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.