In making major deals with Myanmar’s military rulers, China seems to be violating its official guidance for investment abroad: Avoid conflict zones. Although Myanmar is in a state of collapse and widening rebellion, China continues to advance plans for a complex economic corridor in the country with the military unveiling steps to move ahead with big joint-venture projects. The generals’ bid to appear in control of things is obvious. China, on the other hand, seems to have fallen into a trap. Cozying up to the junta puts its investments at immediate and long-term risk and erodes its standing in regional organizations. To protect its interests, Beijing should press the junta to curb its rampant violence against the population and to restore the elected government.

Gen. Min Aung Hlaing, instigator of Myanmar’s coup, on the front page of a state-owned newspaper, March 30, 2021.  China’s response to the coup has been shaped by propaganda produced by Myanmar’s military. (The New York Times)
Gen. Min Aung Hlaing, instigator of Myanmar’s coup, on the front page of a state-owned newspaper, March 30, 2021. China’s response to the coup has been shaped by propaganda produced by Myanmar’s military. (The New York Times)

Plans for the China Myanmar Economic Corridor (CMEC), a connectivity scheme tying Myanmar’s economy to China’s, were developed with Beijing by the deposed elected government. The process for approving CMEC industrial and transportation projects included meticulous reviews of social and environmental impacts, assurance of financial viability and analysis to ensure the proposal would first and foremost benefit Myanmar’s economic development goals.

Four months into their attempt to reimpose a military dictatorship, the junta leaders in Naypyitaw have ripped up that vetting system and imprisoned almost everyone involved. Plans to proceed with the first major economic projects under junta rule have now been released, and they seem to include a project China has made a top priority for years: the $2.5 billion Mee Lin Gyiang LNG generating plant, which would power a major industrial zone for the Ayeyarwady region. The generals also boasted that they would continue plans for the Kyaukphyu port and special economic zones, which, if constructed, will complete China’s long-coveted access to the Indian Ocean.

Announcement of these projects follows months of China’s largely hands-off response to the February 1 coup, a stance that has emboldened the junta leaders’ violent assaults on civilians protesting their power grab. This, in turn, has tapped a deep well of anti-Chinese sentiment among the country’s majority population. China’s failure to acknowledge that a coup even occurred has exacerbated the backlash as has Beijing’s announced intent to block U.N. Security Council efforts to address the coup-caused crisis and its decision to sever contact with the National League for Democracy (NLD), which won Myanmar’s 2020 elections in a landslide. Already attacks have been staged on Chinese-owned factories and a natural gas pipeline critical to the economy in Yunnan Province.

Why would Chinese investors risk reputation and resources on billions of dollars of infrastructure in a war zone — and do so while partnering with an illegitimate regime that China’s own representative to the U.N. indicated faces a severe crisis that has undermined peace and stability?    

Why would Chinese leaders allow decisions that run counter to their “sensitive areas” policy?

How could China so seriously underestimate the negative impact of the coup on its interests in Myanmar and Southeast Asia?

China’s View of the Coup Is Strongly Influenced by Junta Disinformation

China’s response to the coup was — and remains — shaped by propaganda produced by the Tatmadaw, as Myanmar’s military is known. Official Chinese media, in turn, has amplified the junta’s disinformation to appeal to China’s traditional paranoia about designs of Western and liberal democratic sources. This disinformation has been taken by media and decision-makers at face value, especially regarding the former ruling party’s purported reliance on foreign advisers and influences.

Chinese policymakers have accepted that hostile forces seeking to undermine China’s security and economic interests have deeply penetrated Myanmar society through the democracy movement. They have also bought the Tatmadaw line that the army is the “glue” holding the country together and that it alone can resolve the political crisis.

Chinese state media outlets such as the Global Times have reinforced these narratives through a series of almost farcical reports that accuse Hong Kong democracy advocates and Taiwan independence figures of “manipulating” the Myanmar public. Attacks on Chinese factories and infrastructure are described in conspiratorial terms as “supported by the United States.”

Meanwhile, key public intellectuals working on Myanmar have justified the Tatmadaw’s brutal crackdown, writing that the army had no choice but to “prevent the NLD from overthrowing or undermining the ‘disciplined democracy’ as stipulated in the 2008 Constitution” — a gross exaggeration of the powers that the constitution reserved for the military.

Economic Concessions

This fundamental misreading of the context in Myanmar is further shaped by two key factors. Broadly, China’s traditional foreign policy accepts relations with incumbent political actors, regardless of how they gained power. Transactionally, the Tatmadaw put on a full court press to influence public discourse in China and to signal their willingness to trade political support for future economic concessions. Positioning itself as pro-business, such concessions mean moving forward rapidly with billions of dollars in infrastructure projects, including several the NLD government placed on hold over environmental and social concerns.

Since the coup, China has restricted its interactions with the NLD and with many of the ethnic armed organizations (EAOs) that joined deposed lawmakers in forming the National Unity Government. It has also ceased engaging with other ethnic political parties. Instead, information about developments in country comes almost exclusively from the junta and particularly via Myanmar’s ambassador in Beijing, who, unlike his diplomatic colleagues elsewhere, has swapped sides to speak for the Tatmadaw and promoted continued economic collaboration.

Further coloring Beijing’s understanding are ideologues of the pro-military Union Solidarity and Development Party who have deep experience and business interests in China and now dominate the military’s State Administrative Council.

The skewed information Chinese policymakers receive has left them essentially in the dark. They have no independent assessment of Myanmar’s economy or the intentions of the underground National Unity Government and many EAOs. They don’t hear about the determination of Myanmar’s majority population to resist at all costs a return to military rule or the mounting chance of civil war. As a result, the Chinese response to the coup has dangerously discounted the threat it represents to China’s own security, as we have discussed previously.

It also presents China with a growing regional crisis.  

Chinese Support for the Coup Is Damaging Its Regional Standing

Myanmar’s military coup has created major tensions in regional organizations that China has invested heavily in building, especially the Lancang-Mekong Cooperation Forum (LMC) and the Association of Southeast Asian Nations (ASEAN) 10+1 framework. Myanmar took over as joint chair of LMC alongside China this year and was due to play a key role in promoting China’s signature cooperation platform at its fifth anniversary celebration. Instead, Myanmar was all but absent from the event.

In recent months, significant tensions have emerged between Thailand and Myanmar over the coup, placing the LMC in an awkward position to address regional security threats. China also has to worry about popular backlash against the organization generated by high profile involvement of Myanmar’s widely — and deeply — unpopular coup government.  

Similarly, China’s engagement with ASEAN is scheduled to be coordinated by Myanmar in 2021 according to ASEAN’s protocols. However, high tensions between Myanmar and several key ASEAN governments, including Indonesia, Malaysia and Singapore, will make this problematic. Not a single ASEAN government has given official recognition to the junta government — instead recognizing the junta’s head of state, Min Aung Hlaing, as commander-in-chief at the ASEAN Forum.

How China Can Encourage Myanmar’s Return to Stability to Protect Its Interests

China is not without options to prevent this multi-tiered security threat from undermining its interests. Despite the destruction and chaos inflicted on Myanmar over the past 125 days, China could make reliable partners of the democratic forces pushing for good governance, peace and stability. That would depend, however, on Beijing recognizing the nature of the security threat the Tatmadaw presents to its interests and adopting a more balanced policy response to the crisis before it’s too late.  

Such a strategy on China’s part could take a multipronged approach.

  • Formalize a freeze on any Chinese state-owned enterprise or state bank initiating new business with the junta.
  • Dramatically enhance efforts to crack down on Chinese involvement in cross-border criminal activity, which is a major source of revenue for the Tatmadaw. 
  • Accept requests for engagement from the National Unity Government, EAOs and political parties to share their views on the current situation with China.
  • Using both Party and government channels, demand that the Tatmadaw immediately implement the five-point ASEAN Consensus agreed at the ASEAN leader’s meeting on April 24 and that China get access to the detained political leadership.
  • Suspend Myanmar’s joint chair of the LMC until the political crisis is resolved.
  • Permit the U.N. to exercise its “good offices” to address the conflict, in particular by coordinating efforts with the U.N. special envoy.
  • Through “creative involvement” with ASEAN, persuade Min Aung Hlaing his ambitions are leading to a disaster and that he should leave Myanmar before its economy implodes and the country is engulfed by uncontrolled  violence. This effort might involve partnership with the United States, the U.N. special envoy and European Union – all of which enjoy strengthening ties with the National Unity Government, EAOs and civil society, and might help guide a sustainable transition. 

If China proceeds on its current course, aligning with the junta, ignoring Tatmadaw atrocities and enriching the army with investment in major CMEC projects, those investments will soon become magnets for further conflict. Its entanglement with the military rulers will destroy its future relations with the country’s political leaders, who eventually are bound to prevail in their struggle against the revived dictatorship. If Beijing wants to keep its eye on the future, it must avoid the trap the Tatmadaw set to cause China to view the coup solely through the prism of geo-political competition — a perspective that disregards Myanmar’s internal realities.  

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