China in Myanmar: How the Game-Changing Neighbor Would Continue to Maintain Its Influence

China’s continued engagement with Myanmar’s junta recognizes the control that the junta continues to hold over important population centers in Myanmar. On the other hand, China’s engagement with resistance groups also speaks to the junta’s inability to control issues important to China like border security and scam centers. As the most influential foreign actor in Myanmar, China continues to play an important role in how Myanmar’s civil war will unfold. This piece by a next-generation Myanmar scholar analyzes the manner in which China approaches the junta and resistance groups to maximize protection of its own interests.

Editor’s Note: The Stimson Center, in its Myanmar work, seeks to elevate the voices of rising scholars of Myanmar. Thant Aung (Victor) Paing is a next-generation Myanmar scholar who is a recent Fulbright Fellow and master’s graduate. Victor attained a Master of Public Administration concentrating in International Development Studies at Cornell University.

By Yun Sun, Senior Fellow and Co-Director, East Asia Program

Since the February 2021 military coup in Myanmar, many people have speculated that the Chinese government supported the coup. However, China’s tacit approval of Operation 1027 silenced many of the speculations and it is still hard to say that China intends to pick a side. China is known to be the most influential foreign actor in Myanmar, having interaction and, at the very least, informal discussions with almost every major armed or political group, unlike the United States.¹ As the civil war roils on, China seeks to utilize its influence in Myanmar to encourage a stable environment to boost Chinese investments in the country.

China’s Economic Interest in Myanmar

China is the biggest investor in Myanmar, but the civil war is not conducive for foreign investment or trade. China’s major infrastructure projects could have far-reaching impact on Myanmar’s economy, but while recent progress has been made on major Chinese projects such as the Kyaukphyu deep-sea port² and the Myitsone Dam project,³ the junta’s hold on these lands is uncertain. As a result, the realization of the projects seems distant. Border trade also plays a significant role in Myanmar’s economy, but China-Myanmar trade shows a declining trend, which is compounded by Operation 1027.⁴

The post-COVID years have seen the deceleration of the Chinese economy, which impacts both neighboring countries and China’s ambitious infrastructure projects, especially through the Belt and Road Initiative (BRI). The BRI projects have been stalling or slowing down around the world, and these projects in Myanmar face a more severe situation due to the intensifying conflict and economic decline in the country. Moreover, the Chinese government is trying to deal with post-COVID domestic problems such as a decline in economic growth and high unemployment, making international affairs less of a priority for Beijing. Even though Myanmar is important for China’s access to the Indian Ocean, Myanmar is mainly the concern of the Yunnan provincial government for the time being rather than the China’s central government, as long as the United States’ involvement is minimal.

China’s economic interests in Myanmar are a potential source of influence. Chinese FDI is still a significant resource for the junta, but the USD 2.5 billion investment in May 2021⁵ was the last major Chinese investment to enter the country. There has been no notable Chinese investment for more than three years now, indicating that China is waiting for the situation to stabilize instead of risking its own projects.

The Problem with Scam Centers

Economic opportunity is not China’s only concern about Myanmar’s stability. The widespread practice of online fraud through scam centers, located across Southeast Asia including in Myanmar, has had an increasing impact on Chinese citizens, who are being trafficked into Myanmar to work at the scam centers.

Scam centers established by Chinese-led crime networks have been cooperating with various armed groups along the China-Myanmar border, such as junta-linked militias, the United Wa State Army/Party, the National Democratic Alliance Army, and authorities of the Kokang Self-Administered Zone.⁶ Since the coup, these activities have expanded as the military looks the other way, needing to keep the militias on their side. In addition, the thriving business of scam operations has become one of the primary revenue generators of the militias. In 2023, the number of scammers working in Myanmar was estimated to be 120,000 people,⁷ and the total annual revenue generated by them was estimated at USD 15.3 billion, roughly equivalent to a quarter of Myanmar’s GDP in 2023.⁸ The increasing threat to the safety of Chinese citizens led the Chinese government to request in May 2023 that the junta eradicate scam centers.⁹

However, the junta’s unwillingness to commence a large-scale, anti-scam center initiative provided a golden opportunity for the resistance in the form of tacit approval from the Chinese government for Operation 1027 in late 2023. The Three Brotherhood Alliance stated at the start of Operation 1027 that the elimination of cyber scam centers was one of the major reasons for commencing the offensive.¹⁰ The junta has since actively undertaken the task of combatting such scam center operations, but it was already too late for them to win back China’s approval. In addition, tackling the problem of the scam centers is inevitably a double-edged sword for the junta, as they might lose their grip on the militias while still being perceived by China as not doing enough.

The success of Operation 1027 has forced the scam centers to relocate to other places in Myanmar and in the region, largely to the Shwe Kokko area on the Thai-Myanmar border, which is controlled by the Karen National Army, formerly a Karen Border Guard Force of the junta, led by Colonel Saw Chit Thu.¹¹ Still, the Chinese government has maintained pressure on both the junta and the Thai government to fully eradicate these scam centers, which led to the termination of internet and phone communications to Shwe Kokko from Thailand’s side in May 2024. However, Saw Chit Thu had proven himself a necessary component of the junta’s control of Myawaddy, an important point on the Thai-Myanmar border crossing, which indicated to the Chinese government that the junta would not take down the Shwe Kokko scam centers by sacrificing Myawaddy. The Chinese government by now should understand that the junta would not be capable of anti-scam center operations, at least in Shwe Kokko, not to mention other scam centers thriving in militia-controlled areas, given the junta’s ties to the people in charge.

How China Chooses to Approach Myanmar

Complicating China’s approach to Myanmar is its strict preference for conducting state-centric diplomacy regarding high-level political interactions. In the first Libyan Civil War in 2011 that led to the fall of Gaddafi’s regime, China was among the last countries to recognize the rebel National Transitional Council despite the potential threat to Chinese investments in the country.¹² Although the decade before the Myanmar military coup saw a change in Chinese leadership, the Chinese diplomatic preference for state-centered relations has seen little evolution.

The junta still maintains control over the nation’s crucial state infrastructures. To date, the junta controls international airports, seaports, and economically important areas such as the commercial capital, Yangon, which also has the most foreign embassies. This is why China maintains high-level interactions with the junta despite a recent Special Advisory Council for Myanmar (SAC-M) report indicating that the junta lacks effective territorial control, with11 out of 18 townships along the China-Myanmar border fully under resistance.¹³

Conversely, the resistance holds areas that were economically insignificant pre-coup, though it does control the previously prosperous China-Myanmar border trade routes, which have been minimally active since Operation 1027, with attempts to fully reopen them having failed despite China’s eagerness to resume trade. Worse, from China’s perspective, is that different armed and political groups have yet to come under a collective NUG banner, even though the resistance has the common goal of fighting against the junta. The SAC-M report may help to persuade the international community to increase interactions with the National Unity Government (NUG), though China is unlikely to be convinced. China is trying to conduct backdoor diplomacy through various groups with its special envoys, but this is not tantamount to overt support.

Would China Support Elections?

As part of China’s state-centric approach, there have been official meetings and visits between the junta election commission and Chinese officials. Since junta leader Min Aung Hlaing’s announcement that general elections will be held in 2025,¹⁴ recent Chinese actions indicate an “agnostic” approach. Beijing separately invited former Myanmar President U Thein Sein, deputy leader of the State Administration Council (SAC) Soe Win, and political parties which are going to participate in the next election, but Beijing appeared to be cautious of Min Aung Hlaing’s increasing ties with Moscow. Min Aung Hlaing has neither visited China nor been invited by Beijing, possibly due to his intention to reduce Myanmar’s dependence on China or Beijing’s reluctance to extend an invitation. Recently, Beijing has not actively responded to the situation when the resistance forces reinitiated their offensive in Northern Shan State, not brokering a ceasefire as it previously did during the first wave of Operation 1027.

As China did with the election in 2010, which was also announced by Myanmar’s military government at the time, China will undoubtedly support the junta’s election process as it wants a political dialogue in the country, and the elections probably could result in a change in leadership, which would mark a change in government. The Chinese government would not be naive enough to think that the elections will be the final political outcome of the current crisis. The junta has also dissolved the National League for Democracy party, a move that disappointed China, which wanted the continued existence of the party, as China has had a good relationship with NLD throughout NLD’s time in office and recognizes its importance as a future dialogue partner for Myanmar’s domestic affairs.¹⁵

What Happens Next?

Myanmar remains a diplomatic and security headache for China: the same situation as before the coup, in which different actors will listen to China only to an extent and act according to their will, sometimes coming as a surprise to China, as is apparent in the suspension of the Myitsone Dam project, the military coup itself, the SAC repeated violations of the Haigeng Agreement that led to the re-initiation of Operation 1027, and Min Aung Hlaing’s self-promotion to acting President. Operation 1027 turned out to be a mixed blessing for the Chinese government, as the operation met China’s goal of breaking down major scam centers, but it also expanded the territorial holds of the resistance forces, undermining China’s desire for long-term stability.

As the civil war continues to unfold, China will remain the most influential foreign actor, but it is unlikely to use its influence to pick a side in Myanmar and will instead maintain an “agnostic” approach. For now, the Chinese interest in Myanmar is mainly economic, and China has confidence that it can conduct business with whoever is in control of the territory. The only things that annoy the Chinese government are the ongoing conflict, the worst factor in conducting thriving business, and the proliferation of scam centers that have targeted so many Chinese citizens. As evidenced by Operation 1027, other armed groups could realize Chinese objectives like eradicating scam centers. It is almost certain that even if Chinese recognition comes late for the resistance forces, it would have nothing to regret, but it would greatly impact the future of China and Myanmar’s multifaceted relations.

Notes

1
Jason Tower, “As Myanmar’s Junta Loses Control in the North, China’s Influence Grows,” United States Institute of Peace, August 1, 2024, https://www.usip.org/publications/2024/08/myanmars-junta-loses-control-north-chinas-influence-grows.
2
Nyein Chan Aye, “Myanmar OKs Resumption of Construction at
Beijing-Backed Indian Ocean Port,” VOA, January 29, 2024,
https://www.voanews.com/a/myanmar-oks-resumption-of-construction-at-beijing-backed-indian-ocean-port-/7462062.html. RFA Burmese, “China sends 300 workers to deep sea port project in Myanmar’s Rakhine state,” Radio Free Asia, May 3, 2024, https://www.rfa.org/english/news/myanmar/china-workers-deep-sea-port-project-rakhine-05032024161325.html.
3
RFA Burmese, “မြစ်ဆုံရေအားလျှပ်စစ်စီမံကိန်း ဦးဆောင်အဖွဲ့ဖွဲ့စည်း,” Radio Free Asia, May 21, 2024, https://www.rfa.org/burmese/news/myit-sone-electric-project-05212024163410.html. Myanmar Ministry of Information, “ကျောက်ဖြူရေနက်ဆိပ်ကမ်းစီမံကိန်း တိုးတက်ဆောင်ရွက်ရာတွင် “PPP”(“People ၊ Prosperity ၊ Planet”) ဖြစ်သော ပြည်သူလူထုအကျိုးစီးပွားမြှင့်တင်မှု၊ ချမ်းသာကြွယ်ဝမှုနှင့် သဘာဝပတ်ဝန်းကျင်ထိန်းသိမ်းခြင်း စသည့်အခြေခံမူကြီး ၃ ချက်အပေါ်တွင်မူတည်ပြီး အလေးထားအကောင်အထည်ဖော် ဆောင်ရွက်သွားမည်,” December 28, 2023, https://www.moi.gov.mm/news/49668.
4
Myanmar Ministry of Commerce, “ဘဏ္ဍာနှစ်အလိုက် ပုံမှန်/နယ်စပ် ပို့ကုန်၊သွင်းကုန်၊ကုန်သွယ်မှု ပမာဏအခြေအနေ ၂၀၂၀-၂၀၂၁ ဘဏ္ဍာနှစ်မှ ၂၀၂၄-၂၀၂၅ ဘဏ္ဍာနှစ် (ဧပြီလ မှ ဇွန်လထိ) ပုံမှန်/နယ်စပ်ကုန်သွယ်မှ အခြေအနေ ,” https://www.commerce.gov.mm/my/content/ပံုုမွန္-နယ္စပ္-ပိုု႔ကုုန္-သြင္းကုုန္.
5
“Myanmar Junta Approves 15 Investments, Including US$2.5-Billion Power Project,” The Irrawaddy, May 8, 2021, https://www.irrawaddy.com/news/burma/162007.html.
6
Jason Tower and Priscilla A. Clapp, “China Forces Myanmar Scam Syndicates to Move to Thai Border,” United States Institute of Peace, April 22, 2024, https://www.usip.org/publications/2024/04/china-forces-myanmar-scam-syndicates-move-thai-border.
7
“Online Scam Operations and Trafficking into Forced Criminality in Southeast Asia: Recommendations for a Human Rights Response,” UN Office of the High Commissioner for Human Rights, 2023, p. 7. https://bangkok.ohchr.org/wp-content/uploads/2023/08/ONLINE-SCAM-OPERATIONS-2582023.pdf
8
“Transnational Crime in Southeast Asia: A Growing Threat to Global Peace and Security,” United States Institute of Peace, 2024, https://www.usip.org/publications/2024/05/transnational-crime-southeast-asia-growing-threat-global-peace-and-security. “GDP (current US$) – Myanmar,” The World Bank, https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=MM.
9
“Scam Centres and Ceasefires: China-Myanmar Ties Since the Coup,” International Crisis Group, Briefing No. 179, March 27, 2024, https://www.crisisgroup.org/asia/north-east-asia/china-myanmar/b179-scam-centres-and-ceasefires-china-myanmar-ties-coup.
10
See the joint statement here: “ထုတ်ပြန်ကြေညာချက်,” ArakanArmy.net, October 27, 2023, https://www.arakanarmy.net/post/ထ-တ-ပ-န-က-ည-ခ-က-10.
11
Tower and Clapp, “China Forces Myanmar Scam Syndicates to Move to Thai Border.”
12
Chris Buckley, “China officially recognizes Libyan rebels,” Reuters, September 12, 2011, https://www.reuters.com/article/us-libya-china-idUSTRE78B3Z320110912/.
13
“Briefing Paper: Effective Control in Myanmar, 2024 Update,” Special Advisory Council Myanmar, May 30, 2024, https://specialadvisorycouncil.org/wp-content/uploads/2024/05/SAC-M-Effective-Control-in-Myanmar-2024-Update-ENGLISH.pdf.
14
Thuta Zaw, “စစ်ရှုံးနေသော မင်းအောင်လှိုင်၏ ရွေးကောက်ပွဲထွက်ပေါက်နှင့် ဆင်ခြေအမျိုးမျိုး,” Myanmar Now, March 31, 2024, https://myanmar-now.org/mm/news/50619/.
15
“China Doesn’t Want Myanmar’s NLD Dissolved: Informed Sources,” The Irrawaddy, August 27, 2021, https://www.irrawaddy.com/news/burma/china-doesnt-want-myanmars-nld-dissolved-informed-sources.html.