China’s Influence in Myanmar Facing Growing Scrutiny

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Mounting local opposition to Chinese-backed infrastructure projects in Myanmar over the past few months has again led to growing scrutiny on Beijing’s influence in the Southeast Asian state.

Trouble surfaced once more last month in the Letpadaung copper mine in northwest Myanmar, a joint venture between a Chinese state-owned arms manufacturer and the Myanmar military. After dozens of villagers had obstructed the erection of a fence in the project area, Myanmar police fired on protesters near the mine, leaving one woman dead and nine other villagers wounded. While China expressed regret at the incident, protests continued at the dam site and in other parts of the country, including outside the Chinese embassy in Yangon.

The Letpadaung project became a focus of international attention in 2012, when Myanmar police used phosphorus smoke bombs to disperse demonstrating villagers and Buddhist monks, causing several injuries. Since then, locals and activists have continued to hold protests demanding the project’s suspension, citing concerns including pollution, unfair wages for local employees, forced relocations, and illegal land confiscations.

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“The death of a woman during a protest at a Chinese copper mine in north-western Myanmar has underscored inadequate corporate social responsibility management by Chinese mine operators, which continues to fuel public resentment against Chinese investment across Myanmar,” Verisk-Maplecroft, an Anglo-American risk assessment firm, warned recently.

Letpadaung is but one example of Chinese infrastructure projects hitting snags in Myanmar. While China is one of Myanmar’s most important partners, the economic relationship is complicated by allegations that Beijing is only interested in extracting its neighbor’s natural resources with a string of exploitative transportation and energy projects.

In July 2014, the director of Myanmar’s railway ministry Myint Wai said the government would no longer carry out another major project, this time a proposed $20 billion railway line connecting China’s Yunnan province with Myanmar’s western Rakhine state “in accordance with the public’s demand.”

Apart from public opposition, the Myanmar government was reportedly lukewarm on the project because of commercial issues as well, particularly its long timeline which would mean reduced revenues. In an environment of growing investment from Western and Asian investors, some say the government in Naypyidaw feels it can now afford to turn down deals that do not meet its interests because of its enhanced bargaining power.

“The government is no longer willing to accept terms that are less than optimal to the national interest. The renewed availability of Western and other foreign capital after decades of isolation and stagnation caused by economic sanctions has made Chinese investment less appealing,” Yun Sun, a fellow at the Stimson Center in Washington, D.C., wrote of the project in Asia Times Online at the time.

Yet despite massive reductions in Chinese foreign direct investment over the past few years – partly because of the tougher business climate – Beijing still remains one of the biggest investors in Myanmar and a crucial partner for the country’s economic development. During Chinese Premier Li Keqiang’s visit to Myanmar in November, the two sides signed deals worth $7.8 billion covering energy, agriculture, telecommunications, infrastructure and finance.

As a result, Myanmar’s president Thein Sein and his advisers have themselves struggled to balance the state’s needs with the concerns of its citizens. The suspension of the $3.6 billion, Chinese-led Myitsone dam project in 2010, which would have seen 90 percent of the power going to China, or the railway project in 2014, are examples of where the government eventually determined not to go ahead with major infrastructure projects, despite Chinese frustration.

However, there have also been examples of major projects where the government has had to push back against local opposition. In the case of the Kyaukphyu-Kunming oil pipeline, another key project which begins delivering oil to China this month, the government has repeatedly rejected activist demands for Rakhine state to get a large share of the revenues and refused to address concerns about potential oil spills and threats to the livelihoods of local fishermen. Most of the oil will go to China, with only one-tenth it reportedly used by Myanmar.

And despite continued protests against the Letpadaung project, Myanmar authorities have charged several of the protestors for an illegal demonstration and released a statement on January 6 fiercely objecting to citizen concerns and warning against further disruptions to the project.

“While the majority of the local people in the project area are hoping to launch the production of the copper mine project as soon as possible and to get job opportunities, a handful of people who are on utter destructive course with the project, have confused with the project and created hindrance to systematic implementation of the project due to instigators,” the statement said.

Nonetheless, few would contest that the writing is on the wall for Chinese companies to quickly adapt to new realities.

“[T]he rules of the game have changed,” Bi Shihong, a professor at the School of International Studies at Yunnan University, wrote in The Global Times last week. “Chinese enterprises are used to dealing more with Myanmese authorities instead of its private firms and nongovernmental organizations and thus urgently need to learn the real needs and desires of the locals,” Bi said.

To China’s credit, it has already made some significant adjustments to account for this changing environment. As early as 2013, big Chinese companies began to embark on corporate social responsibility (CSR) efforts and public relations campaigns to reach out to the local population. They have been supported by the Chinese government, which replaced its ambassador to Myanmar in 2013 and has released CSR guidelines for its firms.

But as 2014 has illustrated, these efforts may not be sufficient to counter growing resentment against Beijing’s influence there.

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