The New Era of Sino-Burmese Relations: Changes in the Bilateral Relationship in View of China's Rise and Myanmar's Reforms

Abstract

Burma was the first non-Communist country to recognize the People's Republic in 1949. Since then, the relationship between Burma and China remained nervously friendly, and finally warmed in 1988. Due to isolation and economic sanctions Burma moved closer to China, the two authoritarian states becoming close allies. Subsequent concerns over Beijing's influence directly affected the junta's decision to pursue reform and open up the country. The following rapid expansion of Myanmar's diplomatic profile has complicated its relations with China. Myanmar has sought to diversify its foreign relations, but the Rohingya crisis has hindered this effort. China with its non-interference principle and the Belt and Road Initiative has managed to win Myanmar back, at least partially. This paper examines how Myanmar's relationship with China has evolved from Myanmar being aligned with China; through Myanmar hedging on the side of the United States; to Myanmar employing a double-hedging strategy with two great powers.

Introduction

The purpose of this article is to produce an account of the changes in bilateral relations between China¹ and Burma/Myanmar² in view of China’s rise and Myanmar’s reforms. Myanmar’s relationship with China has evolved from being aligned, through hedging on the side of the United States (U.S.), to employing a double-hedging strategy with both China and the U.S.

In the past, Burma/Myanmar looked to China for security and economic resources. Although the Burmese military never completely trusted any external major power, due to isolation and economic sanctions, it had to move closer to the Tayôks,³ as the Chinese are referred to in Burmese. After 2011, with Myanmar’s economic liberalization and political transition away from direct military rule, the country joined the ranks of other Southeast Asian countries that employ hedging strategies toward the emerging new regional order in the post–Cold War era.

Arguments about hedging in Southeast Asia took shape when scholars assessed responses by states in China’s neighbor-hood to its reemergence as an economic and military power. Regional countries were resorting neither to conventional balancing nor bandwagoning strategies to manage China’s growing power. According to Evelyn Goh, hedging strategies encompass balancing or containment along with engagement and reassurance elements.⁴ She defines hedging as “a set of strategies aimed at avoiding a situation, in which states cannot decide upon more straightforward alternatives such as balancing, bandwagoning, or neutrality; instead they cultivate a middle position that forestalls or avoids having to choose one side at the obvious expense of another.”⁵ Cheng-Chwee Kuik sees hedging as involving mixed positions of both power acceptance and power rejection.⁶ Jürgen Haacke regards hedging as a security strategy crafted to address major security risks (which are potential security threats). It involves the signaling of alignment, which leaves open the question as to how a state would react should the potential security challenge materialize.⁷

As such, smaller and middle powers are hedging when confronted with a serious security challenge from one of the major powers. Southeast Asian small and middle powers, many of which face security challenges by China, are considered to be hedging against the possibility of a reduction in the U.S. presence in the region, just as they are hedging against a possible Chinese domination. Southeast Asian hedgers choose to cooperate with China in the economic realm, but prefer to treat the U.S. as their security protector. In this way, hedgers can maximize their interests with both the U.S. and China.

Widely recognized hedgers between China and the U.S. are Singapore, Malaysia, the Philippines, Thailand, and Indonesia. On the contrary, Cambodia and Laos are the prime examples of countries that have not adopted hedging due to their unambiguous alignment with China, much like Myanmar before 2011.⁸

Myanmar’s dependence on China was a crucial factor in the top-down decision to pursue transformative policies, although some internal factors may have been in play too. Following the 2010 election, dismissed by Western countries as fraudulent, Myanmar transitioned from military rule to a quasi-civilian government in a system that guarantees a strong role for the military. This transition,⁹ sometimes erroneously called democratization, is nothing more than a transitory stage of development, which can last for decades and may or may not lead to democracy. Myanmar could follow El Salvador’s path; the Latin American country transitioned from authoritarian rule in the post-1979 period, followed by regression, and never reached the democratization phase.¹⁰ The new government in Myanmar, comprising former military leaders, began a series of progressive reforms, including allowing greater personal freedoms for citizens and beginning dialogue with the opposition party.

Despite Myanmar having been considered by the West to be a global pariah state for decades, after the reforms, ties between Myanmar and the U.S. started to warm. Myanmar effectively became a hedging partner of the U.S., which of course, angered Beijing. One example that illustrates this anger is Chinese President Xi Jinping never visiting Myanmar. The last Chinese President to make an official visit to Myanmar was Jian Zemin in 2001.

According to the Taiwanese academic Yu-shan Wu, middle powers have five options when engaging with the U.S. and China: partner up with China, become the hedging partner of China, pivot between China and the U.S., partner up with the U.S., and become a hedging partner of the U.S.¹¹

In the author’s opinion, such a view is an oversimplification. Not all middle powers are the same, and political transitions can change their otherwise-logical external alliance choice. The reality in Myanmar is much more complicated than a one-dimensional spectrum, with China and the U.S. at either end, and Myanmar moving about the middle. Before 2011, China was Myanmar’s chief partner, although Myanmar became a member of the Association of Southeast Asian Nations (ASEAN) in 1997 (ASEAN admitted Myanmar mostly out of fear that it would fall even further into China’s orbit).¹² After the start of political reforms, Myanmar was eager to diversify its international relations (IR) and hedge its relationship with China. After 2016, with the Rohingya segregation, persecution, and human rights abuses that amount to genocide and crimes against humanity coming to light,¹³ Myanmar was hindered to establish a broader partnership with the U.S. and other Western countries. China, with its non-interference principle and a very problematic human rights approach, became the number-one choice of a partner in light of such grave human rights accusations.

Moreover, China has leverage over Myanmar due to its geographical proximity and control over the peace process (which ultimately determines the un/success of any Burmese government). China imports from Myanmar mostly raw materials, teak, and minerals, while it exports manufactured goods, electronics, machinery, vehicles, and steel. A significant portion of China’s development aid to Myanmar takes the form of export credits to Chinese companies in Myanmar. This way, China is able to subsidize Chinese companies and boost their competitiveness in Myanmar.¹⁴ Chinese foreign direct investment in Myanmar is focused on extractive industries and the energy sector.¹⁵ Unfortunately, many projects have relied on expropriated land, thus leading to displaced local populations, aggravated social polarization, and even political instability.

This article challenges conventional IR theories and demonstrates that one middle power can be a hedger on two sides: hedging on the side of A against B on one set of issues, and hedging on the side of B against A on another set of issues. Myanmar is a hedging partner of the U.S. against China on economic issues, and a hedging partner of China against the U.S. on human rights issues.

From a Myanmar-centric perspective, the following sections will examine how relations between the two countries evolved in the era of Myanmar’s top-down transition from military rule and China’s Belt and Road Initiative (BRI) and moved from Myanmar’s alignment with China, through Myanmar hedging on the side of the U.S., to Myanmar employing a double-hedging strategy with two great powers.

The Birth of a Strong Alliance between Burma and China

A brief account of the history of Burma/Myanmar and the interaction between Burma/Myanmar and China will be helpful to understand the current dynamics between the two neighboring countries.

Burma gained independence from Britain in 1948 and until 1962 was led by a civilian government (except for the two years of the military caretaker regime in 1958–1960). The military took power in a coup in 1962 and ruled under different names until 2010. Decades of the “Burmese way to socialism” during the Cold War turned a prosperous country into one of the poorest in the region. The country was economically deeply impoverished and had weak diplomatic links with the rest of the world. For the Burmese junta, China became its greatest ally, providing much-needed foreign exchange, capital equipment, technical expertise, and diplomatic support to fend off United Nations (UN) resolutions. However, this was not always an obstacle-free relationship.

Burma was the first non-Communist country to recognize Mao Zedong’s People’s Republic of China on December 17, 1949. From then until the Cultural Revolution, the relationship between Burma and China remained nervously friendly (not least because of the presence of the Chinese Nationalist Kuomintang (KMT) troops on Burma’s territory), and even hostile from 1967 onward when anti-Chinese riots occurred in Rangoon, the old capital of Burma. It was followed by anti-Burma demonstrations in Beijing and the downgrading of diplomatic ties.¹⁶

Relations eased in the 1970s, remained uneventful throughout most of the 1980s, and finally warmed in 1988, with an agreement to legalize border trade, subsequent arms deals, and the collapse of the Communist Party of Burma (CPB) in 1989.¹⁷

The CPB was one of the major irritants between the two countries. During the Cultural Revolution, Mao Zedong supported the CPB to propagate socialism among ethnic Chinese in Burma (who led to the riots). The CPB even took control of large parts of territory along the Yunnan border. After the Cultural Revolution, bilateral relations improved, although the continued support for the CPB irritated the generals.

What enabled the strategic alliance from 1988 onward was mostly the West’s diplomatic isolation of Burma/Myanmar. The U.S. first began to impose restrictions against Myanmar in the wake of its military crackdown on protesters in 1988. President Ronald Reagan suspended U.S. aid and stopped all arms sales to Myanmar. U.S. Presidents George H. W. Bush, Bill Clinton, and George W. Bush successively strengthened sanctions to isolate and pressure the then-ruling generals for their repression of the opposition and imprisonment of prodemocracy activists. The killings of the Burmese people in 1988 in the former capital Rangoon, as well as the killings of Chinese students at Tiananmen in Beijing in 1989, received strong criticism and triggered economic sanctions from the West. For China, this was a golden opportunity to ally and for Burma a necessity.

China was the first country to officially recognize Myanmar’s new government in 1988 and since then enjoyed a persistent trade surplus with the country. Until 2010, China had invested around U.S.$10 billion in Myanmar.¹⁸ There has been a sharp jump in the trade volume: in 1988, the total trade between China and Myanmar reached a bit over U.S.$9 million. In 1995, the total value of trade grew to over U.S.$767 million, and in 2010, it exceeded U.S.$4 billion.¹⁹ During this time, China was Myanmar’s largest trading partner (followed by Thailand and Singapore). China established a major presence in the country in the construction, logging, mining, and energy sectors. Besides official trade, clandestine border trade in narcotics and arms thrived. As for (official) arms deals with China, they helped the Burmese junta to expand its military and extend its power within the country.

For China, the motivating factors behind its policy to strengthen ties with Burma/Myanmar were threefold. First, since 1979, China’s Burma/Myanmar policy has been in line with its general policy of ensuring a stable external environment with the neighboring states, so as to enable a continued implementation of China’s domestic modernization and development policy. Second, there was the economic imperative, based on the need to tap Myanmar’s rich energy resources to benefit China’s modernization efforts. Third, Myanmar’s location on a tri-junction between South Asia, Southeast Asia, and China has become increasingly important for China. Economically, Myanmar is an important trading outlet for China’s inland provinces of Yunnan and Sichuan, and strategically, Myanmar is potentially important for China to achieve its strategic presence in the Indian Ocean in order to reduce transport time for some of China’s trade and to achieve its long-term two-ocean objective.²⁰

The relationship between Myanmar and China has always been uneven, but nevertheless reciprocal and mutually beneficial (see appendix 1 for more detailed information on the Sino-Burmese relations in 1949–2010). Some describe it as a marriage of convenience. During the years of military rule in Myanmar, China provided economic assistance, cheap loans, trade, investment, energy deals, military and diplomatic support (e.g., the blocking of a 1990 UN General Assembly resolution criticizing Myanmar’s human rights record). In return, China gained access to Myanmar’s rich natural resources and has moved closer to gaining passage to the Bay of Bengal.

However, Myanmar’s military leaders were well aware of the dangers of being too close to China. In the late 1990s, they adopted a diversifying strategy by consolidating ties with ASEAN and encouraged industrialized states to invest and conclude joint ventures in the countries, namely Malaysia, Thailand, and Singapore.²¹ They did this in order to minimize their military dependency on China (with nearly 60 percent of Myanmar’s weapons imports having come from China). In order to obtain higher-quality armaments, the Burmese military made purchases in Russia, Ukraine, and North Korea.

Much of the credit for pioneering China’s rapprochement with Myanmar goes to Yunnan, with the province focusing on promoting local businesses’ cross-border expansion. This has at times required the Chinese Communist Party disciplinary mechanisms for Yunnan actors who have tried to exploit vague central directives on cross-border activity for their own benefit, such as in 1985, when they established a special border trade zone without Beijing’s authorization.²² A more recent example includes Myanmar’s repeated calls on China to cease trading with ethnic minority resistance groups, to which Beijing repeatedly agreed, but Yunnan has prioritized local interests over international diplomacy.²³ Cross-border interdependence has also generated negative consequences (drug trafficking, illicit jade trade, illicit gambling, and HIV/AIDS), and the issue of illegal exports to China remains an unresolved trade concern. Nevertheless, Yunnan Province subnational activism was encouraged after 2013 under the BRI scheme, and the province has attracted substantial central government funding for trans-boundary endeavor.

The oil and gas pipeline, up and running, is also a brainchild of academics of Yunnan University in Kunming. It was introduced to the central government in 2003, and initially rejected. With subsequent concerns about China’s energy security, the pipeline was given the green light in 2006. The 771-kilometer-long Shwe gas and oil pipelines, implemented by the China National Petroleum Corporation and Myanmar Oil and Gas Enterprise, generate billions of dollars and provide China with an alternative to importing fuel via the Malacca Strait and cut transportation times by seven days.²⁴ The project is not to be confused with the Shwe Natural Gas Project that consists of several offshore gas fields located in the Bay of Bengal and is developed by a consortium of six companies from Myanmar, China, and India.²⁵

At that time, Burma/Myanmar was clearly engaging with China to obtain security and economic resources. This, of course, brings risks with it that the generals were very well aware of. The next section will look closer at the change of strategy from alignment to hedging.

Changing Relations in Light of Myanmar’s Transition from Military Rule

China’s reemergence as a global power is one of the defining moments of twenty-first-century international relations. The Burmese military rulers considered it necessary to deal with China’s political-economic penetration into Myanmar. They opened up the country along the Chinese model of capitalism without democratization. With the seven‐step roadmap toward democracy (2003), the new constitution (2008), and fraudulent elections (2010) the junta’s rule officially ended. Concerns of Beijing’s influence directly affected the junta’s decision to diversify Myanmar’s diplomatic and trade partners by pursuing reform. In March 2011, the quasi-civilian government was sworn in, but the military continued to dominate in many aspects. With this strategic decision, relations with China entered into a new era defined by hedging. There have emerged new challenges for China, such as the Burmese civil society and new international and economic relations.

The new era of cooperation between the two countries coincided with Xi Jinping’s announcement of the BRI in 2013. He proposed a modern equivalent of the ancient Silk Road (a network of trade routes that linked China to Central Asia and the Arab world) with a vast network of railways, roads, pipelines, and utility grids that would link China and Central Asia, West Asia, and parts of South Asia. With the domestic slowdown and rising wages, China wants to export its surplus steel, cement, and workers. This requires building vast infrastructure networks to link manufacturing centers in China with markets and natural resources abroad. Thus, many of the new and even old Sino-Burmese projects were subsequently shelved under this initiative.

Immediately after assuming the presidency, Thein Sein visited China. The two countries signed a joint statement to establish the Comprehensive Strategic Cooperative Partnership, as well as nine economic agreements and memoranda of understanding, including a big hydropower project.

Since the 1990s, China has established similar strategic partnerships with many other countries, not only including Russia, the U.S., and the United Kingdom, but also neighboring countries, such as Laos and Vietnam. With Myanmar it did not establish such a strategic partnership any earlier because of reputational issues.

By elevating Myanmar from a political and economic friend to a strategic partner, China expected some reciprocal benefits from Myanmar in return for having backed the country internationally in the past. These expected return favors included support on multilateral platforms (e.g., the support for China’s position on South China Sea issues at ASEAN), good military relations (arms sales and naval cooperation), and the implementation of the bridgehead strategy aimed at the development of Yunnan Province.²⁶ Since Myanmar is conveniently located along the Chinese border and rich in natural resources, such as hydropower, minerals, timber, and jade, China’s fundamental interests in Myanmar include economic cooperation, energy transportation, and border stability.

Soon after the new quasi-civilian government took office in Myanmar, a series of events frustrated China’s ambitions, including Myanmar’s suspension of the Myitsone Dam project (a cascade of seven dams) in Kachin State, and the Letpadaung copper mine project in the Sagaing Region, as well as the rapid improvement of its relationship with the West, especially with the U.S.

According to the American academic Sun Yun, China has misjudged post-election Myanmar in both the country’s domestic politics and its foreign policy. In China’s perspective, privileged military rulers would never give up their power willingly, and the new Burmese government would only differ from the old junta by a stretch of imagination.²⁷

China knew that the Myitsone Dam already faced tremendous public opposition. The dam project was being instituted by the state-owned China Power Investment Corporation and the Burmese conglomerate Asia World and was allegedly designed to supply 90 percent of its electricity to China. Residents complained about environmental degradation, insufficient compensation for expropriated land (2,600 villagers have been forcibly displaced from their homes from a territory of 270 km²), labor abuses, and Chinese companies hiring Chinese workers rather than locals. But, Beijing was confident Myanmar would not risk angering its largest political and economic patron. To their surprise, President Thein Sein suspended the project in September 2011. By suspending the construction of the dam, Myanmar demonstrated a willingness to respond to domestic calls to reduce overreliance on China.²⁸

At the same time, Myanmar elites were concerned about ties between Yunnan actors and ethnic armed groups in the border areas. It has been no secret that over the years, China unofficially supplied weapons and training to the ethnic militias, particularly the Wa and the Kokang. The Wa, Kokang, but also Shan and Kachin, have significant populations on both sides of the China–Myanmar border. Ethnic communities in northern Myanmar are closer to China’s Yunnan Province than to the rest of Myanmar, especially in terms of culture and economy. Some Burmese towns along the border even conduct transactions in the Chinese currency rather than the Burmese one.

Renewed armed conflict along the Chinese border has been a particular source of crisis. After nearly two decades of relative peace, the borderlands have become unstable with scores of people killed and displaced. The escalation of fighting on the Burmese side has spilled across the Chinese border with bombs and artillery shells landing on the Yunnan side.²⁹ China lodged formal diplomatic protest and at times even deployed military forces along the border.

According to academics Jonathan T. Chow and Leif-Eric Easley, Beijing can turn violence in the border regions on and off like a switch depending on China’s needs.³⁰ This is directly connected to the peace process, first launched under President Thein Sein, now continued by his successors. China is and will remain an integral player in this process, particularly regarding the ethnic militias in the northern borderland. Despite its proclaimed noninterference policy, China uses its involvement in the peace process as both a carrot (encourage more cooperation) and a stick (rectify Myanmar’s policy course).³¹ China has played a positive role in persuading the ethnic armed groups to join the national peace conference, but on the contrary, illicit economic activities in the borderland directly fuel the war economy and prolong the conflict. Many in Myanmar see China as the largest obstacle to the success of the peace process.

In terms of Myanmar’s foreign policy, the reforms provided more diplomatic options. In 2012, Myanmar and the U.S. exchanged ambassadors. Then-President Barack Obama eased the most restrictive sanctions against Myanmar, including authorizing U.S. financial services and new investment into Myanmar and allowing imports from Myanmar to enter U.S. markets. These changes enabled economic reengagement and encouraged U.S. businesses to invest in the country.³²

Beijing did not expect postelection Myanmar to normalize diplomatic relations with the U.S., or at least not so fast. More broadly, Myanmar’s new willingness to court partners like the U.S., Japan, or India raised anxiety in China that their economic interests could be compromised, and that Myanmar would become part of the circles trying to contain China.

In light of Myanmar’s opening, many economic sanctions were suspended (although sanctions on arms sales remain in place), and many international dignitaries traveled to Myanmar, including the Presidents of the U.S. and South Korea; Prime Ministers of the United Kingdom, India, Japan, and Australia; and heads of fellow ASEAN countries.³³ Thein Sein helped Myanmar shed its so-called pariah status and diversify its diplomatic and economic relations. From the opening up through 2016, Myanmar was engaging in a hedging strategy on the side of the U.S.

In 2016, after a largely free and fair election, a new civilian government assumed power in Myanmar (with the military still in control of several key ministries and 25 percent seats in both houses of the parliament). Although the 2015 elections were won by Aung San Suu Kyi’s National League for Democracy (NLD), the current government is a power-sharing arrangement between the winner party and unelected military officials. Aung San Suu Kyi herself was constitutionally banned from the presidency and assumed the newly created post of State Counselor (which is in effect the head of government) and the Minister of Foreign Affairs.

Although Xi Jinping was absent from the list of well-wishers after NLD’s electoral victory, the State Counselor’s first visit was not to ASEAN, Japan, the U.S., or the European Union, but to China to reassure Beijing of close friendly ties. A joint statement with the Chinese President reaffirmed the two countries’ paukphaw (kinfolk) relationship and pledged cooperation on border security, natural disasters, climate change, and trade. China expressed support for Myanmar’s reforms, while Myanmar affirmed the One-China principle and welcomed the BRI. Further strengthening ties, China and Myanmar signed deals to construct a bridge at Kunlong (Shan State) and build two hospitals in Yangon and Mandalay.

Aung San Suu Kyi’s government also reopened the controversial Letpadaung copper mine to address Chinese investors’ concerns. The mine, a U.S.$1 billion project, is operated by Wanbao Mining, a subsidiary of NORINCO, a Chinese state– owned conglomerate with interests in arms manufacturing and mining, in partnership with the military-owned Union of Myanmar Economic Holdings and began shipping copper in September 2016. The project is responsible for evictions of locals without due process or adequate compensation, worsening human rights conditions of ethnic minorities and farmers residing near the mine.³⁴

Public outcry over the Myitsone Dam project and Letpadaung copper mine are examples that represent the wider dissatisfactions of the Burmese people with Chinese projects in Myanmar. They feel that China exploited their country during its hard times—purchased Burmese natural resources with cheap prices and supported the military ignoring democracy, human rights, and good governance—and continues to do so today with Chinese companies bringing in large amounts of Chinese workers and not creating enough jobs for the local work force. To improve China’s image, Beijing announced new corporate social responsibility guidelines for Chinese companies operating in Myanmar in July 2013, aimed at ensuring benefits for local communities.³⁵

In sum, after assuming power in 2016, the new government of Myanmar continued engaging and cooperating with China, while it also continued Thein Sein’s balancing strategy with the U.S.

Cooperation under China’s BRI

In 2017, the State Counselor attended the first BRI Forum in Beijing and signed five agreements that covered cooperation within the BRI framework. Over the next year, Myanmar’s engagement with China improved, and Myanmar officially became a BRI partner country after signing a fifteen-point memorandum of understanding (MoU), establishing the China–Myanmar Economic Corridor (CMEC) in September 2018.

The 1,700-kilometer-long CMEC will start in China’s Yunnan Province, go through Myanmar’s major economic cities— Mandalay and Yangon—and reach the coast at Kyaukphyu Special Economic Zone (SEZ) in Rakhine State. China has proposed forty projects for the CMEC, but Myanmar has so far only agreed to nine of them.

Map 1.

The border economic cooperation zones. Source: The Irrawady, 2018.

The two countries also agreed to three border economic cooperation zones in Myanmar’s Muse (Shan State), Chinshwehaw (Shan State), and Kanpiketi (Kachin State), with the implementation of the Muse zone already in progress (see Map 1).

Map 2.

The Kunming–Muse–Mandalay–Kyaukphyu/Yangon railway line. Source: Myanmar Times, 2019.

The stalled railway and road project from Kyaukphyu (Myanmar) to Kunming (China) reached a partial agreement with a study of the Burmese Muse-Mandalay railway project signed. The 430-kilometer-long line is expected to support trains traveling at up to 160 kilometers/hour and will feature seven cargo stations and five passenger stations (see Map 2).³⁶

According to the Indian sinologist J. Mohan Malik, the Kyaukpyu–Kunming railway and pipeline together with the Xinjiang (China)–Gwadar (Pakistan) railroad and pipeline constitute the two most critical veins of the BRI as both provide China access to the Indian Ocean.

Also, a framework agreement for the development of the Kyaukphyu SEZ by China’s state-run CITIC Group was signed, and in May 2018, the New Yangon City Project led by the Yangon Region Government and the China Communication Construction Company started.

Another MoU was signed on the renegotiated Kya ukphyu Deep Sea Port (also being built by China’s CITIC Group) that will offer China access to the Bay of Bengal. The project is part of the SEZ, and will not be far away from the submarine base India is developing on its east coast. The port will cover a total of 520 hectares (twenty for the port, hundred for housing, and 400 for an industrial park) and is expected to provide 100,000 jobs for local people.³⁷ China and Myanmar scaled back the project in response to local government’s debt worries, reducing the investment from U.S.$7.2 billion down to U.S.$1.3 billion.³⁸ The downsizing of the project is one of the signs that Myanmar is hedging against China.

For the implementation of the above-mentioned projects related to the CMEC and Myanmar–China border economic cooperation zones under the BRI, Myanmar formed a steering committee chaired by the State Counselor.³⁹

As for Chinese aid, a notable sum went toward supporting the peace process and assistance in Kachin and Rakhine States, both conflict-torn states of strategic interest for China because of the Myitsone Dam and the Kyaukphyu SEZ.⁴⁰

The year 2018 also brought other developments, most notably in the tourism and culture industries. After Myanmar introduced an on-arrival visa for Chinese tourists, several Chinese airlines expanded and started flying to Yangon and Mandalay.⁴¹ However, there were continued concerns over the so-called zero dollar tours, which leave no returns in Myanmar. Yangon also opened its first Chinese cultural center to promote cultural exchanges and cooperation. Moreover, Chinese literature and books, including President Xi’s The Governance of China, were translated into Burmese, and Chinese films were screened in nearly all states and regions of Myanmar as part of the Chinese Film Festival in 2018.

In the second BRI Forum, China and Myanmar signed three bilateral cooperation agreements: the Agreement on Economic and Technical Cooperation (China will provide a grant of U.S.$148 million for socioeconomic development projects under this agreement); an MoU on the CMEC Cooperation Plan 2019–2030 (cooperation in industry, transportation, energy, agriculture, “digital silk road,” finance, tourism, environmental protection, people-to-people exchanges, science and technology, personnel training, water resources, and flood prevention); and an MoU on the Formulation of the Five-Year Development Program for Economic and Trade Cooperation, which aims to enhance cooperation in investment and productivity.⁴²

However, no agreement was reached on the Myitsone Dam project—which has been in limbo since 2011—due to protests over fears that the project would devastate the environment and displace families. For example, in Hpakant in Kachin State, where as much as 90 percent of the world’s jade is mined— most of it destined for China—landslides generated by piles of mining refuse have killed many residents and destroyed nearby dwellings.⁴³ Moreover, it is common knowledge in Myanmar that Chinese investment does not support sustainable development, technology transfer, or long-term employment opportunities, despite producing long-term negative effects on the environment and on the displaced communities.

The most notable development of the forum was the dropping of the plans to construct a 2,800-kilometer-long road network and energy corridor called the Bangladesh, China, India, and Myanmar Corridor (BCIM). This plan was supposed to develop three railways and three highways in Yunnan Province with the aim of connecting Kunming (China) with Dhaka (Bangladesh), Mandalay (Myanmar), and Kolkata (India). The BCIM was originally conceived before Xi Jinping’s launch of the BRI in 2013 and was subsequently included in the six major corridors envisioned under the BRI. India has been blamed for the slow progress in the BCIM as New Delhi is said to be apprehensive about the security situation in its northeastern states. Beijing will now go ahead with infrastructure projects in South Asia bilaterally. In Myanmar’s case, this is the CMEC agreement signed back in 2018.

The engagement between Myanmar and China has become multifaceted, and besides trade and investment projects, it includes various other initiatives. Nevertheless, Myanmar is cautious and prefers to diversify its diplomatic and trade portfolios. After the start of the reform process, Myanmar was eager to ameliorate relations with the U.S., a dominant power in the region and a potential counterweight to China.

The next section will shed light on why Myanmar—despite its political transition from military rule to economic liberalization in recent years—is not accepted as an equal partner by the U.S. (and the West, in a broader sense) and has thus resorted to a double-hedging strategy—hedging with the U.S. against China on economic issues, while at the same time hedging against the U.S. with China on human rights issues.

Myanmar’s Double Hedging Strategy

Myanmar’s case certainly proves that democratization or regime change can have destabilizing consequences, sometimes referred to as the “dark side of democracy” (although in Myanmar’s case we cannot speak of democracy⁴⁴). According to Michael Mann, an American professor of sociology, transitioning regimes are more likely to commit ethnic cleansing than stable authoritarian regimes or stable democracies.⁴⁵ Myanmar is an ethnically diverse country, and heterogeneity poses a risk for democratization because of the distrust between groups. It is not diversity that destabilizes and leads to violence, but the politicization of that diversity. In a political transition, elites from the old regime seek strategies that will prevent their fall, while rising elites are trying to muscle in. Certain political actors may play the ethnic card and incite hostility toward other ethnic groups, as has been the case in Myanmar.

The Rohingya people, a minority living in the western part of the country, have for a long-time experienced anti-Muslim violence resulting in internal displacement and restrictions in all aspects of life. Thousands sought refuge in other countries, but many still remain in the country trapped in an apartheid regime. The Burmese government considers the Rohingya illegal Bengali immigrants from Bangladesh and Pakistan and refers to them as “Bengali” or the derogatory kala (alien), and does not acknowledge the name “Rohingya.” This triggered the social media campaign #JustSayTheirName before U.S. President Barack Obama’s visit to Myanmar in 2014.

In 2016, the Burmese armed forces and police started a major crackdown on Rohingya people after the Arakan Rohingya Salvation Army (ARSA), a militant group created in 2013, attacked police posts and killed nine Burmese police officers. The Tatmadaw (military) responded with a “clearance operation” to capture “terrorists” and recover stolen weapons; it razed dozens of villages, opened fire on civilians, killed people, gang-raped women, burned victims alive, slit throats, and arbitrarily arrested hundreds. The NLD government initially described the allegations of rape as “fabricated stories” and “one-sided accusations.”

The violence escalated in August 2017, when more than 700,000 Rohingya were driven out of Rakhine State (renamed from Arakan in 1989) to neighboring Bangladesh after militants again attacked police outposts and killed twelve state security officials.⁴⁶ The military retaliated by attacking all Rohingya residents with no distinction between militants and civilians.

The UN has found evidence of wide-scale human rights violations not only in Rakhine State, but also other regions of the country (Kachin and Shan States), and numerous human rights groups, journalists, and governments, including the U.S., have accused the military of ethnic cleansing and genocide.⁴⁷ The end of the year 2019 saw two meaningful international responses to the Rohingya issue: the International Criminal Court authorized an investigation into alleged crimes against humanity (namely forced deportation to Bangladesh since the court has no jurisdiction over Myanmar where the genocide happened); and the International Court of Justice started a trial, after the Gambia, with the full support of the fifty-seven-member Organization for Islamic Cooperation, filed a genocide lawsuit against Myanmar. This constitutes a great hope for accountability for the crimes against the Rohingya, particularly because the UN Security Council has so far failed to adopt any strong resolution on the Rohingya situation, hindered by China.

Washington responded by withdrawing military aid, blacklisting, and even imposing sanctions on Myanmar’s top generals, military, and police commanders.⁴⁸ The U.S. State Department released a report on the atrocities and condemned the Burmese military. During President Barack Obama’s visit to Myanmar in 2014, he used the term “Rohingya” multiple times and said discrimination against them was destabilizing the country’s bid for democracy.⁴⁹

Beijing, on the contrary, refused to condemn Myanmar’s treatment of the Rohingya people. Chinese foreign minister Wang Yi even reiterated China’s support for the Myanmar government’s efforts to protect its national security.⁵⁰ China itself is being criticized for its human rights record, not least for the repression and systematic abuses against the Turkic Muslims, including the Uyghurs, in the northwestern Xinjiang region.⁵¹ Diplomatic ties with China are tightening, while Beijing continues shielding Myanmar from international intervention. China has regularly spoken out against interference on human rights grounds and has rather emerged as a spokesperson for states seeking to affirm the paramount responsibility of the state to enforce public order.⁵²

With such developments—the escalation of the Rohingya crisis and the following condemnation from the West— Myanmar suddenly found itself in the position of a hedging partner of China against the U.S. (and the West, in a broader sense) on the issue of human rights.

Conclusion

Postindependence Burma has accommodated China as its big brother in the paukphaw (kinsmen) relationship and avoided taking actions inimical to China’s interests, although the relationship has been a nervously friendly one. After 1988, China became the junta’s closest ally. Shortly after Myanmar started its political transition with its quasi-civilian government assuming power in 2011 and allowing some reforms in the country, relations with China soared over the cancelation of various Chinese-funded projects. More broadly, the rapid expansion of Myanmar’s diplomatic profile has complicated its relations with China. Nevertheless, when the Rohingya crisis broke out, and the West criticized the military’s actions, China refused to condemn Myanmar and even supported the Burmese government’s efforts to protect its national security.

Political transitions from one regime to another are inherently messy, can change otherwise-logical external alignment options, and as has been demonstrated in this article, middle powers like Myanmar can employ a double hedging strategy with two great powers. Myanmar hedges with the U.S. against China on economic issues and with China against the U.S. on human rights issues.

Cooperation with China has been revived under the umbrella of the BRI: the year 2018 became the year of signing MoUs, and the year 2019 was the year of the initiation of project implementation. China will continue to be a prominent part of Myanmar’s diplomatic and economic portfolios. The Burmese parliament approved many plans to develop hydropower, electric power, mining, telecom, railway, and oil and gas projects by Chinese companies. However, after Myanmar’s opening up, the country now has also other suitors, and China must compete with them. Foreign capital is pouring in from Japan, Singapore, Malaysia, Thailand, and Vietnam, although in the past few years attracting investment from overseas has proven somewhat difficult because of the many human rights abuses in the country. Moreover, China now has to engage in a diversified landscape where different sectors of society have impact on sociopolitical life.

In Myanmar, the image of China has been severely damaged as China supported ex‐military regimes in Myanmar and neglected the voice of the people under suppression. Present projects are also under attack for not creating enough jobs for the local workforce and not treating the Burmese workers the same way as the Chinese workers. Even as the Burmese government welcomes Chinese investments, the civil society pushes back against Chinese economic dominance. Chinese projects are very often characterized by imported Chinese labor, poor environmental standards, debt accumulation, and disregard for regulations on working hours and minimum wages. To improve China’s image, Chinese firms in Myanmar must abide by standards of corporate social responsibility.

In sum, fundamental difficulties that can destabilize Myanmar–China relations remain. Myanmar fears becoming economically overdependent on China through accumulating excessive debt, while China holds fears with respect to the political stability and security in the border region.

Myanmar’s best strategy lies in balancing diplomacy among big powers to maximize its leverage and gains. On one hand, Myanmar does not want to become China’s satellite state; on the other hand, it does not make sense for Myanmar to alienate China. Myanmar recognizes the importance of China in the (near) future, as its financing predominantly comes from China. But Myanmar’s approval of borrowing from foreign banks may provide a future solution to diversifying the risk of being too dependent on Chinese investment.

Good projects that will benefit the local population will be welcomed; bad projects that ignore them will not. Progress will depend on political solutions and economic relations that are in the interest of the peoples of Myanmar.

Funding

This work was supported by European Regional Development Fund—Project “Sinophone Borderlands—Interaction at the Edges” CZ.02.1.01/0.0/0.0/16_019/0000791.