Energising China-Myanmar Relations

Focus

The acquisition of energy has become a dominant influence in China’s foreign policy orientation generally, and has been a driving force in its relationship with Myanmar in recent years, believes Daniel Wagner

China and Myanmar have had a mixed post-war relationship, ranging from warm to hostile, with Burma being the first non-communist country to recognise the PRC in 1949, then expelling much of its Chinese population following anti-Chinese riots in the 1960s. Since the repression of pro-democracy riots in 1988, Myanmar has generally sought a closer relationship with China, as the government wished to strengthen itself in the process. Today, the relationship is characterised by strong bilateral trade and investment, but also a similar sensitivity as other Southeast Asian nations to China’s growing strength and influence in the region.

Myanmar’s Strategic Energy Play

The acquisition of energy has become a dominant influence in China’s foreign policy orientation generally, and has been a driving force in its relationship with Myanmar in recent years. While Myanmar is resource-rich, it does not have particularly noteworthy hydrocarbon reserves, but, because of its geostrategic position, it has punched above its weight in perceived significance to China. China views Myanmar as important to its own strategic objective of having access to more ports in the Andaman Sea and Indian Ocean.

The Shwe Gas Pipeline (otherwise known as the Myanmar-China Oil and Gas Pipeline), which commenced operation in 2013, certainly symbolises China’s willingness to invest in Myanmar in order to achieve its energy acquisition objectives. Although built by a consortium that includes India and South Korea, the pipeline is an important component of China’s ability to deliver oil and gas to southwest China.

China has taken this big step further with the inauguration last month of a 478-mile crude oil pipeline that runs the length of Myanmar and will transport oil from the Middle East and Africa to southwest China. China’s CNPC owns 50.9 percent of the venture, which included the construction of a new deep-water port and oil storage facilities on Myanmar’s Maday Island. The completion of the port was also a long-held strategic ambition of China in terms of its ability to project its military power in the region. So, it is fair to say that bilateral economic relations have never been better between the two countries, nor has Myanmar’s economic significance to China ever been higher.

Rising Above Challenges

However, there were a few bumps in the road. The government of Myanmar halted the construction of the Myitsone Dam in the country’s north, a large hydroelectric project that was under construction along the Irrawaddy River and was to be completed in 2017. It was to generate up to 6,000 megawatts of power for Yunnan Province in China. The project was highly controversial, largely because of the environmental damage it would cause and the thousands of people who would eventually be displaced to build the Dam.

A broad range of interests and organisations opposed construction of the dam, which was being built by the China Power Investment Corporation – one of China’s largest power producers – and Sinohydro – one of the world’s largest hydropower contractors. In 2011, Myanmar’s then President, Thein Sein, succumbed to pressure and cancelled the project, to the great consternation of the Chinese government, and to the great delight of environmentalists.

Cancellation of the Dam raised a whole host of issues which China had never before addressed in public. It is extremely rare for a developing country government with a long history of friendly relations with China, and seeking its investment, to publicly challenge the Chinese government in such a manner. Even more interestingly, it was one of the first instances when major Chinese government-owned companies were forced to deal with issues related to contract cancellation and de facto expropriation of Chinese assets related to Overseas Foreign Direct Investment (OFDI).

As a result, the Chinese government learned that it is ultimately as powerless as any other government when contracts are cancelled in another country – even Myanmar. The Dam remains suspended. While China has sought to portray the project in a more favourable light, local environmental activists remain adamantly opposed to the project, and allegations of fraud, corruption and lack of transparency remain rife. A rather thought provoking dichotomy – the Dam and the Pipeline – since it may certainly be presumed that many of the objections Myanmar had to the Dam may surely also be said of the Pipeline, but are not.

The Myanmar people have raised, and continue to raise, objections to the manner in which a variety of Chinese-sponsored and funded projects have evolved. Although there are more than two dozen mega-dams either in place or planned in Myanmar, more than 90 percent of the electricity generated by them end up being exported either to China or Thailand, meaning that the benefits for Myanmar’s citizens are ‘limited’. Power shortages are still common in Myanmar as a result.

However, China is quickly learning about the potential benefits of establishing more equitable and genuinely mutually beneficial bilateral economic relationships, as well as being more sensitive to environmental issues and the concerns of host country inhabitants. Perhaps that will be one enduring legacy of Myanmar’s growing importance to the economy of China.



Go to Content Page

Back to Top

Diplomatist Magazine was launched in October of 1996 as the signature magazine of L.B. Associates (Pvt) Ltd, a contract publishing house based in Noida, a satellite town of New Delhi, India, the National Capital.

Search