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China still has it wrong in Myanmar

Date: 18/09/2013
Source: Asia Times
China still has it wrong in Myanmar

China's policy of pursuing relations strictly at an inter-governmental level has spawned negative perceptions among various politically relevant grass roots communities in Myanmar. From controversial investments that have had negative social and environmental impacts, to single-minded efforts to protect its commercial interests, China is now part and parcel of many of Myanmar's deep-seated problems.

China's policy of pursuing relations strictly at an inter-governmental level has spawned negative perceptions among various politically relevant grass roots communities in Myanmar. From controversial investments that have had negative social and environmental impacts, to single-minded efforts to protect its commercial interests, China is now part and parcel of many of Myanmar's deep-seated problems.

As recently as two years ago, China failed to anticipate any significant changes in the previous ruling military junta's authoritarian tack. Since President Thein Sein has led the country in a more democratic direction, Beijing has at times appeared flabbergasted by the fast pace of liberal reforms and the impact they have had on its investments and other economic ventures in the country.

Despite the shift, Beijing has nonetheless maintained relations at a strict bilateral inter-state level to promote its key strategic interests: stability in border regions and protection of its substantial investments in the country. Yet soon after Thein Sein started to implement various democratizing reforms, including a loosening of past restrictions on critical news reporting, China has suffered setbacks in both areas.

In June 2011, China was suddenly faced with an influx of about 30,000 refugees into its southwestern Yunnan province after fighting reignited between the Tatmadaw (Myanmar army) and the rebel Kachin Independence Army after a 17-year ceasefire. In September that year, Thein Sein announced that China's state-owned CPI Group's US$3.6 billion Myitsone Dam project in Kachin State would be suspended for environmental and social reasons.

Many in Beijing interpreted the abrupt suspension as an attempt by the new quasi-civilian government in Naypyidaw to convince Western observers that its democratic intentions and reforms were genuine. China-based commentators expressed disappointment with Myanmar, claiming Thein Sein's government was ungrateful for years of substantial Chinese aid, investment and diplomatic support.

China had consistently defended Myanmar, including at the United Nations Security Council, while the West punished the military-led government through various economic and financial sanctions. Now, pro-China commentators complain, Myanmar's quasi-civilian government has chosen to favor investment and relations with the West, including the United States, over China.

One of the key concerns for Chinese policymakers was the China National Petroleum Corporation (CNPC)-led oil and gas pipeline project. The 2,100 kilometer-long pipeline is designed to connect Myanmar's Shwe offshore gas fields and Kyaukphyu deep-sea port with China's southern Yunnan and Guangxi provinces.

Although the project has not yet come into question [China started to receive gas through the pipeline in July this year], the suspension of the Myitsone dam triggered concerns in Beijing that the government's newfound sympathy for local communities' complaints would complicate the construction and maintenance of the pipeline, which is viewed as crucial to bolstering China's energy security against a possible US blockade of fuel shipments from the Middle East in a conflict situation.

Instead of addressing issues related to land rights, compensation and environmental issues, China and its state-affiliated companies have consistently emphasized the allocations they make to social infrastructure such as hospitals and schools as proof of their corporate social responsibility. This stance, however, has only reinforced perceptions that China is more concerned with securing investments and maintaining stability than the well-being of Myanmar's mostly impoverished grassroots communities.

Slow to react
So what aspects of China's foreign policy towards Myanmar have left its interests so badly exposed to a shift towards more democratic governance?

Firstly, Beijing has underestimated its own role and influence in Myanmar while the lack of policy coordination among various state and private actors has sent mixed messages to Naypyidaw. Beijing's long-standing rhetoric of non-interference in other countries' internal affairs, meanwhile, has outlived its usefulness and obviously does not square with its historical or contemporary actions.

While the West imposed punitive sanctions against the previous military regime, China built considerable influence with Myanmar's ruling generals. Approvals of new Chinese investments rose sharply before the 2010 general elections that marked the shift from direct military to quasi-civilian rule - though the armed forces have maintained a strong role in politics. New investment approvals have fallen off dramatically over the past year, even as Western companies jockey for access to the country's various "last frontier" markets.

Since achieving independence from British colonial rule in 1948, mostly military governments in Myanmar have aimed to diversify their foreign relations in order to minimize external influences, a diversification of diplomatic relations that was nearly impossible to maintain under the Western sanctions that isolated the country. Chinese investments, often in joint ventures with military-controlled state agencies, gradually came to dominate the local economy.

Over the years, China's broad relations have become inconsistent with power brokers in Yunnan province, where local leaders and businesspeople often pursue their own agendas based on local needs and entrepreneurial interests. Chinese policymakers and companies still maintain close contacts with influential members of both the Tatmadaw and quasi-civilian government, ties they have tried to leverage into lifting the Myitsone dam suspension.

Despite supposed strict controls imposed by Chinese supervisory bodies, Chinese state agencies and enterprises have undertaken many questionable projects. NORINCO, a horizontally structured enterprise engaged in defense and extractive industries, took over operational control of Myanmar's Monywa copper mine in 2010. The deal, however, immediately raised suspicions about a possible copper-for-arms agreement and complaints about official land-grabbing to expand the mine's operations have plagued the project.

CPI's cooperation with Asia World Group on the Myitsone dam project also raised widespread suspicions. Asia World is a Myanmar-based company that emerged from a drug cartel led by the recently deceased Lo Hsing Han and under the leadership of his son Stephen Law is now involved in a wide range of industrial and construction-related investments. (During the suspension of the massive project, the site has become a restricted zone and is allegedly being used for industrial gold mining.)

Controversial practices
Similarly, the business practices of Chinese entrepreneurs have triggered widespread local complaints. Besides large scale logging and mining ventures that provide little trickle-down benefits to local communities, Chinese companies have increasingly become involved in industrial scale agriculture projects in Shan State, with some allegedly financed by concessions under China's opium substitution program for the region.

According to the Transnational Institute (TNI), a worldwide fellowship of activist scholars, the program has marginalized former poppy growing groups and dispossessed many of them of their lands. Chinese companies have used subsidies and low interest loans under the program to introduce mainly industrial rubber plantations. The programs, according to TNI, have brought little if no benefit to local farmers.

While Beijing has continuously expressed concerns about stability and security in border regions with Myanmar, it has done surprisingly little about Chinese-driven problems in the areas. This is particularly true in Kachin State, where armed hostilities between the government and Kachin Independence Army re-erupted in 2011 after 18 years of a ceasefire agreement.

Despite the serious security implications, China has demonstrated a lack of understanding of the circumstances behind the renewed conflict. Rather, Chinese involvement in peace-brokering attempts has only eroded trust in China's intentions and confidence in the abilities of Thein Sein's civilian government to act in good faith.

Chinese companies still prefer to deal with the central government and their affiliated military networks in the previous junta rather than engaging with local communities, particularly among ethnic groups situated in resource-rich border areas. The underlying justification has traditionally been that ethnic groups are part of separatist movements that lack formal political recognition.

During heavy artillery shelling around the border town of Laiza in January, reports indicated that a couple of shells landed in Chinese territory. Beijing felt compelled to act and allegedly sent Yangon a stern message about containing the conflict along its border areas. Chinese special envoy to Myanmar Fu Ying met Thein Sein in Yangon on January 19 reportedly in order to raise issues of border security and stability.

In the follow up, China took an unprecedented step by trying to rekindle peace talks between Kachin rebels and the government's Myanmar Peace Center run by the Office of the President. During two successive rounds of talks in the border town of Ruili in southwestern China in February and March, both parties to the conflict perceived Chinese mediation attempts as highly interventionist, according to people familiar with the meetings.

During a third meeting in Myitkyina in May, the Chinese representative arrived to the talks late, a tardiness that almost caused the meeting to collapse. With the realization that there was no quick fix in sight, China has apparently backed away from its half-hearted attempt at mediation.

During the course of these events, China again sent the wrong signal to all involved parties in Myanmar. Its interventions were interpreted as attempts to once more secure its interests, including its investments in Kachin State, including the suspended Myitsone dam, restoring stability and eliminating international competition of the country's natural riches in the area.

To date China has shown little interest in joining wider international efforts to assist the peace process in Kachin State. Meanwhile, key issues in Myanmar's fragile political transition, including diminishment of the military's role in politics and the resolution of long-standing conflicts between ethno-nationalist groups are testing China's previous grip on the country. Beijing's response so far has only served to damage rather than protect its substantial interests in Myanmar.

Topic: Politics
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