GP Insights

GP Insights # 231, 25 January 2020

China and Myanmar signs several MoUs and agreements: Just not the BRI
Aparupa Bhattacherjee

What happened?

On 18 January, Myanmar and China signed 33 memorandum of understanding (MoUs), agreements, protocols and exchange letters, including concession agreement and shareholder’s agreement of Kyaukphyu Special Economic Zone Deep Sea Port Project. This MoUs and agreements were signed during the visit of Chinese President Xi Jinping to Myanmar. He has also promised to give an aid of 4 billion yuan over the next three years to support the development of Myanmar. 

The MOUs signed focuses on fast-tracking negotiation of the framework agreement on the China-Myanmar Ruili-Muse cross-border economic cooperation zone and on establishing local cooperation under the joint implementation framework for the China-Myanmar Economic Corridor (CMEC) between Yunnan and Mandalay. The Exchange letters and protocols covered a new urban development in Yangon, the acceleration of the Mee Laung Gyaing Integrated Liquid Natural Gas power project in Ayeyarwady Region, plant inspection and quarantine requirements for exporting rice from Myanmar to China, health requirements for bovine slaughter for exports from Myanmar to China, and a zero-interest loan to Myanmar for procuring 28 passenger train coaches from China. 

What is the background?

The bilateral relationships have been often described as 'fraternal' or 'Paukphaw’ due to ethnic and geographic linkages. In 2011, the stalling of the Myitsone dam project due to public protest was a setback to the above relationship. Since then, there was also a rise of anti-Chinese sentiments within Myanmar, dampening the relationship. However, this did not hamper the Chinese investments. Neither did it impact the pro-China sentiment of the Myanmarese leadership.

Aung San Suu Kyi’s visits to China, her pragmatic approaches towards the stalled Chinese projects and also China's active role as a mediator in the national reconciliation process helped the two countries to come closer. This assured Beijing's support for the NLD government. Further, Beijing refused to condemn Myanmar, when the rest of the international community criticised the latter for their treatment to the Rohingyas. The Chinese support is also important for Suu Kyi, who has been condemned and eschewed for her inaction and support for the army. Since coming to power, Suu Kyi's Beijing inclination has been evident. 

China, on the other hand, is marred in the trade war with the US and disputes in the South China Sea with countries in Southeast Asia. Contentions in the South China Sea and maritime claims have soured the relationship of China with Malaysia, Indonesia, Vietnam, and the Philippines. The BRI is being questioned and scrutinised by Malaysia and Indonesia. Several South and Southeast Asian countries who have received Chinese investment with open arms in the early 2000s have later realised the carrot and stick approach of China in the name of investment. Hence there is a growing apprehension to China’s investment and debt traps which resultant of it. Xi needs to maintain a stronger rapport with Myanmar.

What does it mean?

First, China’s interest in Myanmar is evident. The strategic location of Myanmar plays a crucial role in China's Belt and Road Initiative. All the MoUs on Kyaukphyu Special Economic Zone Deep Sea Port Project and China-Myanmar Economic Corridor (CMEC) and others are crucial for the BRI. 

Second, for Myanmar, Xi’s visit could also backfire. Myanmar will face a general election by the end of 2020. Sui Kyi cannot take popular support for granted, given the failure of the ethnic reconciliation processes and the lack of support from the ethnic minorities. Xi’s visit may further hamper this as most of the stalled projects are in the peripheries where the ethnic minorities are in a majority. This would also end up increasing the anti-Chinese sentiment within Myanmar. 

Third, anti-China sentiment and protests within Myanmar is the cause that has stalled several projects. Hence addressing the sentiment is pivotal for restarting these projects. This could be a reason that Xi has emphasised on the fraternal nature of the Sino-Myanmar relations and its development especially in the border areas. 

Fourth, Xi’s visit could impact Myanmar’s relationship with its other neighbour. The growing bonhomie between the two has made India wary and according to a top official, they have also cautioned Myanmar. In comparison, Japan, the other big investor, seems to be undeterred by Xi's visit has recently offered the aid of 1 billion US dollars for the development of the country. They have also recently praised Myanmar's for its Independent Commission of Enquiry (ICOE) report on the Rohingya crisis. 

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