Strategic Analysis: Chinese Business Activity in Burma (Abstract)

Under the rule of the mil­i­tary jun­ta, Bur­ma wel­comed large-scale Chi­nese invest­ment from Chi­nas state-owned banks and con­trac­tors that were will­ing, as they have been in oth­er under­de­vel­oped coun­tries, to oper­ate in a cul­ture of cor­rup­tion and uncon­strained by the human­i­tar­i­an and envi­ron­men­tal car­nage that would have deterred most major com­pa­nies.

Indeed, dur­ing the jun­ta regime, Chi­na was Bur­mas most sig­nif­i­cant finan­cial backer. As has been the case in a num­ber of oth­er coun­tries that have found them­selves iso­lat­ed from the inter­na­tion­al com­mu­ni­ty, Chi­nas posi­tion of influ­ence in Bur­ma was cul­ti­vat­ed imme­di­ate­ly fol­low­ing the with­draw­al of West­ern pow­ers.

After the rise of Bur­mas semi-civil­ian gov­ern­ment in 2011, how­ev­er, the coun­trys rela­tion­ship with Chi­na changed dra­mat­i­cal­ly. Bur­mas new lead­er­ship had to grap­ple with anti-Chi­nese sen­ti­ment, as a grad­u­al­ly more empow­ered pub­lic looked with scorn at the cor­rupt, crony rela­tion­ships behind many Chi­nese con­tracts, the envi­ron­men­tal and human­i­tar­i­an col­lat­er­al dam­age that they caused and the lack of suf­fi­cient tan­gi­ble ben­e­fit that these projects usu­al­ly meant for the local pop­u­la­tions. A num­ber of high-pro­file invest­ments were delayed, includ­ing: the $8 bil­lion Myit­sone dam; the $20 bil­lion cross coun­try rail­way line; and the Let­padaung Cop­per Mine project.

These projects, how­ev­er, rep­re­sent­ed only a small por­tion of Chi­nas over­all invest­ment in the coun­try. Bei­jings less pub­lic activ­i­ties, such as their jade min­ing oper­a­tions, real estate devel­op­ment and log­ging activ­i­ties, were large­ly unaf­fect­ed, and the mas­sive oil and gas pipeline projects con­nect­ing Bur­ma to Chi­na con­tin­ued to com­ple­tion.

In 2016, the gov­ern­ment of Aung San Suu Kyi appears intent to reopen delib­er­a­tions over cer­tain of the under­tak­ings pre­vi­ous­ly planned by Chi­na and, indeed, to reex­am­ine the two coun­tries bilat­er­al eco­nom­ic and finan­cial rela­tion­ship as part of a bal­anced for­eign pol­i­cy. In doing so, how­ev­er, the coun­try and the region are exposed once again to Bei­jings strate­gic agen­da for South­east Asia.

This has fueled a resur­gence in Chi­nese inter­est in the coun­try, most notably in projects that have the poten­tial to con­nect Chi­na to the Andaman Sea (and to the Indi­an Ocean) via over­land routes that per­mit Bei­jing to cir­cum­vent the mil­i­tar­i­ly and geopo­lit­i­cal­ly vul­ner­a­ble Malac­ca Strait, where so much of its trade and ener­gy imports flow.

More­over, the influ­ence that Chi­na gains through projects in oth­er indus­tries (such as min­ing) are also impor­tant to solid­i­fy­ing its posi­tion with­in the coun­try. Over­all, Chi­nas projects in Bur­ma appear serve two pri­ma­ry strate­gic pur­pos­es:

  1. to estab­lish mul­ti­ple, effi­cient over­land eco­nom­ic routes to South­east Asia, South Asia and out to glob­al mar­kets in Europe, Africa and the Mid­dle East in cir­cum­ven­tion of the Malac­ca Strait; and
  1. to give Bei­jing a posi­tion of influ­ence in the coun­try via its state-owned and state-con­trolled enter­pris­es tak­ing on con­trol­ling posi­tions in mul­ti­ple of the coun­trys most impor­tant indus­tries and infra­struc­ture projects.


Excerpted Deals and Transactions:

  • Chi­nese enti­ties are in the lead on a $10–12 bil­lion Spe­cial Eco­nom­ic Zone (SEZ) project being devel­oped at Kyauk­phyu that includes the con­struc­tion and oper­a­tion of a deep-sea port and a mas­sive indus­tri­al park.
  • At the Dawei SEZ, imme­di­ate­ly fol­low­ing Japans entry into the for­mer­ly Thai-led project, Chi­nese enti­ties showed resur­gent inter­est in also estab­lish­ing a foothold via a $400 mil­lion invest­ment in a 132 km road con­struc­tion project, three ports being devel­oped by Chi­na Rail­way Engi­neer­ing Corp. and a $2.6 bil­lion oil refin­ery project award­ed to Guang­dong Zhen­rong Ener­gy.
  • A rail­way line is being dis­cussed that would fol­low the route tak­en by the oil and gas pipelines. This project has a pric­etag of rough­ly $20 bil­lion dol­lars and would fur­ther con­nect Chi­na with the Bay of Ben­gal and the rest of South­east Asias trans­porta­tion and infra­struc­ture net­work. As of now, no deci­sion has been tak­en (and, in fact, the deal was pre­vi­ous­ly shelved), but the con­struc­tion of the new rail­road seems pos­si­ble at some point in the future. A pre­vi­ous­ly pend­ing agree­ment called for Chi­na to get 50-year man­age­ment rights over the strate­gic rail­road in exchange for Chi­nese financ­ing and con­struc­tion.
  • A sep­a­rate $2 bil­lion loan was pro­posed by Chi­na for the con­struc­tion of a Sino-Myan­mar high­way that would like­wise par­al­lel the oil and gas pipeline projects.
  • Wan­bao Cop­per Min­ing a sub­sidiary of Chi­nas weapons man­u­fac­tur­er, Nor­in­co oper­ates sev­er­al nick­el and cop­per mines with­in Bur­ma.
  • Chi­na Uni­com and Myan­mar Posts and Telecom­mu­ni­ca­tions (MPT) signed a $50 mil­lion agree­ment for the con­struc­tion of new fiber optic cables link­ing the two coun­tries; the 1500 km cable also links inter­na­tion­al sub­ma­rine com­mu­ni­ca­tion net­works in the Andaman Sea.