinese language online media review. Full details are included in Summary of Completed, Current and Planned Hydropower, Oil and Natural Gas, and Mining Projects in Burma with Chinese Involvement. 3 Chevron is exempt from United States sanctions in Burma because of a grandfather clause which permits the continuation of already existing projects. For more information, see EarthRights International. 2008. The Human Cost of Energy: Chevron’s Continuing Role in the Financing Oppression & Profiting from Human Rights Abuses in Military-Ruled Burma (Myanmar). Available at http://www.earthrights.org/publications 4 Official Myanmar government figures; calculations from United States Department of State. ‘2007 Investment Climate Statement – Burma.’ http://www.state.gov/e/eeb/ifd/2007/80685.htm. 5 ‘Foreign Investment in Myanmar Oil & Gas Sectors More Than Tripled Last Year.’ The Associated Press, 30 June 2008. http://www.irrawaddy.org/article2.php?art_id=13054
1
While China has embraced a foreign policy of non-interference in the internal affairs of other states, the line between business and politics in a country like Burma is blurred at best. In pursuit of Burma’s natural resources, China has provided Burma with political support, 6 military armaments,7 and financial support in the form of conditions-free loans.8 Investments in Burma’s energy sectors provide billions of US dollars in financial support to the military junta, which devotes at least 40% of its budget to military spending, 9 only slightly more than 1% on healthcare, and around 5% on public education.10 These kinds of economic and political support for the current military regime constitute a concrete involvement in Burma’s internal affairs. The following is a brief introduction to and summary of the major completed, current and planned hydropower, oil and natural gas, and mining projects in Burma with Chinese involvement. All information is based on Chinese and English language media available on the internet and likely represents only a fraction of China’s actual investment.
6
‘China & Russia veto US/UK-backed Security Council Draft Resolution on Myanmar.’ United Nations Website, 12 January 2007. http://www.un.org/apps/news/story.asp?NewsID=21228&Cr=myanmar&Cr1 7 ‘People’s Republic of China: Sustaining Conflict & Human Rights Abuses.’ Amnesty International, 11 June 2006. 8 ‘China to Provide Myanmar with US$200m Loan.’ China Daily, 11 June 2006. http://www.chinadaily.com.cn/china/2006-06/11/content_613786.htm; & Amnesty International. 2006. China: Secretive Arms Exports Stoking Conflict & Repression. 9 University of California at Berkeley Human Rights Center & Johns Hopkins Bloomberg School of Public Health Center for Health & Human Rights. 2007. ‘The Gathering Storm: Infectious Diseases & Human Rights in Burma,’ p. 1. http://www.hrcberkeley.org/pdfs/BurmaReport2007.pdf; ‘Misery Piled Upon Misery: Myanmar.’ The Economist, 6 October 2007; & Sardellitti, E. ‘Myanmar: Courted by the Asian Players.’ Power & Interest News Report, 8 March 2007. http://www.pinr.com/report.php?ac=view_report&report_id=627&language_id=1; 10 The U.S. State Department reports that the budget of Burma’s Ministry of Health in 2007 was 0.3% of Gross Domestic Product (GDP). Available at http://www.state.gov/e/eeb/ifd/2007/80685.htm. Burma’s budget represents about 20-25% of Burma’s GDP. This means that expenditures, as a percentage of the budget, are four to five times their percentage of GDP. In the case of health care, that means expenditures are about 1.2-1.5% of the budget. For more information, see EarthRights International. 2008. The Human Cost of Energy: Chevron’s Continuing Role in the Financing Oppression & Profiting from Human Rights Abuses in Military-Ruled Burma (Myanmar), p. 22-23. Available at http://www.earthrights.org/publications
2
CHINA’S INTEREST IN BURMA In 1954, the People’s Republic of China and Burma signed a joint declaration on the Five Principles of Peaceful Coexistence, a political philosophy which has since then theoretically defined China’s relations with Burma. 11 These five principles are (1) mutual respect for sovereignty and territorial integrity, (2) mutual non-aggression, (3) non-interference in each other’s internal affairs, (4) equality and mutual benefit, and (5) peaceful coexistence in developing diplomatic relations and economic and cultural exchanges.12 As a young nation-state, these five principles set precedents for both China’s growing international presence, and the international community’s influence in China’s sometimes fragile internal social and political structures. Following economic reforms in the late 1970s, China adopted a more pragmatic foreign policy and, under the guidance of the Five Principles of Peaceful Coexistence, increased international economic and political exchanges in order to fuel economic and industrial development at home.13 In doing so, China has opened itself to trade and investment around the world, including in controversial places like Burma and Sudan, under the belief that economic prosperity at home and abroad will lead to mutually beneficial political and social stability. Chinese foreign policy also generally holds that countries are entitled to determine their own social and political systems and development strategies as they see fit, without the intervention of other countries.14 This preference for the use of soft power to achieve stability is characteristic of China’s “peaceful rise” as a world power, and also reflects the internal changes China has experienced in the three decades since its own economic reforms. As one of China’s neighboring countries, Burma plays a strategic role in China’s pursuit of regional economic, political and social stability. Moreover, Burma is geopolitically significant to China given its access to the Indian Ocean, and its extensive natural resources ranging from dense forests and untouched rivers to vast reserves of minerals, oil, and natural gas. The pursuit of such natural resources has become all the more important to China as its rapid industrialization and urbanization require an increasing amount of energy and raw materials. In particular, as China is now one of the world’s top energy consumers,15 Burma’s oil and natural gas resources and the prospect of constructing dual pipelines from the Indian Ocean to carry imports of oil and natural gas from the Middle East, South America and Africa and avoid the dangerous Straits of Malacca16 make Burma a particularly desirable partner in China’s pursuit of energy security.
11
One day prior to signing this agreement with Burma, Chinese Premier Zhou Enlai signed the ‘Agreement between the People's Republic of China and the Republic of India on Trade and Intercourse between Tibet Region of China and India’, in which the Five Principles of Peaceful Coexistence were first introduced. For more information, see ‘China’s Initiation of the Five Principles of Peaceful Coexistence.’ Ministry of Foreign Affairs of the People’s Republic of China, 17 November 2000. http://www.fmprc.gov.cn/eng/ziliao/3602/3604/t18053.htm 12 Geng, L. 2006. ‘Sino-Myanmar Relations: Analysis & Prospects.’ In The Culture Mandala, Vol. 7, No. 2. http://www.international-relations.com/CM7-2WB/Sino-Myanmar.htm; & ‘China’s Foreign Policy.’ People’s Daily. http://english.people.com.cn/china/19990914A128.html 13 Zou, K. 2003. ‘China’s Possible Role in Myanmar’s National Reconciliation.’ In The Copenhagen Journal of Asian Studies, Vol. 23, p. 62. http://rauli.cbs.dk/index.php/cjas/article/viewFile/13/13 14 Ibid. 15 China is currently the world’s second largest consumer of oil, and the fourteenth largest consumer of natural gas. Statistics for both available at NationMaster. http://www.nationmaster.com/cat/ene-energy 16 90% of China’s foreign trade and 80% of China’s energy imports travel through the Straits of Malacca. Khalid, N. 2006. ‘Security in the Straits of Malacca.’ In Japan Focus. http://japanfocus.org/products/details/2042
3
Some Chinese MNCs defend their investments in Burma through the Five Principles of Peaceful Coexistence which draw a distinction between economic trade and politics. According to a spokesperson for China National Offshore Oil Co. (CNOOC), which has interests in several oil and natural gas blocks in Burma, "We, in the oil business, have no choice but to go to places with oil…a company is in business for profits, not for politics."17 Such statements echo those made by western MNCs like Ivanhoe Mines,18 Total,19 and Chevron Corporation20 who have come under sharp criticism for their role in Burma. For their part, these corporations have emphasized economics over politics and tout the benefits of their investment over any alleged negative impacts. At the same time, China’s government has recently voiced increase concern about the situation in Burma, and has urged Burma’s military leaders to “push forward a democracy process that is appropriate for the country”,21 while stressing that it is Burma’s people who must decide Burma’s future, not the international community.22 From China’s perspective, investment in Burma is mutually beneficial as it encourages economic development in both countries and promotes regional economic, political, and social stability.23
17
‘Myanmar Keeps the Wheels on with China’s Help.’ The Wall Street Journal, 24 June 2008. http://online.wsj.com/article/SB121424381094497175.html?mod=googlenews_wsj 18 When questioned about Ivanhoe Mines’ role in the Monywa Copper Project in Burma, company president Dan Kunz stated that Ivanhoe Mines is “not motivated by political considerations…Ivanhoe is in the mining business, not the political business.” McClearn, M. 2002. ‘Ivanhoe Mines Steps into the Crossfire.’ In Canadian Business, Vol. 75, Issue 3. http://www.minesandcommunities.org/article.php?a=863 19 Total has created a website to promote the benefits of its continued involvement in the Yadana Gas Pipeline Project. Available at http://burma.total.com 20 ‘Chevron Statement on Myanmar.’ Chevron Website, 2 October 2007. http://www.chevron.com/news/press/Release/?id=2007-10-02; for more information regarding Chevron, see EarthRights International. 2008. The Human Cost of Energy: Chevron’s Continuing Role in the Financing Oppression & Profiting from Human Rights Abuses in Military-Ruled Burma (Myanmar). Available at http://www.earthrights.org/publications 21 ‘Chinese Dilemma over Burma Protests.’ BBC News, 25 September 2007. http://news.bbc.co.uk/2/hi/asiapacific/7011746.stm 22 ‘China backs Dialogue between Myanmar & Aung San Suu Kyi.’ Channel News Asia, 20 November 2007. http://www.channelnewsasia.com/stories/afp_asiapacific/view/312543/1/.html 23 ‘Myanmar Keeps the Wheels on with China’s Help.’ The Wall Street Journal, 24 June 2008. http://online.wsj.com/article/SB121424381094497175.html?mod=googlenews_wsj
4
HYDROPOWER At least 45 Chinese MNCs have been involved in approximately 63 hydropower projects in Burma, including several related substation and transmission line projects. Of these hydropower projects, the largest is the 7,100 megawatt (MW) Tasang Dam on the Salween River,24 which is to be integrated into the Asian Development Bank’s Greater Mekong Sub-region Power Grid. A groundbreaking ceremony for the Tasang Dam was held in March 2007, and China Gezhouba Group Co. (CGGC) started preliminary construction shortly after. China’s involvement in the damming of the Salween River is not limited to the Tasang project. In 2006, Sinohydro signed a Memorandum of Understanding (MoU) with Burma for the US$ 1 billion, 1,200 MW Hat Gyi Dam along the Thai border. In April 2007, Farsighted Group, now known as Hanergy Holding Group, and China Gold Water Resources Co. signed MoUs with Burma for an additional 2,400 MW hydropower project on the upper Salween, an area which Yunnan Power Grid Co. reportedly surveyed in 2006. In April 2008, Sinohydro, China Southern Power Grid Co., and China Three Gorges Project Co. signed a strategic cooperation framework agreement for the development of the hydropower potential of the Salween River.25 Despite China’s involvement in these large-scale dams on the Salween, most of the electricity is destined for export to neighboring Thailand. The 1,420 MW Shweli I, II, III Cascade, in Shan State near the Chinese border, has also received significant Chinese support. Yunnan Machinery & Equipment Import & Export Co. (YMEC) began work on the Shweli I Hydropower Plant in February 2004 and, following Burma’s inability to secure funding, 26 joined with Yunnan Huaneng Lancang River Hydropower Development Co. and Yunnan Power Grid Co. to create the Yunnan Joint Power Development Co. (YUPD) in August 2006.27
Sinohydro’s 14th Bureau Dali Sub-bureau Website
State Peace and Development Council Chairman Than Shwe greets Chinese representatives at the Shweli I Site
24
For more information regarding the Salween River, see Mon Youth Progressive Organization. 2007. In the Balance: Salween Dams Threaten Downstream Communities in Burma; Shan Sapawa. 2006. Warning Signs: An Update on Plans to Dam the Salween in Burma’s Shan State; Karen Rivers Watch. 2004. Damming at Gunpoint: Burma Atrocities Pave the Way for Salween Dams in Karen State; & Salween Watch, Southeast Asia Rivers Network & Center for Social Development Studies at Chulalongkorn University. 2004. The Salween Under Threat: Damming the Longest Free River in Southeast Asia. All available at http://www.salweenwatch.org/publications.html 25 ‘缅甸萨尔温江战略合作框架协议签署 (Salween River Strategic Cooperation Framework Agreement Signed).’ 金融界, 28 April 2008. http://info.jrj.com.cn/news/2008-04-28/000003585891.html 26 ‘激战瑞丽江——水电十四局瑞丽江电站截流施工纪实 (Shweli River Fierce Battle-Shweli Dam 14th Bureau Damming Construction).’ Sinohydro Website, 26 February 2007. http://www.sinohydro.com/portlet?pm_pl_id=7&pm_pp_id=13&COLUMNID=111111&ARTICLEID=1172460789 0001 For photographs of construction at the Shweli I Dam site see ‘瑞丽江项目部图库 (Shweli River Project Bureau Photographs).’ Sinohydro’s 14th Engineering Bureau Dali Sub-bureau Website, 29 June 2007. http://www.fcbdl.com/bencandy.php?fid=61&id=394 27 ‘中国在缅甸投资的首个水电项目成功截流 (China’s First Hydropower Investment in Burma Successfully Dammed).’ China Electricity Council, 13 December 2006. http://www.cec.org.cn/news/showc.asp?id=92488; For more information regarding the Shweli Cascade see Palaung Youth Network Group. 2007. Under the Boot. Available in English and Chinese at http://www.salweenwatch.org/brn.html
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A few months later, YUPD assumed an 80% share in the project after creating the Shweli River I Power Station Co. together with Burma, turned the Shweli I dam into a Build-Operate-Transfer (BOT) project, and increased the installed capacity from 400 to 600 MW. 28 At least two Sinohydro subsidiaries have provided construction services for the project, and Sichuan Machinery & Equipment Import & Export Co. and Ningbo Huyong Electric Power Material Co. have signed US$ multimillion contracts for electricity transmission cables and towers. 29 The Shweli I Hydropower Plant is slated for completion by June 2009, and was half complete as of May 2007. In Kachin State, several Chinese MNCs are involved in the construction of seven large dams along the N’Mai Hka, Mali Hka, and Irrawaddy River, with a combined installed capacity of 13,360 MW. 30 In 2007, China Power Investment Co. signed agreements with Burmese authorities to finance all seven dams, as well as with China Southern Power Grid Co. Yunnan Machinery & Equipment Import & Export Co. (YMEC) signed an MoU with Burma’s Ministry of Electric Power in 2006 to develop the hydropower potential of the N’Mai Hka; however details about this arrangement remain unclear. Changjiang Institute of Surveying, Planning, Design & Research has also completed a feasibility study at the confluence of the N’Mai Hka and Mali Hka, and China CAMC Engineering Co. has been involved in the surveying and implementation of hydropower projects in the region. The 790 MW Yeywa Dam in Mandalay Division, which began construction in 2006, is also being financed and constructed by several Chinese MNCs, including China Gezhouba Group Co., Sinohydro, China International Trust and Investment Co. (CITIC) Technology Co., China National Electric Equipment Co., China National Heavy Machinery Co., and Hunan Savoo Oversea Water and Electric Engineering Co. Additional financial backing for the project is being provided by the China EXIM Bank. In addition to the Yeywa, Shweli and Hat Gyi projects, Sinohydro – China’s largest dam company – and its subsidiaries have been involved in the Kun, Kyauk, Mone, Nam Hkam Hka, Paunglaung, Tarpein I, Thapanseik, and Zawgyi I Dams. As with the Yeywa project, both CITIC and China EXIM Bank provided investment and financial backing for the Thapanseik Dam. The Yunnan Machinery & Equipment Import & Export Co. (YMEC) has been one of the most active Chinese companies in Burma’s hydropower sector. Since the 1990s, YMEC has been involved in more than 25 projects of varying size, including the Ching Hkran, Chinshwehaw, Dattawgyaing, Hopin, Kunhein, Kunlon, Kyaing Ton, Kyaukme, Laiva, Mepan, Nam Hkam Hka, Nam Myaw, Nam Wop, Nancho, Paunglaung, Upper Paunglaung, Shweli I, II, III Cascade, Watwon, Zaungtu, Zawgyi I and II, Zichaung, and N’Mai Hka River hydropower projects, as well as the Rangoon Dagon Substation. The extent of YMEC involvement in these projects, several of which are completed, is unclear, but appears to involve construction and some financing.
28
‘瑞丽江电站胜利实现截流 (Shweli River Hydropower Station Triumphantly Blocks Water).’ Sinohydro’s 14th Engineering Bureau Dali Sub-bureau Website, 11 December 2006. http://www.fcbdl.com/bencandy.php?fid=3&id=26 29 ‘Myanmar Installs More Transmission Lines for New Power Plant.’ Xinhua General News Service, 5 July 2007; ‘About Huyong.’ Ningbo Huyong Electric Power Material Co. Website. http://www.hydl-cn.com/en/aboutus.htm [Thanks to Courier Research Associates for providing this link.] ; & ‘缅甸瑞丽江一级电站工程总承建包合同在昆签字 (Contracts Signed in Kunming for Shweli I Dam).’ Sinohydro’s 14th Engineering Bureau Website, 5 July 2007. 30 For more information, see Kachin Development Network Group. 2007. Damming the Irrawaddy. Available at http://www.salweenwatch.org/brn.html
6
OIL AND NATURAL GAS At least 16 Chinese MNCs have been involved in 21 onshore and offshore oil and natural gas projects in Burma, including all three major Chinese oil and natural gas companies Sinopec, China National Petroleum Corporation (CNPC), Sinopec, and China National Offshore Oil Corporation (CNOOC). In August 2007, the Burmese junta confirmed the sale of natural gas from the lucrative Shwe gas fields off the Arakan State coast to PetroChina, at a lower price than other competitors, thus clarifying China’s influence in Burma’s natural gas sector.31
CNPC Sichuan Geophysical Prospecting Co. Website
CNPC survey team at onshore L Block, Arakan State
PetroChina and parent CNPC have signed additional MoUs with the Burmese governmentowned Myanmar Oil & Gas Enterprise (MOGE) for a total of five offshore natural gas blocks in Arakan State. CNOOC and subsidiaries China National Oil & Gas Development Co. (CNODC) and China Oilfield Services Limited (COSL) have signed MoUs for exploration and production at six Arakan blocks. CNOOC’s participation in two of these six blocks comes as part of a SinoSingaporean consortium created together with China Huanqiu Contracting & Engineering Co. and Golden Aaron Pte. Both Sinopec and PetroChina reportedly conducted exploration off the Arakan coast in 2006 and 2007.32 Beyond the Arakan blocks, CNPC has been active to varying degrees in the planning and exploration of several onshore blocks, including Tuyintaung RSF-2, Gwegyo-Ngashandaung RSF-3, Tetma IOR-3, IOR-4, Indaw-Yenan C-1, and Shwebo-Monywa C-2. Sinopec has also conducted exploration at the onshore Block D in Sagaing and Magwe Divisions, while CNOOC and its subsidiaries have been involved, both independently and as part of the Sino-Singaporean CNPC Sichuan Petroleum Geophysical Prospecting Co. Website Consortium, in the M-2, M-3, M-4 and M-10 offshore blocks in the Gulf of Moattama as well as Indaw-Yenan C-1, and Shwebo-Monywa C-2. In addition to fossil fuel exploration, CNPC and Sinopec have spearheaded the construction of parallel oil and natural gas pipelines, which would stretch for more than 2,380 km from Burma’s Arakan coast to China’s southwestern cities of Kunming and/or Chongqing. Sinopec has already signed an over US$ 1 billion contract for the construction of the oil pipeline, and CNPC has signed an MoU with MOGE for a detailed assessment of the potential construction of a crude oil terminal off the coast of Arakan State. The pipelines and the crude oil terminal would facilitate China’s import of oil and natural gas from the Middle East, South America and Africa, as well as increase the efficiency of China’s oil and gas imports by providing an alternative to the problematic Straits of Malacca, which are plagued by piracy.
31
For more information about the Shwe natural gas block, see Shwe Gas Movement. 2006. Supply & Command: Natural Gas in Western Burma Set to Entrench Military Rule; & Arakan Oil Watch. The Shwe Gas Bulletin. Both available at www.shwe.org. 32 For more information regarding China’s oil and natural gas activities in Arakan State contact Arakan Oil Watch, which is currently preparing a report about this issue, at
[email protected]
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MINING China’s involvement in Burma’s mining sector is difficult to assess, as many mining projects are small scale – therefore less visible, attracting less publicity – and they are often located in remote areas where access is restricted by the military or obstructed by difficult terrain. The Kachin Development Networking Group and the Lahu National Development Organization have in recent years published on-theground research indicating that the Chinese companies Northern Star, Sea Sun Star, and the Standing Company Limited are involved in numerous small scale mining projects in Kachin and Shan States.33
YMEC Website
The Namtu-Bawtwin Mine, Shan State.
In addition to these projects, ERI has found evidence of involvement of 10 Chinese MNCs in 6 major mining projects over the last five years. The largest, the Tagaung Taung nickel deposit, in Mandalay Division, is majority controlled by China Nonferrous Metal Mining Co. and represents an investment of US$600 million for 40 million tons of nickel ore. In 2007, China’s National Reform and Development Council approved the project, and Burma’s Ministry of Mines accepted the completed feasibility study. China EXIM Bank and China Development Bank are providing financial support, and China Nonferrous Engineering & Research Institute is helping design the project together with Canadian-based Hatch. The Tagaung Taung project is touted as “one of the greatest collaborative efforts in the history of Sino-Burmese mining,” having received “the highest levels of attention from Burmese and Chinese government leaders.”34 Kingbao (Jinbao) Mining Co. has also signed agreements with the Ministry of Mining No. 3 to conduct exploration and feasibility studies at the Mwetaung nickel deposit in Chin State that contains proven nickel reserves in excess of 10 million tons. Kingbao (Jinbao) Mining Co. is a joint subsidiary of Gold Mountain (Hong Kong) International Mining Co. and Wanbao Mining Co., both of which control 50% of the company. Gold Mountain (Hong Kong) International Mining Co. is itself a wholly-owned subsidiary of Zijing Mining Co., while Wanbao Mining Co. is a wholly-owned subsidiary of China North Industries (NORINCO). Other major mining projects on queue for development include the Letpadaung copper deposit, which is the third deposit of the Monywa Copper Project in Monywa, Sagaing Division. Reports from March 2006 announced China Nonferrous Metal Mining Co.’s ownership of the Letpadaung deposit, which could mean the company now owns a stake in the joint venture between Ivanhoe Mines of Canada and the Myanmar Ministry of Mines.35 The Mount Popa 33
Kachin Development Networking Group. 2007. Valley of Darkness: Gold Mining & Militarization in Burma’s Hugawng Valley. Available at http://www.kachinnews.com/Valleyofdarkness/ValleyofDarkness.pdf; & Lahu National Development Organization. 2006. Undercurrents: Monitoring Development on Burma’s Mekong, Issue 2. Available at http://www.shanland.org/articles/environment/2006/Images/Undercurrents2.pdf 34 ‘中国有色集团积极推进缅甸达贡山镍矿项目 (CNMC Embarks on Tagaung Taung Nickel Mine Project).’ The State-owned Assets Supervision & Administration Commission (SASAC) of the State Council Website, 16 November 2006. www.sasac.gov.cn/zyqy/gcjz/200611210070.htm 35 In February 2007, Ivanhoe Mines reported that due to requirements of its partnership with Rio Tinto in Mongolia, the company transferred all of its assets in Burma to an independent trust. Ivanhoe Mines. 2007. Fact File: The Monywa Copper Project. Available at http://www.ivanhoemines.com/i/pdf/Monywa-Fact-File.pdf
8
Pozzolan Mine in Mandalay Division is also on queue; this project involves the Jiangsu Pengfei Group Co. and was announced in 2007. Yunnan Machinery & Equipment Export & Import Co. has signed several agreements with Burma’s Ministry of Mines for the Namtu-Bawtwin Mineral Deposit in Shan State, and is also currently in negotiations for additional exploration and exploitation at the site. Last, the Tigyit coal fired power plant and mine in Shan State is being undertaken by China National Heavy Machinery Co., which has also worked on the Kun, Kabaung and Yeywa Hydropower Plants. All of this activity follows a 2001 MoU between the Burmese mining authorities and the Chinese Ministry of Land Resources regarding the promotion of exploration and investment in Burmese mining and mineral resources.36
36
‘Myanmar’s Coal Production up Sharply in 2005.’ Xinhua News Agency, 13 January 2006.
9
LIST OF CHINESE MULTINATIONAL CORPORATIONS INVOLVED IN BURMA’S HYDROPOWER, OIL AND NATURAL GAS, AND MINING SECTORS HYDROPOWER Central China Power Grid Co. (CCPGC) Central China Power Grid International Economic & Trade Co. Changjiang Geotechnical Engineering Co. Changjiang Institute of Surveying, Planning & Design Research China CAMC (Construction & Agricultural Machinery Import & Export Co) Engineering Co. China Datang Group Co. China Datang Yantan Hydropower Co. China Export-Import (EXIM) Bank China Gezhouba Group Co. (CGGC) China Gezhouba Group (CGGC) International Co. China Gold Water Resources Co. China Hydropower Engineering Consulting Group Co. (CHECC) CHECC, Kunming Hydroelectric Investigation Design & Research Institute (KHIDI) CHECC, Mid-South Design & Research Institute China International Trust & Investment Co. (CITIC) Group China International Trust & Investment Co. (CITIC) Technology Co. China National Electric Equipment Co. (CNEEC) China National Heavy Machinery Co. (CHMC) China Power Investment Co. (CPI) China Shanghai (Group) Co. for Foreign Economic & Technological Co-operation Co. China Southern Power Grid Co. (CSG) China Three Gorges Project Co. (CTGPC) Guangdong New Technology Import Export Zhuhai Co. Guangxi Electric Power Industry Investigation Design & Research Institute Hanergy Holding Group (formerly China Farsighted Investment Group) Hunan Savoo Oversea Water & Electric Engineering Co. Jiangxi Water Programming & Design Institute Kunming Electric Machinery Co. Ningbo Huyong Electric Power Material Co. Shenzhen Menglong Import & Export Co. Shweli River I Power Station Co. Sichuan Machinery & Equipment Import & Export Co. (SMEC) Sinohydro International Sinohydro’s 1st Engineering Bureau Sinohydro’s 14th Engineering Bureau Sinohydro’s 14th Engineering Bureau Dali Sub-bureau
10
State Grid Corporation of China State Grid Corporation of China, Beijing Electric Power Construction Research Institute Tianjing ALSTOM Hydro Co. Yunnan Electric Power Design Institute Yunnan Huaneng Lancang River Hydropower Development Co. Yunnan Joint Power Development Co. (YUPD) Yunnan Machinery & Equipment Import & Export Co. Ltd. (YMEC) Yunnan Power Grid Co. Zhejiang Orient Holding Group
OIL AND NATURAL GAS China National Offshore Oil Co. (CNOOC) China National Offshore Oil Co. (CNOOC) Ltd. China National Offshore Oil Co. (CNOOC) Myanmar China Oilfield Services Limited (COSL) China National Petroleum Co. (CNPC) China National Petroleum Co. (CNPC) International China National Petroleum Co. (CNPC) Hong Kong China National Petroleum Co. (CNPC) Huabei Petroleum China National Oil & Gas Exploration & Development Co. (CNODC) China National Petroleum Co. (CNPC) Sichuan Petroleum Geophysical Prospecting Co. China Huanqiu Contracting & Engineering Co. Chinnery Assets Kai Er Co. PetroChina PetroChina International (Singapore) Co. (ChinaOil Singapore) China Petroleum & Chemical Co. (Sinopec)
MINING China Development Bank China Export-Import (EXIM) Bank China National Heavy Machinery Co. (CHMC) China Nonferrous Metal Mining Co. (CNMC) CNMC Nickel Co. Gold Mountain (Hong Kong) International Mining Co. Jiangsu Pengfei Group Co. Kingbao (Jinbao) Mining Co. Wanbao Mining Yunnan Machinery & Equipment Import & Export Co. (YMEC)
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MAP OF COMPLETED, CURRENT AND PLANNED HYDROPOWER, OIL AND NATURAL GAS, AND MINING PROJECTS IN BURMA WITH CHINESE INVOLVEMENT
12
HYDROPOWER
TRANSMISSION LINES
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56.
Belin-Meikhtila-Taungtwingyi-Monywa Kengtawng Myaungdagar-Hlaingthagar-Yekyi Rangoon-Yegyi Shweli I-Rangoon/Niyou River (China)
Nam Hkam Hka Dam (5 MW) Khaunglanphu Dam (1700 MW) Phizaw Dam (1500 MW) Lakin Dam (1400 MW) Laiza Dam (1560 MW) Pashe Dam (1600 MW) Chibwe (Chibwi) Dam (2000 MW) Chibwe Nge (Chibwi Nge) Dam (99 MW) Myitsone Dam (3600 MW) Ching Hkran Dam (2.52 MW) Hopin Dam (1.126 MW) Tarpein I Dam (240 MW) Tarpein II Dam (168 MW) Shweli I Dam (600 MW) Shweli I Substation Nam Myaw Dam (4 MW) Shweli II Dam (460 MW) Shweli III Dam (360 MW) Upper Thanlwin/Kunlong Dam (2400 MW) Kunlon Dam (0.5 MW) Chinshwehaw Dam(0.2 MW) Mepan (Meipan) Dam (1.26 MW) Kunhein (Kunheng) Dam (0.15 MW) Mongsan Substation Kyaing Ton (Kengtung) Dam (0.48 MW) Nam Wop Dam (3 MW) Tasang Dam (7100 MW) Kengtawng Dam (54 MW) Zawgyi I Dam (18 MW) Zawgyi II Dam (12 MW) Kyaukme Dam (4 MW) Watwon Dam (0.5 MW) Yeywa Dam (790 MW) Yeywa Substation Dattawgyaing Dam Belin Substation Shwesaryan Substation Thapanseik Dam (30 MW) Zi Chaung Dam (1.26 MW) Laiva Dam (0.96/0.6 MW) Kyeeon Kyeewa Dam (75 MW) Buywa Dam (60 MW) Mone Creek Dam (75 MW) Nancho Dam (40 MW) Upper Paunglaung Dam (140 MW) Paunglaung Dam (280 MW) Thaukyegat I Dam (150 MW) Thaukyegat II Dam (120 MW) Kapaung Dam (30 MW) Phyu Dam (20 MW) Kun (Kunchaung) Dam (60 MW) Yenwe Dam (25 MW) Zaungtu Dam (20 MW) Kyauk Naga Dam (75 MW) Hat Gyi Dam (1200 MW) Rangoon Dagon Substation
HYDROPOWER LOCATIONS UNKNOWN Kyauk Dam (Pegu Division) ‘Songpu’ Dam* (7.5 MW) ‘Piaoliang’ Dam* (400 MW)
ONSHORE OIL AND NATURAL GAS C-1 Block C-2 Block D Block IOR-3 Block IOR-4 Block L Block M Block RSF-2 Block RSF-3 Block Natural Gas Pipeline Oil Pipeline
OFFSHORE OIL AND NATURAL GAS A-1 Block A-3 Block A-4 Block AD-1 Block AD-6 Block AD-8 Block M-2 Block M-3 Block M-4 Block M-10 Block
MINING Letpadaung Copper Deposit Mount Popa Pozzolan Mine Mwetaung Nickel Deposit Namtu-Bawtwin Mineral Deposit Tagaung Taung Nickel Deposit Tigyit Coal Fired Power Plant and Mine
* Name available in Chinese only
13
MAP OF COMPLETED, CURRENT AND PLANNED HYDROPOWER PROJECTS IN BURMA WITH CHINESE INVOLVEMENT
14
MAP OF COMPLETED, CURRENT AND PLANNED OIL AND NATURAL GAS, AND MINING PROJECTS IN BURMA WITH CHINESE INVOLVEMENT
15
SUMMARY OF COMPLETED, CURRENT AND PLANNED HYDROPOWER, OIL AND NATURAL GAS, AND MINING PROJECTS IN BURMA WITH CHINESE INVOLVEMENT HYDROPOWER ....................................................................................................................................................... 19 CHIN STATE Laiva (0.96/0.6 MW) (Falam Township) ........................................................................................................... 19 KACHIN STATE Chibwe (Chibwi) (2000 MW), N’Mai Hka (Chibwe Township)....................................................................... 19 Chibwe Nge (Chibwi Nge) (99 MW), Chibwe Creek (Chibwe Township) ....................................................... 19 Ching Hkran (Chying Hkran) (2.52 MW) (Ching Hkran Village, Myitkyina Township) ................................. 20 Hopin (1.26 MW), (Monyin Township) ............................................................................................................ 20 Khaunglanphu (1700 MW), N’Mai Hka (Khaunglanphu Township) ................................................................ 20 Laiza (1560 MW), N’Mai Hka (Sumprabum Township) .................................................................................. 20 Lakin (1400 MW), N’Mai Hka (Chibwe Township) ......................................................................................... 20 Myitsone (3600 MW), Irrawaddy Confluence................................................................................................... 20 Nam Hkam Hka (5 MW), (Potao Township)..................................................................................................... 21 Pashe (1600 MW), N’Mai Hka (Chibwe Township) ......................................................................................... 21 Phizaw (1500 MW), N’Mai Hka (Khaunglanphu Township) ........................................................................... 21 Tarpein I (240 MW), Tarpein River (Dawphoneyan Township) ....................................................................... 21 Tarpein II (168 MW), Tarpein River (Dawphoneyan Township) ...................................................................... 21 In the Region of the N’Mai Hka, Mali Hka & Irrawaddy.................................................................................. 19 KAREN STATE Hat Gyi (1200 MW), Salween River ................................................................................................................. 22 Thaukyegat I (150 MW), Thaukyayka (Day Loh) River, (Tantabin Township, Pegu Division) ....................... 22 Thaukyegat II (120 MW), Thaukyayka (Day Loh) River .................................................................................. 22 MAGWAY DIVISION Buywa (60 MW), Mone Creek (Bu Village, Sidoktaya Township)................................................................... 22 Kyeeon Kyeewa (75 MW), Mone Creek (Pwintbyu Township) ....................................................................... 22 Mone Creek (75 MW), Mone Creek (Sidoktaya Township) ............................................................................. 23 MANDALAY DIVISION Dattawgyaing (Kyauksei Township) ................................................................................................................. 23 Nancho (40 MW), Nancho Creek (Pyinmanah Township) ................................................................................ 23 Paunglaung (280 MW) (Pyinmana Township) .................................................................................................. 23 Upper Paunglaung (140 MW) ........................................................................................................................... 24 Watwon (0.5 MW) (Pyin Oo Lwin Township) .................................................................................................. 24 Yeywa (790 MW), Myitnge River (Kyauksei Township) ................................................................................. 24 PEGU DIVISION Kapaung (30 MW) (Taungoo Township) .......................................................................................................... 26 Kun (Kunchaung) (60 MW), Sittaung River (Phyu Township) ......................................................................... 26 Kyauk ................................................................................................................................................................ 27 Kyauk Naga (75 MW), Shwegyin River (Shwegyin Township) ....................................................................... 27 Phyu (20 MW), Phyu River (Phyu Township) .................................................................................................. 27 Thaukyegat (150 MW), Thaukyayka (Day Loh) River ..................................................................................... 27 Yenwe (25 MW), Yenwe Creek (Kyaukdagah Township) ................................................................................ 27 Zaungtu (20 MW), Upper Bago River (Taikkyi Village, Bago Township) ....................................................... 28 SAGAING DIVISION Thapanseik (30 MW), Mu River (Thapanseik Village, Kyunhla Township) .................................................... 28 Zi Chaung (1.26 MW) ....................................................................................................................................... 28 SHAN STATE Chinshwehaw (0.2 MW) .................................................................................................................................... 28 Kengtawng (54 MW), Namtein Creek (Mone Township) ................................................................................. 28 Kunhein (Kunheng) (0.15 MW) ........................................................................................................................ 29 Kunlon (0.5 MW) .............................................................................................................................................. 29 Kyaing Ton (Kengtung) (0.32/0.48 MW) .......................................................................................................... 29
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Kyaukme (4 MW) .............................................................................................................................................. 29 Mepan (Meipan) (1.26 MW) (Mong Hsat Township) ....................................................................................... 29 Nam Myaw (4 MW) .......................................................................................................................................... 29 Nam Wop (3MW) (Kyaing Ton Township) ...................................................................................................... 29 Shweli I (600 MW), Shweli River (Man Tat Village, Namhkam Township) .................................................... 29 Shweli II (460 MW), Shweli River .................................................................................................................... 30 Shweli III (360 MW), Shweli River .................................................................................................................. 30 Tasang (7100 MW), Salween River .................................................................................................................. 31 Upper Thanlwin (2400 MW), Salween River .................................................................................................... 31 Zawgyi I (18 MW), Zawgyi Creek (Yaksawk Township) ................................................................................. 32 Zawgyi II (12 MW), Zawgyi Creek ................................................................................................................... 32 SUBSTATIONS & TRANSMISSION LINES Belin-Meikhtila-Taungtwingyi-Monywa ........................................................................................................... 32 Belin Substation (Kyaukse Township, Mandalay Division) .............................................................................. 32 Kengtawng Transmission Line (Shan State)...................................................................................................... 33 Mongsan Substation (Shan State) ...................................................................................................................... 33 Myaungdagar-Hlaingthagar-Yekyi .................................................................................................................... 33 Rangoon Dagon Substation (Rangoon Division) ............................................................................................... 33 Rangoon-Yegyi (Rangoon Division) ................................................................................................................. 33 Shweli I Substation & Transmission Lines (Shan State) ................................................................................... 33 Shwesaryan Substation (Kyauksei Township, Mandalay Division) .................................................................. 34 Yeywa Substation (Mandalay Division) ............................................................................................................ 34 UNKNOWN LOCATION Songpu (7.5 MW) .............................................................................................................................................. 35 ‘Piaoliang’ (400 MW)........................................................................................................................................ 35 OIL & NATURAL GAS ........................................................................................................................................... 36 ARAKAN STATE A-1 Block (Offshore) ......................................................................................................................................... 36 A-3 Block (Offshore) ......................................................................................................................................... 36 A-4 Block (Offshore) ......................................................................................................................................... 36 AD-1 Block (Offshore, Shallow Water apprx. 200m) ....................................................................................... 37 AD-6 Block (Offshore, Deep Water apprx. 2000m) .......................................................................................... 37 AD-8 Block (Offshore, Deep Water apprx. 2000m) .......................................................................................... 37 L Block (Onshore) ............................................................................................................................................. 37 M Block (Onshore, Kyaungphyu Region) ......................................................................................................... 37 MANDALAY DIVISION Bagan Project (Onshore).................................................................................................................................... 38 IOR-3 Block (Onshore, Tetma) ......................................................................................................................... 38 RSF-2 Block (Onshore, Tuyintaung) ................................................................................................................. 38 RSF-3 Block (Onshore, Gwegyo-Ngashandaung) ............................................................................................. 39 MOATTAMA COAST M-2 Block (Offshore) ........................................................................................................................................ 39 M-3 Block (Offshore) ........................................................................................................................................ 39 M-4 Block (Offshore) ........................................................................................................................................ 39 M-10 Block (Offshore) ...................................................................................................................................... 39 PEGU DIVISION Pyay Oilfield ...................................................................................................................................................... 40 IOR-4 Block (Onshore) ..................................................................................................................................... 40 SAGAING DIVISION C-1 Block (Onshore, Indaw-Yenan) .................................................................................................................. 40 C-2 Block (Onshore, Shwebo-Monywa) ........................................................................................................... 40 D Block (Onshore, Sagaing & Magwe Divisions) ............................................................................................. 41 OIL & GAS PIPELINES ........................................................................................................................................ 41
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MINING ..................................................................................................................................................................... 43 CHIN STATE Mwetaung Nickel Deposit ................................................................................................................................. 43 SAGAING DIVISION Letpadaung Copper Deposit (Monywa)............................................................................................................. 43 SHAN STATE Tigyit Coal Fired Power Plans and Mine (120 MW) (Tigyit, Pin Laung Township) ........................................ 43 Namtu-Bawtwin Mineral Deposit ...................................................................................................................... 43 MANDALAY DIVISION Tagaung Taung Nickel Deposit (Thabeikkyin Township)................................................................................. 44 Mount Popa Pozzolan Mine & Factory ............................................................................................................. 44
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HYDROPOWER CHIN STATE Laiva (0.6 MW) (Falam Township) Yunnan Machinery & Equipment Import & Export Co. (YMEC) undertook this project in 1992.1 KACHIN STATE In the Region of the N’Mai Hka, Mali Hka & Irrawaddy Yunnan Machinery & Equipment Import & Export Co. (YMEC) signed an MoU with the Ministry of Electric Power in 2006 to develop the hydropower potential of the N’Mai Hka, however.2 China CAMC (Construction & Agricultural Machinery Import & Export Corporation) Engineering Co. met with Burmese representatives in Guilin, Guangxi in November 2006 to discuss the surveying and implementation of hydropower projects at the confluence of these rivers.3 China Southern Power Grid Co. (CSG) and China Power Investment Co. (CPI) signed a cooperation agreement in May 2007 to jointly develop the hydropower potential of the N’Mai Hka, Mali Hka and Irrawaddy River.4 China Datang Yantan Hydropower Development Co. and Shenzhen Menglong Import & Export Co. signed agreements for the major repairs of a 60 MW dam in northern Kachin State in October 2007.5 Chibwe (Chibwi) (2000 MW), N’Mai Hka (Chibwe Township) China Power Investment Co. (CPI) signed an MoU for the construction of this dam in May 2007.6 Chibwe Nge (Chibwi Nge) (99 MW), Chibwe Creek (Chibwe Township) China Power Investment Group Co. (CPI) and Burma’s Ministry of Electric Power No. 1 signed a contract in February 2008 for the construction and supply of power generating equipment for this hydropower plant, which will provide energy for the construction of the Myitsone and other dams on the N’Mai Hka, Mali Hka and Irrawaddy River.7 The feasibility study, conducted by Chinese and Burmese teams, is expected to be complete by the end of 2008.8 Changjiang Institute of Surveying, Planning & Design Research and subsidiary Changjiang Geotechnical Engineering Co. undertook surveying and examination services in early 2008.9
1
‘Overseas & Domestic Projects.’ YMEC Website. http://www.ymec.com.cn/cn/about_yj.htm ‘中缅能源合作潜力巨大 (Sino-Burmese Energy Cooperation has Tremendous Potential).’ 中国农村水电及电气 化信息网, 30 March 2006. http://www.shp.com.cn/show.asp?id=18290; & ‘南方电网中电投将合作支持缅甸水 电资源开发 (CSG Investment Supports Development of Burma’s Hydropower Resources.’ 中国水利水电设备 （产品）网，28 May 2007. http://www.cnhydro.com/info/techdevlop/showContent.asp?id=4036 3 ‘Prime Minister General Soe Win & Party Visit Guilin.’ The New Light of Myanmar, 6 November 2006. http://mission.itu.ch/MISSIONS/Myanmar/06nlm/n061106.htm 4 ‘中电投：外围突破 迂回入滇 (China Electric Investment: Foreign Breakthroughs Enter Yunnan).’ LRN 资源网, 17 January 2008. http://www.lrn.cn/invest/enterpriseinfo/enterprisenews/200801/t20080117_189918.htm 5 ‘岩滩发电公司首次敲开水电检修国际市场 (Datang Yantan’s First Strike into the International Hydropower Market).’ Datang Yantan Website, 25 May 2007. http://www.china-cdt.com/news/datangnews/726473.html 6 ‘Burma Committed to Building more Hydropower Plants.’ BBC Financial Times Information, 7 May 2007. 7 Ibid. 8 ‘Kachin Hydropower Study due in December.’ The Myanmar Times, 24 March 2008. http://www.mmtimes.com/no411/b002.htm 9 ‘岩土地质公司领导慰问缅甸地质人员 (Geotechnical Engineering Co. Consoles Burma Geotechnical Staff).’ Changjiang Institute of Surveying, Planning & Design Research Website, 21 March 2008. http://www.cjwsjy.com.cn/News/Company/200803215182.htm 2
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China Gezhouba Group Co. (CGGC) signed agreements with China Power Investment Group Co. (CPI) in 2008 for the construction of earth and metal structures as well as the installation of power generating equipment over a period of 32 months.10 Ching Hkran (Chying Hkran) (2.52 MW) (Ching Hkran Village, Myitkyina Township) Yunnan Machinery & Equipment Import & Export Co. (YMEC) undertook this project in 1991.11 On 11 July 2006 this dam was destroyed following heavy rain storms.12 Hopin (1.26 MW), (Monyin Township) Yunnan Machinery & Equipment Import & Export Co. (YMEC) undertook this project in 1990.13 Khaunglanphu (1700 MW), N’Mai Hka (Khaunglanphu Township) China Power Investment Co. (CPI) signed an MoU with the Ministry of Electric Power in May 2007.14 Laiza (1560 MW), N’Mai Hka (Sumprabum Township) China Power Investment Co. (CPI) signed an MoU with the Ministry of Electric Power in May 2007.15 Lakin (1400 MW), N’Mai Hka (Chibwe Township) China Power Investment Co. (CPI) signed an MoU with the Ministry of Electric Power in May 2007.16 Myitsone (3600 MW), Irrawaddy Confluence China Power Investment Co. (CPI) signed an MoU with the Ministry of Electric Power 1 in December 2006.17 In January 2007, Burma’s Ministry of Electric Power No. 1 held a meeting with CPI and China’s National Development & Reform Council to discuss investment issues for the Myitsone Dam.18 In April 2007, both CPI and the Chinese Embassy to Burma announced that dam construction on the Irrawaddy Confluence had begun ahead of schedule.19 Changjiang Institute of Surveying, Planning, Design & Research has completed a 5 month feasibility study at the Myitsone site.20
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‘缅甸密松和其培水电站施工电源电站 (Burma Myitsone and Chibwe Hydropower Plant Construction).’ CGGC Website, 25 July 2008. http://www.cggc.cn/info_show.asp?type=&UidA=1071&UidB=1078&id=3687 11 ‘Overseas & Domestic Projects.’ YMEC Website. http://www.ymec.com.cn/cn/about_yj.htm; & ‘Chimranrkha Hydropower Station (Myanmar).’ YMEC Website. http://www.ymec.com.cn/en/hpp/Project_jcc.htm 12 ‘Dam Burst Kills Five in Northern Burma’s Kachin State.’ Democratic Voice of Burma, 11 July 2006. http://six.pairlist.net/pipermail/burmanet/20060712/000989.html [Thanks to Courier Research Associates for providing this link.] 13 ‘Overseas & Domestic Projects.’ YMEC Website. http://www.ymec.com.cn/cn/about_yj.htm 14 ‘Burma Committed to Building more Hydropower Plants.’ BBC Financial Times Information, 7 May 2007. 15 Ibid. 16 Ibid. 17 ‘集团公司与缅甸第一电力部签署开发缅甸水电项目谅解备忘录 (CPI & Burma Ministry of Electric Power No. 1 Sign MoU to Develop Burma’s Hydropower).’ CPI Website, 29 December 2006. http://www.cpicorp.com.cn/news.do?cmd=show&id=71604 18 ‘国家法改委副主任张国宝会见缅甸联邦第一电力部长 (CPI, China NDRC & Burma Ministry of Electric Power 1 Meet).’ CPI Website, 22 January 2007. http://www.cpicorp.com.cn/news.do?cmd=show&id=71688 19 ‘缅甸恩迈开讲，迈立开江及伊洛瓦底江流域水电开发施工电源电站前期工程开工 (N’Mai Hka, Mali Hka & Irrawaddy River Project Begins Principal Construction).’ CPI Website, 3 May 2007. http://www.cpicorp.com.cn/news.do?cmd=show&id=73584; & ‘缅甸“三江”流域开发施工电源站前期工程开 工 (‘Three Rivers’ Confluence Hydropower Plant Begins Principal Construction).’ The Economic & Commercial Counselor’s Office of the Embassy of the People's Republic of China in Myanmar Website, 11 May 2007. http://mm.mofcom.gov.cn/aarticle/jmxw/200705/20070504656153.html 20 The original link to this news report is no longer functional; however, a description of its content is included in ‘Junta Ignore Pleas to Stop Myitsone Hydropower Project.’ Kachin News Group via Salween Watch Website, 14 June 2007. http://salween-watch2.livejournal.com/tag/myitsone+kachin+dams
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Nam Hkam Hka (5 MW), (Potao Township) Yunnan Machinery & Equipment Import & Export Co. (YMEC) undertook this project in 1992.21 Sinohydro’s 14th Engineering Bureau lists this as an international project which it has undertaken, presumably by providing construction services.22 Pashe (1600 MW), N’Mai Hka (Chibwe Township) China Power Investment Co. (CPI) signed an MoU with the Ministry of Electric Power in May 2007.23 Phizaw (1500 MW), N’Mai Hka (Khaunglanphu Township) China Power Investment Co. (CPI) signed an MoU with the Ministry of Electric Power in May 2007.24 Tarpein I (240 MW), Tarpein River (Dawphoneyan Township) Central China Power Grid Co. signed an agreement for cooperation in September 2006.25 Sinohydro’s 14th Engineering Bureau and the Dali Sub-bureau of Sinohydro’s 14th Engineering Bureau were present during the December 2007 opening ceremony.26 The dam is expected to come online by September 2008, with construction completed by June 2010.27 Sinohydro reports state that financial investment for this project has been provided by China Datang Group Co., Central China Power Grid International Economic & Trade Co., and Jiangxi Water Programming & Design Institute.28 China Datang Group Co. acquired a controlling stake in March 2008 with an investment of CNY 1.6 billion for the Tarpein I Dam.29 Tarpein II (168 MW), Tarpein River (Dawphoneyan Township) Central China Power Grid Co. discussed construction for this project with the Ministries of Electric Power No.1 and No.2 after a 2006 meeting on the progress of the Tarpein I project 9 km upstream.30
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‘Overseas & Domestic Projects.’ YMEC Website. http://www.ymec.com.cn/cn/about_yj.htm ‘Domestic & Overseas Projects.’ Sinohydro 14th Engineering Bureau Website. http://www.fcbmis.com/English/Overseas%20Projects.htm 23 ‘Burma Committed to Building more Hydropower Plants.’ BBC Financial Times Information, 7 May 2007. 24 Ibid. 25 ‘缅甸总理考察华中电网 鄂缅有望扩大电力开发合作 (Burma Premier Reviews CCPG, Hubei & Burma Hope to Expand Electricity Development Cooperation).’ 湖北日报, 4 November 2006. http://www.cnhubei.com/200611/ca1198075.htm [Thanks for Courier Research Associates for providing this link.] 26 ‘缅甸太平江水电站主体工程开工 (Burma Tarpein Hydropower Plant Principal Work Begins).’ Sinohydro’s 14th Engineering Bureau Dali Sub-bureau Website, 31 December 2007. http://www.fcbdl.com/bencandy.php?fid=37&id=737 For extensive photographs of construction at the Tarpein Dam see ‘太平江电站项目部图库(Tarpein River Power Plant Project Bureau Photographs).’ Sinohydro’s 14th Engineering Bureau Dali Sub-bureau Website, 20 December 2007. http://www.fcbdl.com/bencandy.php?fid=61&id=683 27 Ibid. 28 Ibid. 29 ‘Datang to Take Controlling Stake in Myanmar Hydropower Plant.’ Morning Star-Dow Jones, 4 March 2008. http://news.morningstar.com/newsnet/ViewNews.aspx?article=/DJ/200803040541DOWJONESDJONLINE000209_ univ.xml [Thanks to Courier Research Associates for providing this link. Note: this article does not explicitly name the Tarpein I Dam, however see Courier Research Associates. ELECTRIC INDUSTRY OF BURMA/MYANMAR ON-LINE COMPENDIUM for reference. Available at http://burmalibrary.org/docs2/myanmar-elec.pdf ] 30 ‘华中电网公司经贸代表团赴缅甸进行工作访问 (CCPGC Team Visits Burma).’ CCPGC Website, 7 December 2006. http://202.110.186.75:8080/pub/huazhong/gjjldt/t20061207_10006.htm 22
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KAREN STATE Hat Gyi (1200 MW), Salween River Sinohydro signed a US$ 1 billion MoU in conjunction with Thai EGAT and Burma for this project in June 2006.31 Originally Sinohydro had a 40% stake in the project, while EGAT had at least 50%, leaving Burma with the remainder, however official Sinohydro reports from March 2008 state that Sinohydro became the controlling stakeholder following a meeting with EGAT’s president.32 Thaukyegat I (150 MW), Thaukyayka (Day Loh) River, (Tantabin Township, Pegu Division) Changjiang Institute of Surveying, Planning & Design Research list this dam on its website as an international hydropower project that was undertaken together with Asia World Co.33 Thaukyegat II (120 MW), Thaukyayka (Day Loh) River The Dali Sub-bureau of Sinohydro’s 14 Engineering Bureau signed an agreement with Asia World Co. to provide construction services for a diversion tunnel between May 2008 and February 2009.34 MAGWAY DIVISION Buywa (60 MW), Mone Creek (Bu Village, Sidoktaya Township) Guangdong New Technology Import Export Zhuhai Co. signed a letter of intent with the Ministry of Agriculture and Irrigation in 2004 for this US$ 20 million project 13 miles upstream from the Mone Creek dam.35 Kyeeon Kyeewa (75 MW), Mone Creek (Pwintbyu Township) Guangdong New Technology Import Export Zhuhai Co. signed a EU€ 13 million agreement with the Ministry of Electric Power in 2006 for the construction of the Kyeeon Kyeewa Hydropower Project. 36 This project was inspired by the feasibility study conducted for the Mone Creek Hydropower Plant.37
31
‘怒江--萨尔温江哈吉水电站合作开发备忘录签字仪式在京举行 (MoU Signing Ceremony for the Nu-Salween River Hatgyi Hydropower Project).’ 承包劳务频道:中国对外承包工程商会, 27 June 2006. http://chinca.mofcom.gov.cn/aarticle/tpxw/200606/20060602530559.html 32 ‘EGAT Signs Deal with Sinohydro to Develop 600 MW Hydro Project in Myanmar.’ Global Power Report, 20 July 2006; & ‘泰国产电机构总裁访问中国水电集团 (President of Thai EGAT Visits Sinohydro).’ Sinohydro Website, 11 March 2008. http://www.sinohydro.com/portlet?pm_pl_id=7&pm_pp_id=13&COLUMNID=111111&ARTICLEID=12052265380001 33 ‘立足长江 走向世界—枢纽处坝工一室发展纪实 (Building from the Changjiang, Moving Toward the Global Dam Sector).’ Changjiang Institute of Surveying, Planning & Design Research Website, 30 January 2008. http://www.cjwsjy.com.cn/News/Company/200801304996.htm 34 ‘缅甸 Thaukyegat(2)水电站导流隧洞工程施工 (Thaukyegat II Hydropower Plant Diversion Tunnel Project Construction).’ Dali Sub-Bureau of Sinohydro’s 14th Engineering Bureau Website, 28 April 2008. http://www.fcbdl.com/bencandy.php?fid=29&id=932 35 Maung Aung Myoe. 2007. ‘Sino-Myanmar Economic Relations Since 1988.’ Working Paper Series No. 86, Asia Research Insittute, National University of Singapore. http://www.burmalibrary.org/docs2/MmEcoRelations.pdf; & ‘Information Sheet: No. D-3570(1).’ Myanmar Information Committee, Yangon, 20 January 2005. http://www.myanmar-information.net/infosheet/2006/060130.htm 36 ‘緬甸 Kyeeon Kyeewa 水电站项目签约 (Agreement Signed for Burma Kyeeon Kyeewa Hydropower Plant Project).’ Ministry of Commerce of the People's Republic of China Department of Asian Affairs Website, 28 December 2006. http://big5.mofcom.gov.cn/gate/big5/yzs.mofcom.gov.cn/aarticle/zcfb/200612/20061204166259.html 37 Platts. 2007. Platts Myanmar Country Energy Profile. [Thanks to Courier Research Associates for providing this document.]
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Mone Creek (75 MW), Mone Creek (Sidoktaya Township) China International Trust & Investment Co. (CITIC) Technology Co. undertook this project together with US$ 32 million supplied by China EXIM Bank.38 The main dam at the Mone Creek Hydropower Plant, operational since December 2004, is 61 m high and 1,317 m long with a holding capacity sufficient to irrigate 108,000 acres of land.39 Sinohydro’s 1st Engineering Bureau assisted with the installation of power generators for RMB 34 million, and in November 2000 Sinohydro signed maintenance contracts for this hydropower plant.40 In November 2004 the first turbine generator passed a 72 hour operation test, and the dam was expected to enter commercial production by November 2005.41 MANDALAY DIVISION Dattawgyaing (Kyauksei Township) Yunnan Machinery & Equipment Import & Export Co. (YMEC) discussed this project with Burmese representatives at a November 2006 meeting in Guilin, Guangxi.42 In November 2007, YMEC signed a contract with the Ministry of Electric Power No.1 to supply equipment for this project.43 Nancho (40 MW), Nancho Creek (Pyinmanah Township) Yunnan Machinery & Equipment Import & Export Co. (YMEC) discussed this project with Burmese representatives at a November 2006 meeting in Guilin, Guangxi. 44 In April 2008, YMEC and Kunming Electric Machinery Co. (KEM) signed an agreement to supply two 20 MW hydroturbine generators and additional related machinery for this project.45 Paunglaung (280 MW) (Pyinmana Township) Yunnan Machinery & Equipment Import & Export Co. (YMEC) signed a contract for this project in 1998.46 YMEC’s description of the 131 m high, 945 m long Paunglaung project states that the US$ 170 million was provided by the Chinese government on a seller’s credit basis, and construction services were provided by CHECC Kunming Hydroelectric Investigation Design & Research Institute and Sinohydro’s 14th Engineering Bureau.47 38
‘China-Contracted Myanmar Hydropower Plant Put into Service.’ Xinhua News Agency, 18 June 2006. ‘Government to Generate 2,000 more Megawatts during 5 Year Plan Thanks to Mone Creek Multipurpose Dam, Dry Pwintbyu Plain can Now Increase Irrigated Areas.’ The New Light of Myanmar, 30 December 2004. http://burmalibrary.org/docs2/NLM2004-12-30.pdf [Thanks to Courier Research Associates for providing this link.] 40 ‘缅甸德畔赛及孟和水电站 (Burma’s Thapanseik & Mone River Hydropower Plants).’ Sinohydro Website. http://www.sinohydro.com/portlet?pm_pl_id=7&pm_pp_id=29&COLUMNID=11509592350001 41 ‘缅甸孟河电站首台机组投入运行 (First Generator at Burma’s Mone Hydropower Plant Operational).’ Sinohydro Website, 27 December 2004. http://www.sinohydro.com/portlet?pm_pl_id=7&pm_pp_id=13&COLUMNID=111111&ARTICLEID=11474944380001 42 ‘Prime Minister General Soe Win & Party Visit Guilin.’ The New Light of Myanmar, 6 November 2006. http://mission.itu.ch/MISSIONS/Myanmar/06nlm/n061106.htm 43 ‘Minister for Electric Power No 1 Receives President of YMEC.’ The New Light of Myanmar, 30 November 2007. http://mission.itu.ch/MISSIONS/Myanmar/07nlm/n071130.htm [Thanks to Courier Research Associates for providing this link.] 44 ‘Prime Minister General Soe Win & Party Visit Guilin.’ The New Light of Myanmar, 6 November 2006. http://mission.itu.ch/MISSIONS/Myanmar/06nlm/n061106.htm 45 缅甸南雀水电站主机设备制造合同正式签订 (Burma Nancho Hydropower Plant Primary Equipment Agreement Signed)’ YMEC Website. http://www.ymec.com.cn/cn/news/news_19.htm 46 ‘Overseas & Domestic Projects.’ YMEC Website. http://www.ymec.com.cn/cn/about_yj.htm; & ‘我国在东南亚 承建的最大水电站将开始全面发电 (China’s Largest Dam in Southeast Asia Begins Producing Electricity).’ Sinohydro Website, 24 February 2005. http://www.sinohydro.com/portlet?pm_pl_id=7&pm_pp_id=13&COLUMNID=111111&ARTICLEID=11471537120007 47 ‘Brief Introduction of Paunglaung HPP.’ YMEC Website. http://www.ymec.com.cn/en/hpp/project_pl.htm; & Platts. 2007. Platts Myanmar Country Energy Profile. [Thanks to Courier Research Associates for providing this document.] 39
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Ningbo Huyong Electric Power Material Co. built 230 kV steel power transmission towers for the Paunglaung project under an agreement with Burma’s State Power Industry Ministry.48 Sinohydro’s 14th Engineering Bureau secured bids in 2002 and 2004 for the installation of power generating equipment and machinery for the hydropower plant, and by late 2004, three of the four 70 MW generators were online.49 This Chinese financed and built project is currently functional.50 Upper Paunglaung (140 MW) Yunnan Machinery & Equipment Import & Export Co. (YMEC) signed an US$ 80 million agreement with Burma to supply two 70 MW turbines and additional machinery for this project located 24 km upstream from the Paunglaung Dam.51 Watwon (0.5 MW) (Pyin Oo Lwin Township) Yunnan Machinery & Equipment Import & Export Co. (YMEC) signed a contract with the Ministry of Electric Power No. 1 in November 2007 to supply equipment for the repair of this project.52 This hydropower plant has two 0.25 MW turbines that were installed in the 1930s.53 Yeywa (790 MW), Myitnge River (Kyauksei Township) A consortium created by China International Trust & Investment Co. (CITIC) Technology Co. and Sinohydro International signed engineering, procurement and construction contracts with the Ministry of Electric Power in 2004 for a total value of US$ 126 million.54 These contracts included a supply of four 197.5 MW hydro-turbine generators, transformers, and other mechanical equipment, and China EXIM Bank offered to provide financial credit.55 In November 2006, CITIC Technology Co. met with Burmese Prime Minister Soe Win to discuss the hydraulic steel structure.56 China Gezhouba Group Co. (CGGC) signed a US$ 46,320,000 agreement in 2006 to undertake major construction efforts for this dam over a period of 46 months.57 Construction phases I, II, V, VII and VIII have been completed,58 and in December 2006, the 500 m long roller compacted concrete supply line became fully operational.59 As of April 2007, 40% of the concrete required for the dam had been
48
‘About Huyong.’ Ningbo Huyong Electric Power Material Co. Website. http://www.hydl-cn.com/en/aboutus.htm [Thanks to Courier Research Associates for providing this link.] 49 ‘经受住考察无愧于祖国 (Put to the Test, the Paunglaung Hydropower Plant Shines for the Motherland).’ Sinohydro 14th Engineering Bureau Website, 20 May 2005. http://www.fcbmis.com/sd_nm/2005/5-20/164412.html 50 ‘缅甸最大水电站首台机组成功运行发电 (First Generator at Burma’s Largest Hydropower Plant Successfully Becomes Operational).’ Sinohydro Website, 4 August 2004. http://www.sinohydro.com/portlet?pm_pl_id=7&pm_pp_id=13&COLUMNID=111111&ARTICLEID=11471537000061; & ‘我国在东南亚承建的最大水电站将开始全面发电 (China’s Largest Dam in Southeast Asia Begins Producing Electricity).’ Sinohydro Website, 24 February 2005. http://www.sinohydro.com/portlet?pm_pl_id=7&pm_pp_id=13&COLUMNID=111111&ARTICLEID=11471537120007 51 ‘Myanmar Signs US$ 80 Million Hydropower Deal with China’s Yunnan Machinery.’ Xinhua Financial, 5 September 2005. 52 ‘Minister for Electric Power No 1 Receives President of YMEC.’ The New Light of Myanmar, 30 November 2007. http://mission.itu.ch/MISSIONS/Myanmar/07nlm/n071130.htm [Thanks to Courier Research Associates for providing this link.] 53 ‘General Maung Aye Inspects Construction of Nanmyint Tower in National Kandawgyi Gardens in PyinOoLwin.’ The New Light of Myanmar, 4 September 2002. http://mission.itu.ch/MISSIONS/Myanmar/02nlm/n020904.htm#1_ 54 ‘Chinese Companies to Build Burmese Hydropower Projects.’ BBC World Monitoring, 2 September 2005. 55 ‘集团公司最大机电设备成套出口合同--缅甸耶瓦水电站机电及金结合同签署 (Sinohydro Signs its Largest Machinery & Generator Export Contract for Burma’s Yeywa Project).’ Sinohydro Website, 17 December 2004. http://www.sinohydro.com/portlet?pm_pl_id=7&pm_pp_id=13&COLUMNID=111111&ARTICLEID=11471464260025 56 ‘Prime Minister General Soe Win & Party Visit Guilin.’ The New Light of Myanmar, 6 November 2006. http://mission.itu.ch/MISSIONS/Myanmar/06nlm/n061106.htm 57 ‘缅甸耶涯电站碾压混凝土大坝开仓浇筑 (Roller-compacted Concrete Pouring Begins at Burma’s Yeywa Hydropower Plant).’ CGGC Website, 6 June 2006. http://www.gzbgj.com/article.asp?id=449
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poured, bringing the left bank to a height of 127.4 m and the right bank to 109.4 m.60 By December 2007, diversion tunnels 1 and 2 were completed, as were concrete pouring for diversion structures and earth work for the switch yard.61 Official reports claim that CGGC aims to complete construction a half year before the final December 2008 deadline,62 and also mention visits by officials from China EXIM Bank in 2007 and 200863 and Switzerland’s COLENCO Power Engineering Co.64 China National Electric Equipment Co. (CNEEC) signed an MoU in March 2004 with Burma for the construction of a dam gate for the Yeywa project.65 In November 2006, CNEEC met with Burmese representatives in Guilin, Guangxi to discuss the delivery of mechanical equipment.66 Sinohydro’s 1st Engineering Bureau signed a contract with China National Electric Equipment Co. (CNEEC) in May 2004 for materials and the installation of metal structures.67 In November 2006, Sinohydro and Burmese representatives discussed the delivery of hydraulic steel turbines and generators.68 Hunan Savoo Oversea Water & Electric Engineering Co. has secured a bid for the HSS1.69 See Yeywa Substation for additional information about the involvement of Beijing Electric Power Construction Research Institute of State Grid Corporation of China, Central China Power Grid Co., China National Heavy Machinery Co. (CHMC), and China Power Grid Co. in the distribution of electric power from the Yeywa Hydropower Plant.
58
‘缅甸耶涯项目完成一期砼浇筑任务 (Phase I Concrete Pouring at Yeywa Project Completed).’ CGGC Website, 6 June 2006. http://www.gzbgj.com/article.asp?id=445; ‘缅甸耶洼项目部开展立功劳动竞赛 (Yeywa Project Bureau Launch Labor Competition).’ CGGC Website, 10 October 2006. http://www.gzbgj.com/article.asp?id=711; & ‘缅甸耶洼项目部举行 5&7 期碾压砼施工提前完工庆典 (Celebration for the Early Completion of Yeywa Project Phases V & VII).’ CGGC Website, 16 February 2007. http://www.gzbgj.com/article.asp?id=745. 59 ‘缅甸耶洼水电站供料线贵通运行 (Burma’s Yeywa Hydropower Plant Concrete Supply Line is Functional).’ CGGC Website, 5 December 2006. http://www.gzbgj.com/article.asp?id=726 60 ‘缅甸耶洼大坝 RCC 浇筑突破百万立方米 (CGGC Yeywa Project Dept. Hit 1 million m3 RCC).’ CGGC Website, 18 April 2007. http://www.gzbgj.com/article.asp?id=782 61 ‘Senior General Than Shwe Inspects Myogyi Multi-purpose Dam Project, Yeywa Hydropower Project.’ The New Light of Myanmar, 13 December 2007. http://mission.itu.ch/MISSIONS/Myanmar/07nlm/n071213.htm [Thanks to Courier Research Associates for providing this link.] 62 ‘缅甸耶洼项目部：碾压混泥土月浇筑创新高 (图) (Burma Yeywa Project Bureau: New Innovations in RCC Pouring).’ CGGC Website, 16 October 2007. http://www.gzbgj.com/article.asp?id=881; & Vice President of China Exim Bank Visited Yeywa HPP in Myanmar, CGGC Website, 27 March 2008. http://www.gzbgj.com/english/article.asp?id=841 63 ‘中国进出口银行副行长李郡考察缅甸耶涯水电站 (China EXIM Bank Inspects Yeywa Hydropower Plant).’ CGGC Website, 28 February 2008. http://www.gzbgj.com/article.asp?id=993&tab=znews&word=缅甸 64 ‘缅甸水电一部部长赞 CGGC 最有实力 (Burma’s Ministry of Electric Power 1 Praises CGGC).’ CGGC Website, 18 September 2006. http://www.gzbgj.com/article.asp?id=689; & ‘缅甸总理梭温视察耶涯工程 (Burmese Prime Minister Soe Win Inspects the Yeywa Hydropower Project).’ CGGC Website, 27 September 2006. http://www.gzbgj.com/article.asp?id=705 65 ‘Chinese Companies to Build Burmese Hydropower Projects.’ BBC World Monitoring, 2 September 2005 66 ‘Prime Minister General Soe Win & Party Visit Guilin.’ The New Light of Myanmar, 6 November 2006. http://mission.itu.ch/MISSIONS/Myanmar/06nlm/n061106.htm 67 ‘中国水电一局九分局注重国际建筑市场开发 (Sinohydro 1st Engineering Bureau, 9th Branch’s International Market Developments).’ Sinohydro Website, 17 January 2007. http://www.sinohydro.com/portlet?pm_pl_id=7&pm_pp_id=13&ARTICLEID=11471537840078&COLUMNID=11 424148920001&CHCOLUMNID=11443003710001&GSCOLUMNID=-1 68 ‘Prime Minister General Soe Win & Party Visit Guilin.’ The New Light of Myanmar, 6 November 2006. http://mission.itu.ch/MISSIONS/Myanmar/06nlm/n061106.htm 69 ‘公司简介 (Brief Introduction).’ Hunan Savoo Oversea Water & Electric Engineering Co. Website. http://www.hhpdi.com/hhpdi/ShowArticle.asp?ArticleID=113 [Thanks to Burma Relief Center for providing this link.]
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PEGU DIVISION Kapaung (30 MW) (Taungoo Township) In September 2006, China National Heavy Machinery Co. (CHMC) was invited by Burma’s Ministry of Electric Power 1 to undertake construction at the Kapaung Dam.70 CHMC reports that as of April 2007 the initial phase of construction has been completed,71 and in July 2007 the last of six shipments of construction materials worth US$ 55.64 million was sent from China to Burma, which was in keeping with the goal of bringing the power plant online by October 2007.72 As of September 2007, more than 86% of construction has been completed,73 and in March 2008 technicians from CHMC attended the opening ceremony for the reservoir.74 The hydropower plant is currently operational.75 China National Electric Equipment Co. (CNEEC) met with Burmese representatives in November 2006 to discuss the delivery of electrical and mechanical equipment for this project.76 In March 2008 technicians from CNEEC attended the opening ceremony for the reservoir.77 Hunan Savoo Oversea Water & Electric Engineering Co. provided metal structures.78 Kun (Kunchaung) (60 MW), Sittaung River (Phyu Township) China National Heavy Machinery Co. (CHMC) signed contracts with the Ministry of Electric Power on March 24, 2004 for three 20 MW generators as well as metal structures.79 In May 2004, CHMC signed a contract with Tianjin ALSTROM for the supply of three 22 MW Francis turbine generators,80 as well as a design contract with Guangxi Electric Power Industry Investigation Design & Research Institute. 81 CHMC reports suggest that the Kun Hydropower Plant should be completed and operational by December 2008.82
70
‘陆文俊总经理赴缅甸参加在建水电站项目进度协调会 (CHMC General Manager Visits Burma for Hydropower Plant Meeting).’ CHMC Website, 26 September 2006. http://www.chmc2003.net/news.do?cmd=show&id=1553 71 ‘“CHMC No Problem” – 缅甸 KABAUNG 水电站建设现场纪实 (CHMC Construction at Burma’s Kabaung Hydropower Plant).’ CHMC Website, 30 April 2007. http://www.chmc2003.net/news.do?cmd=show&id=1666 72 ‘陆文俊总经理赴缅甸参加在建水电站项目进度协调会 (CHMC General Manager Visits Burma for Hydropower Plant Meeting).’ CHMC Website, 26 September 2006. http://www.chmc2003.net/news.do?cmd=show&id=1553 73 ‘Ongoing Hydropower Projects to be Completed on Schedule.’ The New Light of Myanmar, 28 September 2007. http://burmalibrary.org/docs4/NLM2007-09-28.pdf 74 ‘Khabaung Reservoir Opened in Ottwin Township on Completion of Projects.’ The New Light of Myanmar, 23 March 2008. http://www.myanmar.com/newspaper/nlm/ 75 ‘缅甸 Kabaung 水电站成功发电 (Kabaung Dam Generates Electricity).’ China National Heavy Machinery Co. Website, 27 March 2008. http://www.chmc2003.net/news.do?cmd=show&id=1904 76 ‘Prime Minister General Soe Win & Party Visit Guilin.’ The New Light of Myanmar, 6 November 2006. http://mission.itu.ch/MISSIONS/Myanmar/06nlm/n061106.htm 77 ‘Khabaung Reservoir Opened in Ottwin Township On Completion of Projects, Bago Division to be Region on which State can Rely in Agricultural & Electric Sectors.’ The New Light of Myanmar, 23 March 2008. http://www.myanmar.com/newspaper/nlm/ 78 ‘公司简介 (Brief Introduction).’ Hunan Savoo Oversea Water & Electric Engineering Co. Website. http://www.hhpdi.com/hhpdi/ShowArticle.asp?ArticleID=113 [Thanks to Burma Relief Center for providing this link.] 79 ‘缅甸 KUN 水电站项目签约 (Burma’s Kun Hydropower Plant Project Agreement Signed).’ CHMC Website, 10 May 2004. http://www.chmc2003.net/news.do?cmd=show&id=1053 80 ‘ALSTOM Wins 2 Hydro Contracts in China.’ ALSTOM Brazil Website. http://www.alstom.com.br/Ingles/Noticias_Detalhes.asp?noticia=307&Idioma=8 81 ‘缅甸 KUN 水电站项目顺利执行 (Burma’s Kun Hydropower Plant Project Smoothly Executed).’ CHMC Website, 29 June 2004. http://www.chmc2003.net/news.do?cmd=show&id=1071 82 ‘陆文俊总经理赴缅甸参加在建水电站项目进度协调会 (CHMC General Manager Visits Burma for Hydropower Plant Meeting).’ CHMC Website, 28 September 2006. http://www.chmc2003.net/news.do?cmd=show&id=1553
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Sinohydro’s 1st Engineering Bureau signed contracts worth RMB 12 million with China National Electric Equipment Co. (CNEEC) for metal structure construction.83 In December 2006, Sinoydro’s 1st Engineering Bureau has signed two additional contracts worth RMB 26.66 million with China National Heavy Machinery Co. (CHMC) for building materials and installation.84 China CAMC (Construction & Agricultural Machinery Import & Export Corporation) Engineering Co. completed a feasibility study in the 1990s.85 Kyauk Sinohydro’s 14th Engineering Bureau lists this as an international project which it has undertaken, presumably by providing construction services; however, additional information remains vague.86 Kyauk Naga (75 MW), Shwegyin River (Shwegyin Township) China Gezhouba Group Co. (CGGC) reports that it signed a contract with the SPDC to supply and install machinery and power-generating equipment in September 2007.87 Phyu (20 MW), Phyu River (Phyu Township) China Gezhouba Group Co. (CGGC) signed a contract in January 2007 for two sets of hydraulic generating units as well as all electrical and mechanical equipment, with a supply time of 21 months.88 Thaukyegat (150 MW), Thaukyayka (Day Loh) River See Thaukyegat (150 MW) in Karen State Yenwe (25 MW), Yenwe Creek (Kyaukdagah Township) Hunan Savoo Oversea Water & Electric Engineering Co. provided a building plan for this plant which was to open in January 2007, pending the arrival of turbines from China.89 The 1,050 foot long 251 foot high earth dam was inaugurated in early February 2007.90 China National Electric Equipment Co. (CNEEC) met with Burmese representatives in November 2006 to discuss the delivery of electrical and mechanical equipment for this project.91 China International Trust & Investment Co. (CITIC) Technology Co. met with Burmese Prime Minister Soe Win in November 2006 to discuss matters relating to the penstock and tunnel lining.92
‘中国水电一局九分局注重国际建筑市场开发 (Sinohydro 1st Engineering Bureau, 9th Branch’s International Market Developments).’ Sinohydro Website, 17 January 2007. http://www.sinohydro.com/portlet?pm_pl_id=7&pm_pp_id=13&ARTICLEID=11471537840078&COLUMNID=11 424148920001&CHCOLUMNID=11443003710001&GSCOLUMNID=-1 84 Ibid. 85 ‘Myanmar Snap Trade Directory.’ Myanmar Snap. http://www.myanmarsnap.com/investment07.asp [Thanks to Courier Research Associates for providing this link.] 86 ‘Domestic & Overseas Projects.’ Sinohydro 14th Engineering Bureau Website. http://www.fcbmis.com/English/Overseas%20Projects.htm 87 ‘缅甸水津电站机电设备设计与供货合同签订 (Burma Shwegyin Hydropower Plant Contract Signed).’ CGGC Website, 11 September 2007. http://www.gzbgj.com/article.asp?id=879 88 ‘Contract Signing of the Design & Supply of Electrical, Mechanical Equipments For Phyu Hydropower Project In Myanmar.’ CGGC Website. http://www.gzbgj.com/english_n/news08.htm 89 ‘公司简介 (Brief Introduction).’ Hunan Savoo Oversea Water & Electric Engineering Co. Website. http://www.hhpdi.com/hhpdi/ShowArticle.asp?ArticleID=113 [Thanks to Burma Relief Center for providing this link.]; & ‘Power Plant to be Ready in September.’ Myanmar Times, 6 November 2006. 90 ‘Prime Minister General Soe Win Attends Inauguration of Yenwe Hydroelectric Power Station.’ The New Light of Myanmar, 11 February 2007. http://mission.itu.ch/MISSIONS/Myanmar/07nlm/n070211.htm [Thanks to Courier Research Associates for providing this link.] 91 ‘Prime Minister General Soe Win & Party Visit Guilin.’ The New Light of Myanmar, 6 November 2006. http://mission.itu.ch/MISSIONS/Myanmar/06nlm/n061106.htm 92 Ibid.
83
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Zaungtu (20 MW), Upper Bago River (Taikkyi Village, Bago Township) Yunnan Machinery & Equipment Import & Export Co. began work on this project in 1994.93 In March 2000, this 45m high dam was inaugurated.94 SAGAING DIVISION Thapanseik (30 MW), Mu River (Thapanseik Village, Kyunhla Township) Sinohydro’s 1st Engineering Bureau assisted with the installation of power generating equipment and structures and secured maintenance contracts worth RMB 14.88 million for this project which was completed in May 2002.95 China International Trust & Investment Co. (CITIC) Technology Co. signed an MoU with the Ministry of Electric Power in November 1998 96 and completed this project with US$ 20 million financing in the form of seller’s export credit from China EXIM Bank.97 Zi Chaung (1.26 MW) Yunnan Machinery & Equipment Import & Export Co. (YMEC) undertook this project in 1991.98 SHAN STATE Chinshwehaw (0.2 MW) Yunnan Machinery & Equipment Import & Export Co. undertook this project in 1993.99 Kengtawng (54 MW), Namtein Creek (Mone Township) Hunan Savoo Oversea Water & Electric Engineering Co. is working on metal structures for the power plant, which as of January 2008 was 86% complete and could be online within the year.100 A joint Zhejiang Orient Holding Group and China National Electric Equipment Co. (CNEEC) consortium signed contracts worth US$ 11.5-15 million in June 2005 for construction materials and electrical equipment for this three 18 MW turbine generator power plant.101
93
‘Overseas & Domestic Projects.’ YMEC Website. http://www.ymec.com.cn/cn/about_yj.htm; & ‘Zaungtu Hydropower Station (Myanmar).’ YMEC Website. http://www.ymec.com.cn/en/hpp/Project_zd.htm 94 ‘Newly Built Zaungtu Dam & Hydel Power Plant in Bago Division Inaugurated.’ The New Light of Myanmar, 23 March 2000. http://mission.itu.ch/MISSIONS/Myanmar/00nlm/n000323.htm#(4) 95 ‘中国水电一局九分局注重国际建筑市场开发 (Sinohydro 1st Engineering Bureau, 9th Branch’s International Market Developments).’ Sinohydro Website, 17 January 2007. http://www.sinohydro.com/portlet?pm_pl_id=7&pm_pp_id=13&ARTICLEID=11471537840078&COLUMNID=11 424148920001&CHCOLUMNID=11443003710001&GSCOLUMNID=-1 96 ‘缅甸德畔赛及孟河水电站 (Burma’s Thapanseik & Mone River Hydropower Plants).’ Sinohydro Website. http://www.sinohydro.com/portlet?pm_pl_id=7&pm_pp_id=29&COLUMNID=11509592350001 97 ‘中国承包的缅甸德畔色水电站竣工 (Chinese Funded Thapanseik Hydropower Plant Completed).’ HWCC, 12 July 2002. http://www.hwcc.gov.cn/nsbd/NewsDisplay.asp?Id=40778; & Platts. 2007. Platts Myanmar Country Energy Profile. [Thanks to Courier Research Associates for providing this document.] 98 ‘Overseas & Domestic Projects.’ YMEC Website. http://www.ymec.com.cn/cn/about_yj.htm 99 Ibid. 100 ‘公司简介 (Brief Introduction).’ Hunan Savoo Oversea Water & Electric Engineering Co. Website. http://www.hhpdi.com/hhpdi/ShowArticle.asp?ArticleID=113 [Thanks to Burma Relief Center for providing this link]; & ‘Minister Goes on Inspection Tour of Kengtawng Hydropower Project.’ The New Light of Myanmar, 18 January 2008. http://mission.itu.ch/MISSIONS/Myanmar/08nlm/n080118.htm [Thanks to Courier Research Associates for providing this link.] 101 ‘Hydro-electric Power Department, Chinese Consortium Ink Two Agreements.’ The New Light of Myanmar, 17 June 2005. http://mission.itu.ch/MISSIONS/Myanmar/05nlm/n050617.htm#Hydro-electric%20Power%20 Department,%20Chinese%20consortium%20ink%20two%20agreements; & Platts. 2007. Platts Myanmar Country Energy Profile. [Thanks to Courier Research Associates for providing this document.]
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China National Electric Equipment Co. (CNEEC) signed an additional US$ 3.5 million contract with the Ministry of Electric Power for ironwork in June 2005.102 In November 2006, CNEEC met with Burmese representatives to discuss the delivery mechanical equipment for this project.103 See Kengtawng Transmission Line for more information about the involvement of Zhejiang Orient Holding Group in the distribution of electric power from the Kengtawng Hydropower Plant. Kunhein (Kunheng) (0.15 MW) Yunnan Machinery & Equipment Import & Export Co. (YMEC) undertook this project in 1990.104 Kunlon (0.5 MW) Yunnan Machinery & Equipment Import & Export Co. (YMEC) undertook this project in 1993.105 Kyaing Ton (Kengtung) (0.32/0.48 MW) Yunnan Machinery & Equipment Import & Export Co. (YMEC) undertook this project in 1990.106 Kyaukme (4 MW) Yunnan Machinery & Equipment Import & Export Co. (YMEC) undertook this project in 1992.107 Mepan (Meipan) (1.26 MW) (Mong Hsat Township) Yunnan Machinery & Equipment Import & Export Co. (YMEC) undertook this project in 1991, and an inauguration ceremony was held on 13 May 2002.108 Nam Myaw (4 MW) Yunnan Machinery & Equipment Import & Export Co. (YMEC) undertook this project in 1992.109 Nam Wop (3MW) (Kyaing Ton Township) Yunnan Machinery & Equipment Import & Export Co. (YMEC) undertook this project around 1992.110 Shweli I (600 MW), Shweli River (Man Tat Village, Namhkam Township) Yunnan Machinery & Equipment Import & Export Co. (YMEC) began work in February 2004, but Burma’s inability to secure funding halted all progress in July 2005.111 In August 2006, YMEC joined with Yunnan Huaneng Lancang River Hydropower Development Co. and Yunnan Power Grid Co. to 102
‘Hydro-electric Power Department, Chinese Consortium Ink Two Agreements.’ The New Light of Myanmar, 17 June 2005. http://mission.itu.ch/MISSIONS/Myanmar/05nlm/n050617.htm#Hydro-electric%20Power%20 Department,%20Chinese%20consortium%20ink%20two%20agreements [Thanks to Courier Research Associates for providing this link.] 103 ‘Prime Minister General Soe Win & Party Visit Guilin.’ The New Light of Myanmar, 6 November 2006. http://mission.itu.ch/MISSIONS/Myanmar/06nlm/n061106.htm 104 ‘Overseas & Domestic Projects.’ YMEC Website. http://www.ymec.com.cn/cn/about_yj.htm 105 Ibid. 106 Ibid. 107 Ibid. 108 Ibid; &‘Regional Development Projects Inspected in Shan State (East).’ New Light of Myanmar, 15 May 2002. http://mission.itu.ch/MISSIONS/Myanmar/02nlm/n020516.htm#(%203%20 [Thanks to Courier Research Associates for providing this link.] 109 ‘Overseas & Domestic Projects.’ YMEC Website. http://www.ymec.com.cn/cn/about_yj.htm 110 Ibid. 111 ‘激战瑞丽江——水电十四局瑞丽江电站截流施工纪实 (Shweli River Fierce Battle-Shweli Dam 14th Bureau Damming Construction).’ Sinohydro Website, 26 February 2007. http://www.sinohydro.com/portlet?pm_pl_id=7&pm_pp_id=13&COLUMNID=111111&ARTICLEID=11724607890001 For extensive photographs of construction at the Shweli I Dam see ‘瑞丽江项目部图库 (Shweli River Project Bureau Photographs).’ Sinohydro’s 14th Engineering Bureau Dali Sub-bureau Website, 29 June 2007. http://www.fcbdl.com/bencandy.php?fid=61&id=394
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create the Yunnan Joint Power Development Co. (YUPD).112 In December 2006, YUPD (80%) and the Ministry of Electric Power 1 (20%) jointly created the Shweli River I Power Station Co., turned the dam into a Build-Operate-Transfer (BOT) project, and increased the installed capacity from 400 to 600 MW.113 As of May 2007 the project is half complete, and will supply electricity to Mandalay.114 Sinohydro’s 14th Engineering Bureau and the Dali Sub-bureau began construction in June 2006, and by December 2006 the diversion tunnel had been completed and the Shweli River was blocked.115 Sinohydro’s 14th Engineering Bureau secured a bid for the construction and installation of metal structures in January 2007. 116 In July 2007 Sinohydro’s 14th Engineering Bureau signed new construction contracts with the goal of completing the project by the 30 June 2009 deadline,117 and in August 2008, the first hydroturbine generator came online for testing.118 CHECC Kunming Hydroelectric Investigation, Design & Research Institute, together with Yunnan Joint Power Development Co., inspected machinery quality at the Shweli dam in March 2007.119 Changjiang Institute of Surveying, Planning & Design Research undertook demolition work for the diversion tunnel and cofferdam in December 2006.120 See Shweli I Substation & Transmission Line for more information about the involvement of Central China Power Grid International Economic & Trade Co., China Southern Power Grid Co., Ningbo Huyong Electric Power Material Co., Sichuan Machinery & Equipment Import & Export Co., and Yunnan Electric Power Design Institute in the distribution of electric power from the Shweli I Hydropower Plant. Shweli II (460 MW), Shweli River Yunnan Machinery & Equipment Import & Export Co. (YMEC) is involved in this project.121 Shweli III (360 MW), Shweli River Yunnan Machinery & Equipment Import & Export Co. (YMEC) is involved in this project.122
112
‘中国在缅甸投资的首个水电项目成功截流 (China’s First Hydropower Investment in Burma Successfully Dammed).’ China Electricity Council, 13 December 2006. http://www.cec.org.cn/news/showc.asp?id=92488 113 ‘瑞丽江电站胜利实现截流 (Shweli River Hydropower Station Triumphantly Blocks Water).’ Dali Sub-bureau of Sinohydro’s 14th Engineering Bureau Website, 11 December 2006. http://www.fcbdl.com/bencandy.php?fid=3&id=26 114 ‘Burma Committed to Building more Hydropower Plants.’ BBC Financial Times Information, 7 May 2007. 115 ‘集团公司水电十四局承建的缅甸瑞丽江水电站成功截流 (图) (14th Bureau Succeed in Damming the Ruili River).’ Sinohydro Website, 15 December 2006. http://www.sinohydro.com/english/portlet?pm_pl_id=7&pm_pp_id=13&COLUMNID=111111&ARTICLEID=11670369310001
‘我局中标缅甸瑞丽江一级水电站厂房枢纽土建及金属结构安装工程 (Sinohydro 14th Engineering Bureau Secures Shweli I Bid).’ Sinohydro 14th Engineering Bureau Website, 12 January 2007. http://www.fcbmis.com/sd_nm/2007/1-12/151512.html 117 ‘缅甸瑞丽江一级电站工程总承建包合同在昆签字 (Contracts Signed in Kunming for Burma’s Shweli I Dam).’ Sinohydro’s 14th Engineering Bureau Website, 5 July 2007. http://www.fcbmis.com/news/jnyw/2007/75/0775101710K58IHJ2120G3BDAJ06D1.html 118 ‘瑞丽江电站首台机组调试正式启动 (Shweli Dam First Hydroturbine Generator Testing).’ Dali Sub-Bureau of Sinohydro’s 14th Engineering Bureau Website, 24 August 2008. http://www.fcbdl.com/bencandy.php?fid=37&id=1114 119 ‘瑞丽江电站厂房基坑开挖通过质量验收 (Shweli Hydropower Project Machinery Undergoes Quality Assessment).’ Sinohydro’s 14th Engineering Bureau Website,10 March 2007. http://www.fcbdl.com/bencandy.php?fid=37&id=193 120 ‘缅甸瑞丽江水电站导流洞进出口围堰爆破圆满成功 (Shweli River Hydropower Plant Diversion Tunnel & Cofferdam Complete).’ Changjiang Institute of Surveying, Planning & Design Research Website, 13 December 2006. http://www.cjwsjy.com.cn/News/specialnews/200612133157.htm 121 ‘Overseas & Domestic Projects.’ YMEC Website. http://www.ymec.com.cn/cn/about_yj.htm 122 Ibid. 116
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Tasang (7100 MW), Salween River China Gezhouba Group Co. (CGGC) signed an MoU with the Tasang Hydropower Co. in March 2007 for the construction of two 1200m long, 8m in diameter diversion tunnels.123 In November 2007, CGGC acquired a 51% stake in the Tasang Dam, leaving Thai MDX with a 24% stake and Burma’s Department of Hydropower Implementation with a 25% stake. 124 In January 2008, an unnamed Chinese company set up sixty 17-30 yard long pillars on both banks of the Salween River at the Tasang site.125 A ground-breaking ceremony was held in March 2007126 and construction supposedly began in April 2007, while some media claim that construction has been put on hold indefinitely.127 Upper Thanlwin (2400 MW), Salween River In April 2007, Than Shwe urged that the Upper Thanlwin project be implemented as soon as possible and, in May 2007, Chinese technicians conducted a feasibility study for this project which is expected to be completed in 2008.128 No decision had been made on whether to expand the Upper Thanlwin project into two dams between the towns of Konekyan and Kunlon, as the original MoU did not specify quantity of dams and the companies involved have not disclosed their intentions.129 Yunnan Power Grid Co. and CHECC Mid-South Design & Research Institute surveyed a 147 km section of the upper Salween River in December 2006.130 Hanergy Holding Group (formerly China Farsighted Investment Group) signed an MoU with Burma on 5 April 2007.131 China Gold Water Resources Co. signed an MoU with Burma on 5 April 2007.132 China Hydropower Engineering Consulting Group Co. (CHECC), CHECC Kunming Hydroelectric Investigation Design & Research Institute (KHIDI), and China Hanergy Holding Group (formerly China Farsighted Investment Group) met in Beijing in March 2008 to discuss the feasibility of the Kunlon Dam, on the mainstream of the Salween River approximately 25 km from the Chinese border at Qingshuihe Port.133 The Department of Commerce of Yunnan Province reports that KHIDI signed agreements with Burma’s Ministry of Electric Power for US$ 5,270,000 in September 2007.134 123
‘缅甸市场开发再传捷报 (News of Victory from Burmese Market Developments).’ CGGC Website, 16 March 2007. http://www.gzbgj.com/article.asp?id=749 124 ‘Chinese Firm takes 51pc of Tasang Hydropower Project.’ The Myanmar Times, 19 November 2007. http://www.mmtimes.com/no393/b004.htm [Thanks to Courier Research Associates for providing this link.] 125 ‘Chinese Dam Builders Set Up 60 Pillars for Tasang Dam.’ Shan Herald Agency for News, 16 January 2008. http://www.shanland.org/environment/2008/chinese-dam-builders-set-up-60-pillars-for-tasang-dam/ 126 ‘Tar-hsan Hydropower Project Construction Begins.’ The New Light of Myanmar, 5 April 2007. http://mission.itu.ch/MISSIONS/Myanmar/07nlm/n070405.htm 127 ‘Myanmar Pushes Ahead Thanlwin Hydro Projects.’ International Water Power & Dam Construction, 17 April 2007. http://www.waterpowermagazine.com/story.asp?sectioncode=130&storyCode=2043576; ‘Mystery Decision Puts Burma Dams on Hold.’ Bangkok Post, 12 February 2008; & ‘Samak Green Lights the Salween Hydro-dam.’ The Irrawaddy, 8 March 2008. http://www.bangkokpost.com/breaking_news/breakingnews.php?id=125863 128 ‘Lt-Gen Kyaw Win Attends Cultivation of 300 Acres of Physic Nut in Hsenwi Station.’ The New Light of Myanmar, 20 May 2007. http://mission.itu.ch/MISSIONS/Myanmar/07nlm/n070520.htm 129 ‘China Eyes Second Dam on Thanlwin.’ The Myanmar Times, 14 May 2007. http://mmtimes.com/no366/b005.htm 130 ‘联合踏勘团顺利完成缅甸萨尔温江上游踏勘任务 (Survey Group Completes On-site Upper Salween River Survey).’ Yunnan Power Grid Co. Website, 28 December 2006. http://www.yndw.com/showinfo.asp?id=37407 131 ‘Myanmar Commits to Building more Hydropower Plants.’ People’s Daily, 7 May 2007. http://english.people.com.cn/200705/07/eng20070507_372570.html 132 Ibid. 133 ‘缅甸滚弄水电站可研阶段工程勘察设计技术大纲咨询会议在北京召开 (Feasibility Meeting for Burma’s Kunlong Dam Held in Beijing).’ CHECC Website, 11 March 2008. http://www.checc.cn/news/news.jsp?type=100&new_id=7254&target= 134 ‘2007 年 1－9 月云南省外经业务统计 (Yunnan Province Overseas Operation Statistics January – September 2007).’ Department of Commerce of Yunnan Province Website, 22 October 2007. http://www.bofcom.gov.cn/bofcom/433477000347254784/20071022/167375.html
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Sinohydro, China Southern Power Grid Co., and China Three Gorges Project Co. signed a strategic cooperation framework agreement for the development of the Salween River’s hydropower resources at Sinohydro’s headquarters in April 2008.135 Zawgyi I (18 MW), Zawgyi Creek (Yaksawk Township) Yunnan Machinery & Equipment Import & Export Co. (YMEC) undertook this run-of-the-river project in 1992.136 In November 2007, YMEC representatives signed equipment supply contracts with the Ministry of Electric Power No. 1.137 Sinohydro’s 14th Engineering Bureau lists this as an international project which it has undertaken, presumably by providing construction services.138 Zawgyi II (12 MW), Zawgyi Creek Yunnan Machinery & Equipment Import & Export Co. (YMEC) undertook the installation of the gate and penstock in 1990,139 and supplied the intake structure, filter, sluices and pressurized steel pipes for this dam that was inaugurated in March 2000.140 China Shanghai Corporation for Foreign Economic & Technological Co-operation (SFECO) provided two 6.4 MW generator units and accessorial equipment between July 1997 and October 1998.141 SUBSTATIONS & TRANSMISSION LINES Belin-Meikhtila-Taungtwingyi-Monywa Central China Power Grid Co. signed agreements with the Ministry of Electric Power worth US$ 58.4 million in December 2006 for the expansion of an existing 230 kV substation, the construction of eight new 230 kV transformation substations, and two 230 kV, 340 km long transmission lines. 142 Construction began in July 2004.143 Belin Substation (Kyaukse Township, Mandalay Division) Central China Power Grid International Economic & Trade Co. signed a contract with the Ministry of Electric Power in January 2007 to supply equipment for a substation in Belin.144 135
‘缅甸萨尔温江战略合作框架协议签署 (Salween River Strategic Cooperation Framework Agreement Signed).’
金融界, 28 April 2008. http://info.jrj.com.cn/news/2008-04-28/000003585891.html 136
‘Overseas & Domestic Projects.’ YMEC Website. http://www.ymec.com.cn/cn/about_yj.htm ‘Minister for Electric Power No 1 Receives President of YMEC.’ The New Light of Myanmar, 30 November 2007. http://mission.itu.ch/MISSIONS/Myanmar/07nlm/n071130.htm [Thanks to Courier Research Associates for providing this link.] 138 ‘Domestic & Overseas Projects.’ Sinohydro 14th Engineering Bureau Website. http://www.fcbmis.com/English/Overseas%20Projects.htm 139 ‘Overseas & Domestic Projects.’ YMEC Website. http://www.ymec.com.cn/cn/about_yj.htm; & ‘Zawgyi Hydropower Station (Myanmar).’ YMEC Website. http://www.ymec.com.cn/en/hpp/Project_zj.htm 140 ‘Government Endeavouring for Sufficient Power Supply Zawgyi Hydel Power Station Launched.’ The New Light of Myanmar, 17 March 2000. http://mission.itu.ch/MISSIONS/Myanmar/00nlm/n000317.htm#(2) [Thanks to Courier Research Associates for providing this link.] 141 ‘Overseas Contracted Engineering: Project List.’ SFECO Website. http://www.sfeco.net.cn/e/trade/list.asp; & ‘Government Endeavouring for Sufficient Power Supply Zawgyi Hydel Power Station Launched.’ The New Light of Myanmar, 17 March 2000. http://mission.itu.ch/MISSIONS/Myanmar/00nlm/n000317.htm#(2) [Thanks to Courier Research Associates for providing this link.] 142 ‘谢明亮率华中电网公司经贸代表团访问缅甸 双方签署缅甸泊宁等三个输变电工程项目合同 (CCPGC Visits Burma & Signs Contracts for Transformation Substations & Transmission).’ CCPGC Website, 5 January 2007. http://intl.ccpg.com.cn/pub/huazhong/tpxw/wsjl/t20070105_10381.htm 143 ‘缅甸总理梭温率团访问华中电网有限公司 (Burmese Prime Minister Soe Win Visits CCPGC).’ CCPGC Website, 7 November 2006. http://202.110.186.75:8080/pub/huazhong/gjjldt/t20061107_9698.htm 144 ‘China, Myanmar Ink Contract on Purchase of Electrical Goods.’ The New Light of Myanmar, 4 January 2007 http://mission.itu.ch/MISSIONS/Myanmar/07nlm/n070104.htm; & Platts. 2007. Platts Myanmar Country Energy Profile. [Thanks to Courier Research Associates for providing this document.] 137
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Kengtawng Transmission Line (Shan State) Zhejiang Orient Holding Group signed a US$ 4.56 million contract with the Hydroelectric Power Department under the Ministry of Electric Power in 2005 to provide 132 kV cables and electrical equipment.145 Electricity will be supplied to Loilem, Langkho, Taunggyi and the national grid.146 Mongsan Substation (Shan State) Central China Power Grid International Economic & Trade Co. signed a contract with the Ministry of Electric Power in January 2007 to supply equipment for a substation in Mongsan.147 Myaungdagar-Hlaingthagar-Yekyi Central China Power Grid International Economic & Trade Co. signed contracts in March 2004 for the expansion of the Myaungdagar 230 kV transformation substation, the construction of the Hlaingthagar 230 kV transformation substation, the construction of the Yekyi 230 kV transformation substation, and the construction of two (one 160 km and one 40 km) 230 kV split single loop transmission lines, with at least 90% of materials coming from China.148 Rangoon Dagon Substation (Rangoon Division) Yunnan Machinery & Equipment Import & Export Co. (YMEC) started this 6,800 kV project in 1993.149 Rangoon-Yegyi (Rangoon Division) Central China Power Grid Co. (CCPGC) and subsidiary Central China Power Grid International Economic & Trade Co. signed agreements with Burma worth US$ 16.1 million in March 2004 for the construction of a 230 kV transformation substation and a 230 kV transmission line.150 Shweli I Substation & Transmission Lines (Shan State) Central China Power China Power Grid International Economic & Trade Co. signed a contract with the Ministry of Electric Power in 2007 to supply equipment for a substation at the Shweli site.151 China Southern Power Grid Co. reports that in March 2007, Yunnan Electric Power Design Institute completed a feasibility study for a 220 kV transmission cable that would link the Shweli I site with hydropower projects on the Niyou River, a tributary of the Jinsha River, in China’s Yunnan Province.152
145
‘Hydro-electric Power Department Inks Contract to Purchase Chinese Electrical Equipment.’ Myanmar Information Committee Yangon Information Sheet, 23 August 2005. http://www.myanmarinformation.net/infosheet/2005/050823.htm [Thanks to Courier Research Associates for providing this link.] 146 Ibid. 147 ‘China, Myanmar Ink Contract on Purchase of Electrical Goods.’ The New Light of Myanmar, January 4, 2007 http://mission.itu.ch/MISSIONS/Myanmar/07nlm/n070104.htm; & Platts. 2007. Platts Myanmar Country Energy Profile. [Thanks to Courier Research Associates for providing this document.] 148 ‘华中电力国际经贸公司积极拓展缅甸市场-缅甸 M.H.Y.230KV 输电线路及变电站项目签约(CCPGC Enthusiastically Opens Burma Markets – Burma’s M.H.Y. 230 kV Transmission Line & Substation Projects Signed).’ CCPGC Website, 20 July 2004. http://202.110.186.75:8080/pub/huazhong/swgc/t20041208_0721.htm ; & ‘华中电力国贸公司承建缅甸 MHY 项目进展顺利 (CCGC’s MHY Project Makes Progress).’ CCPGC Website, 2 November 2006. http://202.110.186.75:8080/pub/huazhong/tpxw/gcjz/t20061102_10239.htm 149 ‘Overseas & Domestic Projects.’ YMEC Website. http://www.ymec.com.cn/cn/about_yj.htm 150 ‘华电国贸公司积极拓展缅甸市场 (CCPGC Enthusiastically Opens Burmese Market).’ CCPGC Website, 8 December 2004. http://202.110.186.75:8080/pub/huazhong/gjjldt/t20041208_0697.htm 151 ‘China, Myanmar Ink Contract on Purchase of Electrical Goods.’ The New Light of Myanmar, 4 January 2007 http://mission.itu.ch/MISSIONS/Myanmar/07nlm/n070104.htm; & Platts. 2007. Platts Myanmar Country Energy Profile. [Thanks to Courier Research Associates for providing this document.] 152 ‘瑞丽江电站送出(缅甸侧)完成踏勘 (Shweli River Transmission Exploration Complete).’ China Southern Power Grid Website, 19 March 2007. http://www.csg.cn/news/compnewscon.aspx?id=10024&ItemCode=002007000000
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Sichuan Machinery & Equipment Import & Export Co. installed 356 km long 230 kV double transmission lines linking Shweli with Mandalay in 2003 under a US$ 34.72 million agreement with Myanmar Electric Power Enterprise.153 Ningbo Huyong Electric Power Material Co. provided engineering services for the 230 kV-350 kV steel power transmission towers linking Shweli with Rangoon.154 Shwesaryan Substation (Kyauksei Township, Mandalay Division) China Power Grid International Economic & Trade Co. signed a contract with the Ministry of Electric Power in January 2007 to supply equipment for a substation in Shwesaryan.155 Yeywa Substation (Mandalay Division) Central China Power Grid Co. (CCPGC), following a meeting in December 2006 with the Ministry of Electric Power, drafted a letter of intent for the use of Chinese government export seller’s credit in the amount of US$ 200 million for the Sino-Burmese joint venture construction of a 500 kV transformation substation and transmission lines.156 China National Heavy Machinery Co. (CHMC) signed a US$ 45.85 million contract with the Ministry of Electric Power Hydropower Bureau to install a 300 km 320 kV transmission cable and construct three substations over 20 months using Chinese Government funding.157 2006 reports from CHMC elaborate that Switzerland’s COLENCO Power Engineering Co. provided consultant services to the project.158 In March 2007, CHMC shipped 351 tons of construction materials to Burma,159 and in November 2007 CHMC conducted testing at eight transformation and transmission towers together with China Power Grid Co. and Beijing Electric Power Construction Research Institute of State Grid Corporation of China.160
153
‘Myanmar Installs More Transmission Lines for New Power Plant.’ Xinhua General News Service, 5 July 2007. ‘About Huyong.’ Ningbo Huyong Electric Power Material Co. Website. http://www.hydlcn.com/en/aboutus.htm [Thanks to Courier Research Associates for providing this link.] 155 ‘China, Myanmar Ink Contract on Purchase of Electrical Goods.’ The New Light of Myanmar, 4 January 2007 http://mission.itu.ch/MISSIONS/Myanmar/07nlm/n070104.htm; & Platts. 2007. Platts Myanmar Country Energy Profile. [Thanks to Courier Research Associates for providing this document.] 156 ‘谢明亮率华中电网公司经贸代表团访问缅甸—双方签署缅甸泊宁等三个输变电工程项目合同 (CCPGC Visit to Burma – Bilateral Agreements for Belin Substation & Transmission Projects Signed).’ CCPGC Website, 5 January 2007. http://202.110.186.75:8080/pub/huazhong/gjjldt/t20070105_10380.htm 157 ‘Chinese Companies to Build Burmese Hydropower Projects.’ BBC World Monitoring, 2 September 2005; ‘热烈 祝贺缅甸耶瓦水电站输变电项目合同签订 (Congratulations on the Signing of the Burma Yeywa Hydropower Plant Contract).’ CHMC Website, 2 September 2005. http://www.chmc2003.net/news.do?cmd=show&id=1264; ‘缅 甸 YEYWA 水电站输变电工程项目计划顺利折行中 (Burma’s Yeywa Hydropower Plant Plans Proceeding Smoothly).’ CHMC Website, 30 November 2006. http://www.chmc2003.net/news.do?cmd=show&id=1594; & ‘缅 甸 YEYWA 输，变电项目正式启动执行 (Burma Yeywa Distribution & Transformation Substation Begins Formal Implementation).’ CHMC Website, 6 April 2006. http://www.chmc2003.net/news.do?cmd=show&id=1436 158 ‘缅甸 YEYWA 输，变电项目正式启动执行 (Burma Yeywa Distribution & Transformation Substation Begins Formal Implementation).’ CHMC Website, 6 April 2006. http://www.chmc2003.net/news.do?cmd=show&id=1436 159 ‘缅甸 YEYWA 输变电项目第一批发货任务圆满完成 (Burma’s Yeywa Substation Project Begins Wholesale Production).’ CHMC Website, 5 April 2007. http://www.chmc2003.net/news.do?cmd=show&id=1654 160 ‘缅甸 YEYWA 输变电铁塔真型实验完成 (Burma Yeywa Transmission & Transformation Tower Test Complete).’ CHMC Website, 30 November 2007. http://www.chmc2003.net/news.do?cmd=show&id=1803
154
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UNKNOWN LOCATION Songpu (7.5 MW) CHECC Kunming Hydroelectric Investigation, Design and Research Institute lists this 50m tall hydropower project that was built between May 1997 and April 1999 on its website, however there is no additional information.161 ‘Piaoliang’ (400 MW) China Gezhouba Group Co. (CGGC) signed an agreement with the Ministry of Electric Power. No. 1 in January 2007 for metal structures, electricity generating equipment and 230 kV transmission lines over 21 months.162
161
‘缅甸松普水电站 (Songpu Hydropower Station in Myanmar).’ KHIDI Website. http://www.khidi.com:8083/ShowMess.asp?ArticleID=826 162 ‘缅甸漂亮水电站设备供货项目 (Burma ‘Piaoliang’ Hydropower Plant Equipment Project.’ CGGC Website, 25 July, 2008. http://www.cggc.cn/news_show.asp?type=&UidA=1006&UidB=1048&id=3682
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OIL & NATURAL GAS ARAKAN STATE PetroChina has conducted exploration in some offshore regions of Arakan State. China Oilfield Services Limited (COSL), a subsidiary of China National Offshore Oil Co. (CNOOC), signed a US$ 46 million contract for offshore exploration at one of Daewoo’s locations.1 Reports from January 2007 claim that drilling has begun.2 A-1 Block (Offshore) China National Petroleum Co. (CNPC) and Hong Kong-based subsidiary PetroChina signed an MoU with Myanma Oil & Gas Enterprise for the purchase of natural gas in late 2005.3 CNPC has a 60% stake in the deal and PetroChina has a 40% stake.4 China National Petroleum Co. (CNPC) reports that China National Offshore Oil Co. (CNOOC) subsidiary China Oilfield Services Limited (COSL) signed an agreement with Burma for offshore oil services in 2005, and obtained two production shares following competition with Thai PTT and India’s ONGC Videsh.5 COSL reports that in November 2005 it secured a 60 day US$ 6 million contract with Daewoo to provide drilling services with its NHII ship.6 A-3 Block (Offshore) China National Petroleum Co. (CNPC) and Hong Kong-based subsidiary PetroChina signed an MoU with Myanma Oil & Gas Enterprise for the purchase of natural gas in late 2005.7 CNPC has a 60% stake in the deal and PetroChina has a 40% stake.8 A-4 Block (Offshore) A Sino-Singaporean consortium created by China National Offshore Oil Co. (CNOOC) Myanmar, China Huanqiu Contracting & Engineering Co., and Golden Aaron Pte. signed a production sharing contract for natural gas exploration with Burma in 2004.9 In February 2008, CNOOC reported it will exchange its C-1 and A-4 blocks for Thai PTT’s 20% control of the M-3 and M-4 blocks.10
1
‘COSL Signs New Drilling Contracts in Myanmar & Australia.’ COSL Website, 24 November 2005. http://210.77.145.59/servlet/Node?Node=35271&Language=0 2 ‘Less than Expected Reserves in OVL’s IRNA.’ Iranian News Agency Distributed by UPI, 17 January 2007. 3 ‘PetroChina Seeks Myanmar Gas Deal.’ Myanmar Times, 16 January 2006. 4 ‘China Replaces India in Deal for Shwe Gas.’ Shwe Gas Bulletin Vol.1 Issue 9., December 2005. http://burmalibrary.org/docs3/SGB01-09.pdf 5 ‘中缅能源管道将进入建设阶段 年输一千万吨石油 (Sino-Burmese Energy Pipelines Enter New Phase).’ CNPC Website, 3 April 2007. http://www.cnpc.com.cn/CNPC/xwzx/hyxx/%e4%b8%ad%e7%bc%85%e8%83%bd%e6%ba%90%e7%ae%a1%e9 %81%93%e5%b0%86%e8%bf%9b%e5%85%a5%e5%bb%ba%e8%ae%be%e9%98%b6%e6%ae%b5%20%e5%b9 %b4%e8%be%93%e4%b8%80%e5%8d%83%e4%b8%87%e5%90%a8%e7%9f%b3%e6%b2%b9.htm 6 ‘COSL Signs New Drilling Contracts in Myanmar & Australia.’ COSL Website, 23 November 2005. http://www.iprogilvy.com/NewsReleaseFile/23-11-05.pdf 7 ‘印竞逐缅甸天然气采购权 (China & India Compete for Burma Natural Gas Rights).’ China Land & Resources News, 16 March 2007. http://www.clr.cn/front/chinaResource/read/news-info4.asp?ID=109029 8 ‘China Replaces India in Deal for Shwe Gas.’ Shwe Gas Bulletin Vol.1 Issue 9., December 2005. http://burmalibrary.org/docs3/SGB01-09.pdf 9 ‘China Ups Myanmar Acreage.’ International Oil Daily, 17 December 2004. 10 ‘Thailand PTTEP in Deal with CNOOC in Myanmar.’ Reuters, 13 February 2007. http://www.reuters.com/article/rbssEnergyNews/idUSBKK2053820080213?rpc=401&
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AD-1 Block (Offshore, Shallow Water apprx. 200m) China National Petroleum Co. (CNPC) International signed exploration and production sharing contracts with Burma’s Ministry of Energy in January 2007, three days after China vetoed a UN Security Council resolution to increase pressure on Burma.11 CNPC owns 100% of this natural gas block and will conduct seismic surveying.12 China National Oil & Gas Exploration & Development Co. (CNODC) signed a contract with Myanma Oil & Gas Enterprise (MOGE) in January 2007 for the exploration of this natural gas block.13 AD-6 Block (Offshore, Deep Water apprx. 2000m) China National Petroleum Co. (CNPC) International signed exploration and production sharing contracts with Burma’s Ministry of Energy in January 2007, three days after China vetoed a UN Security Council resolution to increase pressure on Burma.14 CNPC owns 100% of this natural gas block and will conduct seismic surveying.15 China National Oil & Gas Exploration & Development Co. (CNODC) signed a contract with Myanma Oil & Gas Enterprise (MOGE) in January 2007 for the exploration of this natural gas block.16 AD-8 Block (Offshore, Deep Water apprx. 2000m) China National Petroleum Co. (CNPC) International signed exploration and production sharing contracts with Burma’s Ministry of Energy in January 2007, three days after China vetoed a UN Security Council resolution to increase pressure on Burma.17 CNPC owns 100% of this natural gas block and will conduct seismic surveying.18 China National Oil & Gas Exploration & Development Co. (CNODC) signed a contract with Myanma Oil & Gas Enterprise (MOGE) in January 2007 for the exploration of this natural gas block.19 L Block (Onshore) China National Petroleum Co. (CNPC) Sichuan Petroleum Geophysical Prospecting Co. won a bid from India’s ESSAR to conduct 3-D seismic testing on 300 km2 at this natural gas block.20 M Block (Onshore, Kyaungphyu Region) China National Petroleum Co. (CNPC) Sichuan Petroleum Geophysical Prospecting Co. and China National Offshore Oil Co. (CNOOC) conducted 2D seismic testing at Ramree Island in 2005.21 China Oilfield Services Limited signed a RMB 40 million contract with CNOOC Myanmar in January 2006 for pre-drilling, drilling fluid & cementing at two wells in this block.22
11
‘China Signs 3 Deals in Myanmar, Defying Western Pressure.’ International Oil Daily, 18 January 2007; & ‘CNPC Signs Oil & Gas Contracts with Myanmar.’ CNPC Website, 17 January 2007. http://www.cnpc.com.cn/eng/press/newsreleases/CNPCsignsoilandgascontractswithMyanmar.htm 12 Ibid. 13 Ibid. 14 Ibid. 15 Ibid. 16 Ibid. 17 Ibid. 18 Ibid. 19 Ibid. 20 ‘缅甸 L 区块, 勘探川军迈步越 (Burma’s L Block, Prospects Advance).’ CNPC Sichuan Petroleum Geophysical Prospecting Co. Website, 19 July 2007. http://www.sgc-prc.com/news_detail.aspx?id=489&cate_id=1 21 ‘四川物探与中海油缅甸公司再度握手 (CNPC Sichuan Petroleum Geophysical Prospecting Co. & CNOOC Cooperate Again in Burma).’ CNPC Sichuan Petroleum Geophysical Prospecting Co. Website, 1 December 2005. http://www.sgc-prc.com/news_detail.aspx?id=148&cate_id=1 22 ‘COSL Secured New Overseas Well Service Contracts in Myanmar.’ COSL Website, 16 January 2006. http://www.iprogilvy.com/NewsReleaseFile/16-01-06.pdf ; & ‘HK-Listed China Oilfield Wins CNY 40 Million Well Service Contracts in Myanmar.’ AFX News Limited, 17 January 2006.
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The Sino-Singaporean consortium created by China National Offshore Oil Co. (CNOOC) Myanmar, China Huanqiu Contracting & Engineering Co., and Golden Aaron Pte. signed a 20 year production sharing contract with Myanma Oil & Gas Enterprise in October 2004.23 MANDALAY DIVISION Bagan Project (Onshore) Chinnery Assets was created on 16 November 2001 when China National Petroleum Co. (CNPC) Hong Kong and parent CNPC International entered into a shareholders’ agreement, with both parties holding 50% of shares.24 That same day, Chinnery Assets signed an agreement with Canada’s TG World to acquire a 70% interest in three production sharing contracts at the Bagan Project, which includes blocks IOR-3, RSF-2 and RSF-3, worth US$ 900,000.25 CNPC Hong Kong’s 2002 Annual Report describes an initial investment of HK$ 5,070,000 for these production sharing contracts, while the 2007 Annual Report claims that the group decided to abandon the blocks after exploration revealed limited commercial reserves, and the exploration investment of HK$ 6,355,000 in these blocks was included as impairment loss on loans to jointly controlled entities26. IOR-3 Block (Onshore, Tetma) Chinnery Assets controls 70% of the production sharing contract for this 481 km2 partially developed oilfield with an estimated reserve of 1.91 million barrels, a quantity based on seismic testing conducted by the geology research center of China National Oil & Gas Exploration & Development Co. (CNODC). 27 In June 2007, a CNPC Hong Kong spokesperson suggested the possibility of abandoning this block, which was later confirmed by the 2007 Annual Report.28 RSF-2 Block (Onshore, Tuyintaung) Chinnery Assets controls 70% of the production sharing contract at this 1,050 km2 area with an estimated reserve of 216.6 million barrels, a quantity based on seismic testing conducted by the geology research center of China National Oil & Gas Exploration & Development Co. (CNODC).29 The research phases are complete, and preliminary surveying was conducted30. In June 2007, a CNPC Hong Kong spokesperson suggested the possibility of abandoning this block, which was later confirmed by the 2007 Annual Report.31 23
‘China Ups Myanmar Acreage.’International Oil Daily, December 17, 2004. CNPC Hong Kong 2002. CNPC Hong Kong 2001 Annual Report. Available at http://www.cnpc.com.hk/report/2001cncp-e.pdf 25 ‘CNPC/Parent Company Set Up JV Unit to Participate in Myanmar Oil Fields.’ AFX News, 18 November 2001. http://www.ituc-csi.org/spip.php?action=info_compburma&comp=318&lang=en; & ‘CNPC (Hong Kong) Limited Announcement of Results.’ CNPC Hong Kong Website, 22 April 2002. http://www.cnpc.com.hk/report/report20020422.pdf 26 CNPC Hong Kong 2003. CNPC Hong Kong 2002 Annual Report. Available at http://www.cnpc.com.hk/report/report-20030419.pdf ; & CNPC Hong Kong 2008. CNPC Hong Kong 2007 Annual Report. Available at http://www.cnpc.com.hk/report/2007Annualreport(e).pdf 27 ‘Shareholder’s Agreement with CNPC International Limited & Farmout Agreement & Joint Operating Agreement with TG World Energy (Bahamas) Regarding & Oilfield & Exploration Areas in the Union of Myanmar.’ CNPC Hong Kong Website, 16 November 2001. http://www.cnpc.com.hk/report/report-20011116(e).pdf 28 ‘CNPC Hong Kong Outlines Upstream Spending in SE Asia & Peru.’ International Oil Daily, 14 June 2007; & CNPC Hong Kong 2008. CNPC Hong Kong 2007 Annual Report. Available at http://www.cnpc.com.hk/report/2007Annualreport(e).pdf 29 ‘Shareholder’s Agreement with CNPC International Limited (Connected Transaction) & Farmout Agreement & Joint Operating Agreement with TG World Energy (Bahamas) Regarding & Oilfield & Exploration Areas in the Union of Myanmar.’ CNPC Hong Kong Website, 16 November 2001. http://www.cnpc.com.hk/report/report-20011116(e).pdf; & ‘CNPC Hong Kong Outlines Upstream Spending in SE Asia & Peru.’ International Oil Daily, 14 June 2007; & ‘中国石油 集团在缅甸 (CNPC in Burma).’ CNPC Website. http://www.cnpc.com.cn/CNPC/ywycp/cnpczqq/亚洲.htm 30 ‘中国石油集团在缅甸 (CNPC in Burma).’ CNPC Website. http://www.cnpc.com.cn/CNPC/ywycp/cnpczqq/亚洲.htm 31 CNPC Hong Kong 2008. CNPC Hong Kong 2007 Annual Report. Available at http://www.cnpc.com.hk/report/2007Annualreport(e).pdf
24
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RSF-3 Block (Onshore, Gwegyo-Ngashandaung) Chinnery Assets controls 70% of the production sharing contract for this 1,603 km2 exploration area with an estimated reserve of 288.2 million barrels, a quantity based on seismic testing conducted by the geology research center of China National Oil & Gas Exploration & Development Co. (CNODC). 32 The research phases are complete, and preliminary surveying has commenced 33 ; however, in June 2007, a CNPC Hong Kong spokesperson suggested the possibility of abandoning this block, which was later confirmed by the 2007 Annual Report.34 MOATTAMA COAST M-2 Block (Offshore) The Sino-Singaporean consortium created by China National Offshore Oil Co. (CNOOC) Myanmar, China Huanqiu Contracting & Engineering Co., and Golden Aaron Pte., signed an exploration and production sharing contract with the Myanma Oil & Gas Enterprise in early 2005 for this 9,600 km2 natural gas block.35 China National Offshore Oil Co. (CNOOC) Myanmar signed an agreement with Myanma Oil & Gas Enterprise for exploration of this natural gas block.36 M-3 Block (Offshore) China National Offshore Oil Co. (CNOOC) plans to receive a 20% stake in this block controlled by Thai PTT Exploration & Production in exchange for CNOOC’s A-4 and C-1 blocks.37 M-4 Block (Offshore) China National Offshore Oil Co. (CNOOC) plans to receive a 20% stake in this block controlled by Thailand’s PTT Exploration & Production in exchange for CNOOC’s A-4 and C-1 blocks.38 M-10 Block (Offshore) The Sino-Singaporean consortium created by China National Offshore Oil Co. (CNOOC) Myanmar, China Huanqiu Contracting & Engineering Co., and Golden Aaron Pte., signed an MoU for exploration and a production sharing contract for this 15,534 km2 natural gas block.39
32
‘Shareholder’s Agreement with CNPC International Limited (Connected Transaction) & Farmout Agreement & Joint Operating Agreement with TG World Energy (Bahamas) Regarding & Oilfield & Exploration Areas in the Union of Myanmar.’ CNPC Hong Kong Website, 16 November 2001. http://www.cnpc.com.hk/report/report20011116(e).pdf; ‘CNPC Hong Kong Outlines Upstream Spending in SE Asia & Peru.’ International Oil Daily, 14 June 2007; & ‘中国石油集团在缅甸 (CNPC in Burma).’ CNPC Website. http://www.cnpc.com.cn/CNPC/ywycp/cnpczqq/亚洲.htm 33 ‘CNPC Hong Kong Outlines Upstream Spending in SE Asia & Peru.’ International Oil Daily, 14 June 2007; & ‘中国石油集团在缅甸 (CNPC in Burma).’ CNPC Website. http://www.cnpc.com.cn/CNPC/ywycp/cnpczqq/亚洲.htm 34 IBID; & CNPC Hong Kong 2008. CNPC Hong Kong 2007 Annual Report. Available at http://www.cnpc.com.hk/report/2007Annualreport(e).pdf 35 ‘中海油拿下缅甸 3 个油气区块 (CNOOC Secures 3 Burmese Oil & Gas Blocks).’ CNOOC Website, 27 January 2005. http://www.cnooc.com.cn/zhyww/xwygg/210729.shtml; & ‘中缅签署 3 个油气区块合同 (China & Burma Sign Contracts for 3 Oil & Gas Blocks).’ CNOOC Website, 31 January 2005. http://www.cnooc.com.cn/zhyww/xwygg/211931.shtml 36 ‘Production Sharing Contract Inked.’ The New Light of Myanmar, 27 January 2005. http://www.myanmarinformation.net/infosheet/2005/050127.htm 37 ‘Thailand PTTEP in Deal with CNOOC in Myanmar.’ Reuters, 13 February 2007. http://www.reuters.com/article/rbssEnergyNews/idUSBKK2053820080213?rpc=401& 38 Ibid. 39 ‘China Ups Myanmar Acreage.’ International Oil Daily, 17 December 2004.
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PEGU DIVISION Pyay Oilfield In May of 2006, China National Petroleum Co. (CNPC) Huabei Petroleum and China National Oil & Gas Exploration & Development Co. (CNODC) affiliated Kai Er Co. signed well drilling service contracts worth RMB 60 million for the Pyay Oilfield.40 Following initial failures in 2004, due to unfamiliarity with local conditions, Well Drilling No. 4 Company Team No. 40511 successfully completed the KYTC-1 and KNC-1 wells in 2006.41 IOR-4 Block (Onshore) China National Petroleum Co. (CNPC) has a 100% holding of this block through a contract with the Ministry of Energy.42 CNPC reports that preliminary drilling at the PSC-1 well at the IOR-4 block yielded remarkable results.43 In July 2006, the PSC-101 well was extended from 1200 m to 1960 m following work completed by CNPC Huabei affiliated Drilling No. 4 Company Team No. 40511.44 SAGAING DIVISION C-1 Block (Onshore, Indaw-Yenan) A consortium created by China National Offshore Oil Co. (CNOOC) Myanmar., China Huanqiu Contracting & Engineering Co., and Singapore’s Golden Aaron Pte., signed an exploration and production sharing contract with the Myanma Oil & Gas Enterprise (MOGE) in early 2005 for this 17,000 km2 natural gas block.45 China National Petroleum Co. (CNPC) Sichuan Petroleum Geophysical Prospecting Co. and MOGE signed and completed a contract for 2D seismic surveying with China National Offshore Oil Co. (CNOOC) Myanmar by May 2007.46 In February 2008, CNOOC reported it will exchange its C-1 and A-4 blocks for Thai PTT’s 20 % control of M-3 and M-4 blocks.47 C-2 Block (Onshore, Shwebo-Monywa) The Sino-Singaporean consortium created by China National Offshore Oil Co. (CNOOC) Myanmar, China Huanqiu Contracting & Engineering Co., and Golden Aaron Pte., signed an exploration and production sharing contract with the Myanma Oil & Gas Enterprise in early 2005 for this 26,000 km2 natural gas block.48
40
‘华北石油管理局缅甸市场淘金 (CNPC Huabei Petroleum Pans Burmese Market).’ CNPC Website, 24 May 2006...http://www.cnpc.com.cn/CNPC/xwzx/qydt/%e5%8d%8e%e5%8c%97%e7%9f%b3%e6%b2%b9%e7%ae%a 1%e7%90%86%e5%b1%80%e7%bc%85%e7%94%b8%e5%b8%82%e5%9c%ba%e6%b7%98%e9%87%91.htm 41 Ibid. 42 ‘CNPC in Myanmar.’ CNPC Website. http://www.cnpc.com.cn/eng/cnpcworldwide/asiaandpacific/Burma/ 43 ‘国家概况 (CNPC Myanmar Profile).’ CNPC Website. http://www.cnpc.com.cn/cnodc/hzygy/zygxx/zfjs/md.htm 44 ‘中南半岛亮出中国石油“名片” (图) (Southeastern Peninsula Brightens CNPC’s Brand Name).’ CNPC Website, 13 November 2006. http://www.cnpc.com.cn/Paper/2006/11/13/plate6/005.htm 45 ‘中海油拿下缅甸 3 个油气区块 (CNOOC Secures 3 Burmese Oil & Gas Blocks).’ CNOOC Website, 27 January 2005. http://www.cnooc.com.cn/zhyww/xwygg/210729.shtml; & ‘中缅签署 3 个油气区块合同 (China & Burma Sign Contracts for 3 Oil & Gas Blocks).’ CNOOC Website, 31 January 2005. http://www.cnooc.com.cn/zhyww/xwygg/211931.shtml 46 ‘Production Sharing Contract Inked.’ The New Light of Myanmar, 27 January 2005. http://www.myanmarinformation.net/infosheet/2005/050127.htm; & ‘四川物探缅甸 C1 区块项目完工 (CNPC Sichuan Exploration of Burma’s C1 Block Complete).’ CNPC Website, 14 May 2007. http://www.cnpc.com.cn/Paper/2007/05/14/plate6/003.htm 47 ‘Thailand PTTEP in Deal with CNOOC in Myanmar.’ Reuters, 13 February 2007. http://www.reuters.com/article/rbssEnergyNews/idUSBKK2053820080213?rpc=401& 48 ‘中海油拿下缅甸 3 个油气区块 (CNOOC Secures 3 Burmese Oil & Gas Blocks ).’ CNOOC Website, 27 January 2005. http://www.cnooc.com.cn/zhyww/xwygg/210729.shtml; & ‘中缅签署 3 个油气区块合同 (China & Burma Sign Contracts for 3 Oil & Gas Blocks).’ CNOOC Website, 31 January 2005. http://www.cnooc.com.cn/zhyww/xwygg/211931.shtml
40
China National Petroleum Co. (CNPC) Sichuan Petroleum Geophysical Prospecting Co. was chosen by China National Offshore Oil Co. (CNOOC) Myanmar in November 2005 to conduct seismic surveying at this block.49 China National Offshore Oil Co. (CNOOC) Myanmar signed an agreement with Myanma Oil & Gas Enterprise for exploration of this natural gas block.50 D Block (Onshore, Sagaing & Magwe Divisions) Sinopec planned to drill an exploration well at this 4,763 mile2 oil block in June 2007.51 OIL & GAS PIPELINES Sinopec has signed a RMB 8 billion contract for the construction of a 2,380 km long oil pipeline between Sittwe and Kunming.52 In April 2007, China’s National Reform & Development Council approved the construction of a pipeline to bring oil from the Middle East and Africa to China, and avoid the Straits of Malacca.53 China will also provide Burma with a US$ 83 million loan to develop its oil resources.54 PetroChina, with subsidiary ChinaOil Singapore, is negotiating for the construction of a pipeline capable of carrying 170 billion m3 of natural gas between Burma’s Arakan State and Chongqing.55 A news report from April 2007 indicates that PetroChina has reached an initial agreement with Myanma Oil & Gas Enterprise (MOGE) for the construction of two parallel natural gas and oil pipelines linking the Arakan Coast with Kunming and/or Chongqing.56 China National Petroleum Co. (CNPC) surveyed sites in Arakan State in January 2007 for the construction of parallel oil and natural gas pipelines.57 In December 2007, CNPC signed a strategic agreement with Yunnan for cooperation on the development of an oil pipeline from Burma.58 Nonetheless, the current status of both the oil and natural gas pipelines remains unclear as conflicting reports continue to appear in Chinese and English media. Huang Qifan, Mayor of Chongqing, has been building hype in Chinese media about decisions from high level officials in the Chinese
49
‘四川物探与中海油缅甸公司再度握手 (CNPC Sichuan Petroleum Geophysical Prospecting Co. & CNOOC Cooperate Again in Burma).’ CNPC Sichuan Petroleum Geophysical Prospecting Co. Website, 1 December 2005. http://www.sgc-prc.com/news_detail.aspx?id=148&cate_id=1 50 ‘Production Sharing Contract Inked.’ The New Light of Myanmar, 27 January 2005. http://www.myanmarinformation.net/infosheet/2005/050127.htm 51 ‘Sinopec to Drill for Oil in June.’ Myanmar Times, 28 May 2007. 52 ‘Work on Oil Pipeline Expected to Start this Year.’ The Myanmar Times, 20 April 2007. http://www.mmtimes.com/no364/b004.htm; & ‘Sinopec Construction of China-Burma Oil Pipeline to Start in 2007.’ Xinhua via Comtex, 21 April 2007. http://www.zibb.com/article/811631/Sinopec+says+construction+of+ChinaBurma+oil+pipeline+to+start+in+2007 53 ‘Sino-Burma Pipeline Receives NDRC Approval.’ China Energy Weekly, 25 April 2007. 54 ‘Work on China-Myanmar Oil Pipeline to Start in 2007.’ Asia Today, 23 April 2007. http://www.antara.co.id/en/arc/2007/4/23/work-on-china-myanmar-oil-pipeline-to-start-in-2007/ 55 ‘China Hands Burma to Build Parallel Energy Pipelines.’ Comtex, 5 April 2007; & ‘Natural Gas Business.’ ChinaOil Website. http://www.chinaoil.com.cn/zly_en/zgs/detail.asp?id=414&sid=0 56 ‘Sino-Burmese Energy Pipeline to Begin Construction.’ People’s Daily, 3 April 2007. http://finance.people.com.cn/GB/1038/59942/59955/5556045.html, 57 ‘中缅油气管道将使中缅两国联系更加紧密 (Sino-Burmese Pipeline Brings China & Burma Even Closer).’ CNPC Website, 28 February 2007. http://www.cnpc.com.cn/CNPC/xwzx/hyxx/%e4%b8%ad%e7%bc%85%e6%b2%b9%e6%b0%94%e7%ae%a1%e9%81% 93%e5%b0%86%e4%bd%bf%e4%b8%ad%e7%bc%85%e4%b8%a4%e5%9b%bd%e8%81%94%e7%b3%bb%e6%9b%b 4%e5%8a%a0%e7%b4%a7%e5%af%86.htm 58 ‘CNPC Speeds Up Preparations for Myanmar-China Oil Pipeline.’ Dow Jones, 2 December 2007. http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20071202%5cACQDJON200712022231DOWJONES DJONLINE000386.htm&
41
government and CNPC to extend the Sino-Burmese oil pipeline to Chongqing.59 In January 2007, Huang Qifan announced a campaign to raise CNY 100 billion for the development of Chongqing’s petrochemical industry to accommodate oil from the Sino-Burmese pipeline. In June 2007, CNPC signed an agreement with Chongqing to cooperate on the development of the city’s petrochemical industry and increase the supply of oil and natural gas.60
59
‘中缅石油管线年内动工昆明将建炼油厂 (Sino-Burmese Pipeline Construction to Begin this Year).’ CNPC Website, 4 April 2007. http://www.cnpc.com.cn/gdj/gdxw/%e4%b8%ad%e7%bc%85%e7%9f%b3%e6%b2%b9%e7%ae%a1%e7%ba%bf%e5% b9%b4%e5%86%85%e5%8a%a8%e5%b7%a5%e6%98%86%e6%98%8e%e5%b0%86%e5%bb%ba%e7%82%bc%e6%b 2%b9%e5%8e%82.htm; & ‘中缅输油管线或年内开建-重庆坐望千万吨原油 (Construction of Sino-Burmese Pipeline to Chongqing to Start Next Year).’ People’s Daily, 26 March 2007. http://finance.people.com.cn/GB/1038/59942/59955/5518259.html 60 ‘CNPC Signs Strategic Cooperation Agreement with Chongqing.’ CNPC Website, 27 June 2007. http://www.cnpc.com.cn/eng/press/newsreleases/_CNPCsignsstrategiccooperationagreementwithChongqing_.htm
42
MINING CHIN STATE Mwetaung Nickel Deposit Kingbao (Jinbao) Mining Co. signed agreements with the Ministry of Mining No. 3 to conduct exploration and feasibility studies 1 to explore this laterite nickel mine that contains proven nickel reserves in excess of 10 million tons at an average grade of 1.5%.2 Jinbao (Kingbao) Mining Co. is a 50/50 joint venture created in 2005 by Gold Mountain (Hong Kong) International Mining Co., a wholly-owned subsidiary of Zijin Mining Co., and Wanbao Mining Co., a wholly-owned subsidiary of China North Industries (NORINCO).3 SAGAING DIVISION Letpadaung Copper Deposit (Monywa) According to news reports from 2006, China Nonferrous Metal Mining Co. owns the mine.4 SHAN STATE Tigyit Coal Fired Power Plans and Mine (120 MW) (Tigyit, Pin Laung Township) China National Heavy Machinery Co. (CHMC) signed a US$ 42.9 million contract with the Ministry of Electric Power in August 2001.5 In March 2004, the third and final shipment of equipment from CHMC arrived in Burma, including belt conveyors, crushers, etc. at a value of US$ 5 million.6 The Final Acceptance Certificate has been signed, and the plant is in operation, with a conveyor belt transporting coal from the mine to the power plant.7 Namtu-Bawtwin Mineral Deposit Yunnan Machinery & Equipment Import & Export Co. (YMEC) has been awarded the mining and operation rights to reclaim lead and zinc from the tailings at Namtu by Burma’s Ministry if Mines.8 YMEC has invested US$ 5 million for a 500 ton per day concentrating mill, which is expected to come online in late 2008, and plans to invest an additional US$ 50 million for the development of an 8 million ton per year open pit mine in the near future.9
1
‘China, Myanmar Sign Mineral Exploration Agreement.’ Asia Pulse Pte., 15 August 2005. ‘Zijin Mining Expands Overseas Mining.’ Interfax China, 17 April 2007. http://www.minesandcommunities.org/Action/press1451.htm; & ‘Zijin to Double Gold Output after 68pc Profit Jump.’ South China Morning Post, 31 March 2006. 3 ‘Jinbao Mining Company Limited.’ Zijin Mining Website, 19 July 2007. http://english.zjky.cn/Colla/view.asp?id=55 4 ‘CN Acquires Largest Copper Mine in Northeastern China.’ China Business News Online, 2 March 2006. 5 Platts. 2007. Platts Myanmar Country Energy Profile. [Thanks to Courier Research Associates for providing this document.] 6 ‘More Equipment Arrived for Shan State Coal Mine.’ The Myanmar Times, 5 April 2004. http://www.myanmar.gov.mm/myanmartimes/no211/MyanmarTimes11-211/012.htm 7 ‘缅甸 TIGYIT 燃煤电站项目通过最终验收 (Burma’s Tigyit Coal Generator Plant Project Passes Final Inspection).’ CHMC Website, 2 February 2007. http://www.chmc2003.net/news.do?cmd=show&id=1611; ‘缅甸 TIGYIT 电厂 2#机组调式工作全面展开 (Burma’s Tigyit Power Plant generator No. 2).’ CHMC Website, 24 March 2005. http://www.chmc2003.net/news.do?cmd=show&id=1166; & ‘中国重机公司总承包的缅甸 TIGYIT 电站 2#机组并网发电 (CHMC’s Burma Tigyit Power Plant #2 Generator Produces Electricity).’ CHMC Website, 17 May 2005. http://www.chmc2003.net/news.do?cmd=show&id=1197 8 ‘Development Projects of Namtu-Bawtwin Mineral Deposit in the Union of Myanmar.’ YMEC Website. http://www.ymec.com.cn/en/mining.htm [Thanks to Burma Relief Center for providing this link.] 9 ‘Development Projects of Namtu-Bawtwin Mineral Deposit in the Union of Myanmar.’ YMEC Website. http://www.ymec.com.cn/en/mining.htm [Thanks to Burma Relief Center for providing this link.]
2
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MANDALAY DIVISION Tagaung Taung Nickel Deposit (Thabeikkyin Township) China Nonferrous Metal Mining Co. (CNMC) signed an agreement with the Ministry of Mining in July 2004 to conduct exploration and a feasibility study at this ferrous nickel deposit. 10 In 2007 China’s National Reform and Development Council approved this project, under which CNMC would control 75%, while Burma’s Mining Enterprise No. 3 would control the remaining 25%.11 In June 2007, the feasibility study was completed and approval was granted by the Ministry of Mining12. In July 2008, CNMC Nickel Co. and Burma’s Mining Enterprise No. 3 signed a new agreement to move forward with this US$ 800 million project, with both parties having a 50% stake.13 China EXIM Bank and the China Development Bank are providing funding, while Canadian-based Hatch and China Nonferrous Engineering & Research Institute will jointly design the project.14 Mount Popa Pozzolan Mine & Factory Jiangsu Pengfei Group Co. signed an agreement with Ministry of Electric Power No. 1 for the construction of a 500 ton per day pozzolan factory.15
10
‘CNMC & Burma Sign Exploration & Feasibility Study Agreement.’ 中国国家企业网, 22 July 2004. http://www.chinabbc.com.cn/yljc/view.asp?newsid=200472213265635&classid=109102104; & ‘Myanmar Mining Annual Review December 2005.’ Mining Annual Review, December, 2005. 11 ‘CN’s Nickel Mine Project Still Awaiting Burmese Government Approval.’ China Metals Weekly via Interfax, 15 June 2007; & ‘CN to Develop Nickel Mine in Burma.’ Interfax, 25 August 2006. 12 ‘China Nonferrous Metal Group Starts Nickel Project in Burma.’ Sinocast via Comtex News Network, 29 June 2007. 13 ‘CNMC to kick off construction on Myanmar nickel mine in H2.’ Interfax China Metals and Mining, 1 August 2008. http://www.minesandcommunities.org/article.php?a=8738; & ‘Mining Enterprise No. 3 and CNMC Nickel Co. Sign Contract.’ The New Light of Myanmar, 30 July 2008. http://myanmargeneva.org/NLM2008/eng/7July/n080730.pdf 14 IBID 15 ‘缅甸一电部与中国江苏鹏飞集团公司签署日产 500 吨粉煤灰厂合作协定 (Burma No. 1 Ministry of Electric Power & China Sign Pozzalan Agreement).’ The Economic & Commercial Counselor’s Office of the Embassy of the People's Republic of China in Myanmar Website, 15 April 2007. http://mm.mofcom.gov.cn/aarticle/zxhz/sbmy/200704/20070404570475.html
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For more than five years, Myanmar (formerly Burma) has been a major recipient of Chinese weapons. Eager to win allies in the region following the crackdown in Tiananmen Square, China began to supply vast amounts of military material to Myanmar in 1990. This was at a time when the the government in Yangon (formerly Rangoon ) was also being condemned by the rest of the world for its abysmal human rights record, and most Western powers had imposed a de facto arms embargo on Yangon. Now , however, Myanmar is trying to diversify its sources of military hardware. The Burmese are complaining about the poor quality of the Chinese equipment, as well as problems with maintenance and spare parts. However, Yangon's decision to look elsewhere for weapons also seems to be politically motivated. The heavy dependence on China as almost the sole supplier has led to discontent in the armed forces which fear that the country's traditional neutrality has been compromised. Yangon has also noted that its close relationship with China has caused concern among other neighbours in the region, whose good will Myanmar needs to break its international isolation. Yangon's special relationship with Beijing began in October 1989 when Lieutenant General Than Shwe (then vice-chairman of the ruling State Law and Order Restoration Council, or SLORC,but now its chairman and general) led a 24-men team on a 12-day visit to China. The delegation also included Myanmar's powerful intelligence chief Brigadier General (now Lieutenant-General) Khin Nyunt, together with army, navy and airforce commanders and personnel from Myanmar's defense industries. The high profile nature of the visit was evident in Beijing, where the Burmese guests met Prime Minister Li Pang, army chief General Chi Haotian and defense minister Qin Jiwei. They were also taken to Shijiazhuang, where they inspected F-6 and F-7 jet fighters and a rocket factory operated by Norinco, the state run defense industry. Later, the team went to the naval dockyards in Shanghai before returning to Yangon. At the time, Nyunt stated publicly: "We sympathize with the People Republic of China as disturbances similar to those in Myanmar last year [recently also] broke out in the People's Republic."
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Intelligence sources believe that the basis for Myanmar's massive arms deal was made during this visit. During this period, estimates of the value of the deal varied from more cautious Western figures of US$400 million to US$500 million to Asian intelligence sources claim that it amounted to US$ 1.2 Billion to US$1.4 billion. Subsequent deliveries -- and intelligence about expected arms deliveries indicate that the latter estimate is closer to the actual total.
-Myanmar Ousts Rising Political Star, Confirming Doubts Over Democratic Reforms
The first delivery of Chinese arms took place almost a year after Shwe's and Nyunt's important visit to China. On 10 August 1990, a Chinese freighter docked at Yangon and unloaded anti-aircraft guns, small arms and ammunition.
-Same Game, Different Tactics: China's 'Myanmar Corridor'
Since then, a seemingly never-ending stream of Chinese arms has been pouring into Myanmar: more than 200 light and medium tanks, including T-63, T-69IIs; the Chinese version of the soviet PT-76 light amphibious tanks (T83); armoured personnel carriers and infantry fighting vehicles; at least 30 Norinco Type 63 107mm multiple rocket launchers, a sizeable quantity of 37 mm single barrel anti aircraft guns; HN 5A shouldered-fired surface to air missiles, US$290 million worth of light arms and ammunition; artillery pieces; radio sets for military use; night vision devices; nearly 1000 5t jiefang trucks; and radar equipment.
-Mysterious Motives: India's Raids on the Burma Border [more]
Some of this material was delivered through the port at Yangon, but most of the small arms and lighter equipment arrived in convoys overland from China, along the Burma Road of Second World War fame, and which crosses the frontier near the town of Ruili in Yunan. Intelligence sources say these surface deliveries were coordinated form Chengdu regional military headquarters, which is also the centre for suppling the People's Liberation Army forces in Tibet. This helps explain the strategic context in which the Chinese viewed their expansion into Myanmar; as a client state for southward expansion. The importance of this aspect was underscored in late June this year, when the Chengdu Military Region commander, General Li Jiulong paid a highly publicized visit to Myanmar. Apart from becoming a recipient of Chinese military hardware, Myanmar was also flooded with cheap Chinese consumer goods, and timber. Precious stones and other raw materials were trucked back into the border province of Yunan. Thousands of Chinese, mainly Yunan, have also bought false Burmese identity cards through corrupt officials, and moved into northern cities such as Lashio and Mandalay as "Burmese citizens". Real estate and other property in northern Myanmar has been taken over by these new "immigrants". Myanmar's military leaders, on their part were hard pressed for supplies to equip their rapidly expanding army: in the wake of a massive prodemocracy uprising in 1988, and a humiliating defeat in a general election which was held in May 1990 -- after which the army did not relinquish power, but launched a crackdown on the pro-democracy forces that swept that election - the SLORC decided to more than double the forces under its command. The three services of Myanmar's armed forces numbered 185,000-190-000 before the 1988 uprising. Today's estimates vary between 300-000 and 400,000 troops, depending on the source. Defence intelligence sources in Southeast Asia say the ultimate aim is 500,000 personnel in the army, navy and air force combined. The air force has also been boosted by the delivery of Chinese-made F-7 jet fighters, with the first squadron arriving in early May 1991. Today, Myanmar has acquired or is ordering from China a total of three squadrons of F-7 fighters and two squadrons of NAMC A-5M close support aircraft. A Burmese squadron consists of 12 aircraft, and the F-7 Batch includes 30 single-seat versions and six twin seat trainers. In addition, in September 1992 China delivered two SAC Y-8D medium range transport planes, with a further two on order.
MASSIVE SHIPMENTS The navy has so far received 10 Hainan-class naval patrol boats, plus radar equipment. The naval craft have been accompanied by 70 Chinese naval personnel - over half of whom are middle rank officers - to assist the Burmese in operating the boats, training local crew and maintaining newly installed radar equipment. At the same time, Myanmar's naval strength doubled to 15,000 men including a battalion of naval infantry. The navy has also ordered three 1,865 ton Jianghu 053 frigates but the delivery has been delayed because of technical problems. converted by W eb2PDFConvert.com
While Myanmar's neighbours had been watching with unease the massive shipments to its army and airforce, it was China's involvement in the upgrading of the navy that caused alarm in the region. In late 1992, US satellites detected a new , 150 ft antenna for signals intelligence at the naval base on Coco island. a Burmese possession in the Indian ocean. The suspicion that this new equipment was likely to be operated at least in part by Chinese technicians led to fears that Beijing's intelligence agencies would monitor this sensitive maritime region. Recent intelligence reports indicate that the Chinese are pressing the Burmese to allow them access to three major, strategically located listening islands along Myanmar's coast on Ramree south of Sittwe, the western Arakan State, on Coco Island in the Indian Ocean, and at Zadetkyi Kyun (or St. Matthew's Island) off the southeastern Tenasserim coast. The last is especially sensitive: this long, rugged island is located off the coast of Myanmar's southernmost point, Kawthaung or Victoria Point, close to the northern entrance of the Strait of Malacca. India especially was viewing the developments with increased concern. Coco Island is located barely 30nmi from India's naval base on the Andaman Islands. Any sophisticated signals intelligence equipment on Coco island would also be able to observe India's missile tests at Chandipur-on-sea on the northern coast of the Bay of Bengal. India is known to have made several diplomatic representations to Yangon on the issue. Indonesian officials, always wary of China's extra-territorial intentions, also made their opinions known, at least in private conversations. The magazine Khaota in Thailand, which is close to the military published a lengthy article about China's direct and indirect naval presence in the region, highlighting Kadan Island off the coast of Mergui in southeastern Myanmar, where some Chinese instructors were said to be based. Since Kadan Island is not mentioned in any intelligence reports, it is possible that the Thai author of the article, General Tanapot Boonyopattakam, had confused it with St. Matthew's Island. Whatever the case, the article reflected Thai concerns about Chinese moves into the area. Some of these fears may have been exaggerated, but local analysis believe that there was a significant Chinese threat, and that mattered perhaps more than actual reality. Traditionally, Myanmar has been a buffer state between Asia's largest and most populous countries - India and China - and strict neutrality between these two powers has been maintained by successive governments in Yangon. Only the present SLORC regime has deviated from that policy. Even Burmese themselves, perhaps feeling the heat from their neighbours, were becoming worried about the extent that China's influence had reached in their country, economically, politically and militarily. Credible intelligence reports indicate that many middle-ranking officers, especially at the prestigious Defence Service Academy in Maymyo at internal meetings and seminars expressed their dissatisfaction with the unprecedented dependence on China. A few years after the first delivery, many soldiers also began to complain about the poor performance of the Chinese equipments. The artillery pieces were clumsy and heavy and misfired frequently. The armoured vehicles broke down often and were in any case useless against the rebels who operate in Myanmar's mountainous frontier areas. Chinese army trucks were not nearly as good as the Japanese-supplied Hino and Nissan vehicles which the Burmese army also uses. Complaints have been voiced also over the poor performance of the Hainai class patrol boats. The next country after China to enter the Burmese arms bazaar was Singapore. The first arms shipment from Singapore to Myanmar actually took place as early as 6 October 1988, within weeks of the SLORC's takeover. That shipment - which is thought to have been a barter deal, considering the fact that the Burmese government at the time was on the verge of bankruptcy - consisted of ammunition, and second-hand RPG2s and 57mm recoilless guns of East Bloc origin which may have originated in Israel. Pictures of the equipment indicate that they came from Palestinian stocks captured by Israel when it invaded southern Lebanon in 1983. Given the vast amounts of weaponry that entered the international arms market via Israel after the war in Lebanon, intelligence sources say it is perfectly possible that the Israeli government may have been unaware of the final destination of the cargo. Western intelligence sources in Southeast Asia also assert that private companies in Singapore have arranged for several more shady arms deals since this first shipment, often acting as a middle-men with countries which would not normally sell weapons to Myanmar. These practices caused embarrassment in Lisbon in late 1922 when it was discovered that Singaporean middle men had arranged for the shipment to Myanmar of US$1.5 million worth of 120mm and 81mm mortars manufactured in Portugal. The shipment violated the European Community arms embargo on Myanmar's military regime, but there was not much Lisbon could do as it had little influence over the private company - Companhia de Polvoras Mounicoes Barcarena SA - which had arranged for the almost untraceable transshipment via Singaporean middle-men. More recently, private companies in Singapore have arranged for the sale of Singaporean weapons to Myanmar. This may include locally made M-16s in violation of US export laws Myanmar has also bought more 20 "Hoplite" Mi-2 armed helicopters and at least 13 PZL Swindnik transport helicopters from Poland - despite protests from the United States and the European Union.
EMBARGO VIOLATIONS Even more importantly, Singaporean technicians are now upgrading Myanmar's defense industry. A significant but unknown number of Singapore experts have been based at Padaung opposite Prome on the Irrawaddy river north of Yangon, replacing German technicians from the Fritz Werner company who were there in the past. Intelligence sources also report that arms dealers from Chile visited Yangon early this year. This may involve procurement of naval equipment from Gartha, a Kuala Lumpur based subsidiary of ASMAR (Astilleros Militares de la Armada), a company owned and run by Chile's armed forces. This company has shown interests in selling a wide range of military hardware not only to Myanmar but also to Cambodia, another country in the region which is facing difficulties in obtaining weapons from the West. It is seen as significant that Myanmar is going through the trouble of finding other sources of weapons - especially given the severe difficulties it has to obtain military hardware from countries other than China. Intelligence sources say it is evident that even Myanmar itself is becoming more nervous about China's intentions, and that it feels uncomfortable with criticism from its neighbours. Myanmar's neighbours have reacted to the military build-up there in a way which differs considerably from the West's policy of an arms embargo. The arms deals with Singaporean firms may be private affairs, but it is nevertheless evident that the island republic considers Myanmar one of its potentially most important regional allies. Myanmar has the same resources to offer as Malaysia in terms of raw materials, but with out the friction that has existed between Singapore and Malaysia since the former was thrown out of the latter in 1965. It is also widely believe that Singapore feels uncomfortable with the Malay-Muslim dominance of the Association of South-East Asian Nations (ASEAN) and wants to strengthen the "Sinitic" bloc, which now includes only Singapore and Thailand. Trade between Singapore and Myanmar now totals US$370 million-US$400 million annually, up from less than US$100 million before 1988. This makes Singapore Myanmar's biggest foreign trading partner after China. In May 1993, Nyunt led a 22-man delegation to Singapore, and this visit was seen by observers in Southeast Asia as important in persuading the SLORC to adopt what at least outwardly appears to be more pragmatic policies - and, sources say, to woo Myanmar away from China. In March of this year, Singapore's Prime Minister Goh Chok Tong paid a highly publicized visit to Myanmar. Significantly, the SLORC chairman said in his welcoming speech:"my expression will not be complete if I do not put on recored the most constructive vision and pragmatic advice of Senior Minister Lee Kuan Yew, in providing an atmosphere of mutual confidence between our two countries." Even India, which has been more suspicious of Myanmar's close relationship with China than any other country in the region, has changed from outright condemnation of the regime to an approach which is more akin to ASEAN's policy of "constructive engagement" with the SLORC. This was demonstrated when in May this year the Indian army chief. Bipin Chandra Joshi, arrived in Yangon. This was the first such visit by an
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Indian army chief to Myanmar, and it was prominently displayed on the front pages of Myanmar's strictly state-controlled press. To what extent Myanmar's neighbours will manage to help it lessen its dependence on China remains to be seen. But the process has begun - and Thailand's decision to invite Myanmar as a "guest of the host country" during an important ASEAN meeting which was held in Bangkok in July should also be seen in this perspective. This article first appeared in the International Defence Review, November 1994 Back to articles
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Myanmar - Defense Spending The cost of maintaining internal order in the face of endemic insurgencies has been very high, both in terms of the portion of the total central government expenditures that had to be devoted to national defense and in terms of national resources diverted from government control or left unexploited altogether. Certainly in human terms the expense of physical injury or loss of life and the psychological damage that fear and uncertainty have inflicted have been incalculable, producing especially heavy burdens for those living or fighting in disputed areas. With the military's powerful voice in parliament, as of 2014 Myanmar spent 23.2 percent of its national budget on military spending, the highest in the region, in part to wage war against groups that reject the government's authority. The National Defense and Security Council, effectively governed by the army, sets the budget. The government's firm commitment to a nonaligned foreign policy and its persistent refusal after the early 1950s to accept anything it construed as foreign military aid meant that qualitative equipment upgrading for the nascent forces had to be financed almost exclusively from the nation's own scarce national resources. This placed severe constraints on the armed forces development, for although the nearly constant anti-insurgency campaigns caused defense expenditures to account for over 30 percent of the total government budget in the 1950s and the 1960s, almost all defense outlays were taken up by current expenditures, leaving very little with which to make major, and sometimes even minor, equipment purchases. Under these straitened circumstances, the armed forces were required to become very self-reliant, able to operate with little logistical support and under very spartan conditions. The ground forces, equipped mainly with light arms, developed into a smallunit, light infantry force, well suited to counter-insurgency campaigns. The navy and air force, by virtue of their small equipment inventories, functioned essentially as support elements for the army. There was occasional relief from the stringent financial constraints that allowed for modest equipment upgrading, though not for a substantial
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improvement in overall capability. After the government reached agreement with a West German manufacturer in the late 1950s to establish a licensed production facility in Burma, scarce foreign currency no longer had tobe spent on light arms and ammunition, and these items were less frequently in short supply. In the same period, military hardware was purchased from Yugoslavia, Israel, and the United States, the last with foreign military sales credits. Funds allocated to defense averaged 30 percent of government expenditures in many years, and in fiscal 1956 defense funds accounted for 35 percent of the total budget. The morale and prestige of the army improved over the years largely because of operational successes which reflected greater degree of combat effectiveness. However, poor training and lack of equipment continue to handicap the army. It had the capability gradually to reduce the insurgent menace, but could offer no serious resistance to a Chinese Communist invasion. The Burmese navy, with 29 miscellaneous small ships, was capable only of support operations in coastal and inland waters. The airforce of 86 aircraft (including 33 old piston fighters, 16 transports, and 8 jet trainers) provided fairly effective support to the ground forces in operations against insurgents. Despite the armed forces' leading role in the nation after 1962, conditions in the services continued to be straitened. They were eased only slightly by the nation's improved economic performance in the 1970s, which allowed for small increases to be allotted to defense, particularly for aircraft purchases. The air force also benefited from the government's 1974 bilateral cooperation agreement with the United States, under which helicopters and light transport planes were delivered to the Burmese government for use in narcotics control activities. Notwithstanding these limited improvements, the armed forces were still badly undercapitalized as of early 1983, and any change in that situation would probably necessitate a substantive shift in the government's attitude toward accepting foreign military assistance. Although perennial insurgencies kept the military in the forefront of the national life since independence, the defense establishment had grown only slowly, and equipment had remained in very short supply -- even after active-duty and retired military officers assumed the dominant role in national decisionmaking. Defense expenditures accounted for over 30 percent of the total national budget from the mid-1950s until the early 1970s, and military spending grew steadily, but Burma was a very poor nation. Even so high a portion was generally sufficient to fund only current expenditures - if they were kept low - and very little was left over for equipment replacement or spares, not to mention modernization. The situation changed little after the national budget began to expand significantly during the mid-1970s. Military expenditures continued to grow steadily in absolute terms-nearly doubling in size from K722 million in fiscal year 1974 to over KI.4 billion in FY 1981. When inflation was factored in, however, defense spending actually decreased in real terms in FY 1975 and FY 1976, then grew at a very uneven rate thereafter. Total government expenditures, on the other hand, increased at a much faster rate over the same period, causing the ratio of military spending to the total to fall from 27 percent in FY 1974 to 19.5 percent in FY 1981. While even the latter figure was a significant one, representing a sizable diversion of sorely needed resources from national development projects, it did not translate into significant sums compared with other nations of the world. According to one researcher, Burma ranked 114 out of 141 world nations in terms of public expenditures per capita devoted to the military, and 129 out of 141 in terms of public expenditure: per soldier. The armed forces budget was divided into two categories: current expenditures for routine matters, such as pay and allowances, maintenance, and travel; and capital expenditures, generally used to purchase new equipment. Over the FY 1974-81 period, current expenditures accounted for between 85 and 92 percent of the total. Of the small amount left over, most was used to acquire spare parts for imported equipment. Until 1988 Burma's defense equipment requirements were very modest. The government's emphasis on strategic independence and economic self-reliance, the poor performance of the economy after 1962, and the relatively modest demands of its counter-insurgency strategy all helped limit arms imports. When the SLORC assumed power, however, it immediately undertook a massive arms procurement program, raising defense capital equipment converted by W eb2PDFConvert.com
outlays to unprecedented heights. Increased emphasis was also given to indigenous arms production. After 1988, when the military opened fire on pro-democracy protestors, the tatmadaw grew dramatically, turning the country into the formidable military state it is today. Most sources suggest that the regime spent at least 40% of its budget on the military. In 1997, the Burmese military regime was in a financial crisis. Then the Yadana Project came online, and everything changed. By 2001, Thailand was importing about 570 million cubic feet of Yadana gas per day, at over $550 million for the year. Burmese army battalions are assigned the task of pipeline security. EarthRights International [ERI] has documented at least fourteen different infantry battalions that had regularly performed pipeline security duties: battalion nos. 25, 104, 273, 282, 401, 402, 403, 404, 405, 406, 407, 408, 409, and 410. In 2006, the SPDC' s total budget was estimated at around $2.3 billion, making the military's share around $900 million. The Yadana Project, taking natural gas from the Andaman Sea through a pipeline in southern Burma to Thailand, is the single largest source of revenue for the junta. Between 1995 and 2005, the time period when profits from Yadana began flowing, Burma's estimated annual military expenditures increased dramatically. Official publications reveal that almost one-quarter of Myanmar's national budget was allocated to defense. The Government Gazette reported that 1.8 trillion kyat (about $2 billion at free market rates of exchange), or 23.6% of the 2011 budget will go to the military. The number of personnel in three branches of military (Army, Navy, and Air Force) increased from 190,000 in 1988 to 429,000 in 2001. Intelligence sources estimated that Burma spent between US$1.5 billion and US$2 billion to purchase arms from China alone in 1990s. Adding to the hardships faced by Burma's ethnic minorities, the government's 1997 policy of making army units live off the land gaven soldiers free reign to extort money from villagers and force them to provide food and building materials, according to the U.S. State Department and Amnesty International. Burmese soldiers often extort money or seize food by levying arbitrary fees or taxes. Refugees from Mon State told Amnesty International in February 2001 that soldiers made them pay an unofficial "paddy tax" of a certain amount of their rice harvest. The refugees also told Amnesty's investigators that a local militia called the Pyi Thu Set, or People's Army, forced them to pay taxes, and, in some cases, provide labor. The militia is made up of civilians recruited and armed by local SPDC officials. The Burmese military has a large presence even in ethnic minority areas where no rebel groups are active, such as the large Karen areas of Irrawaddy Division in southern Burma, according to the State Department human rights report. Villagers in these areas face more military checkpoints, closer monitoring by military intelligence, and more demands for informal taxes than do residents in majority Burman areas also free of insurgency. The SLORC's ambitious program to expand and modernize the armed forces resulted in a massive influx of arms and equipment from abroad. In theory at least, it also significantly improved the military's ability to conduct counterinsurgency campaigns and perform more conventional defense roles. This rapid expansion placed the armed forces under considerable strain, however, and emphasized the importance of greatly improved command, control and intelligence capabilities. The SLORC also needed to improve the military's training programs and its ability to support and maintain the new weapons systems. Given these deficiencies, it remained to be seen whether Burma's greatly expanded order of battle has been matched by a commensurate increase in its military capabilities. In March 2013 Myanmar's military was granted a $2.4 billion annual budget, just over 12 percent of total government spending in the poverty-stricken country. They will invest about $1.25 billion buying aircraft, weapons, etc.. The total $2.4 billion approved by parliament was $100 million less than the previous year. Under the former military junta which ruled Myanmar for decades, the state budget was neither released publicly nor put up for scrutiny and oversight.
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