Challenges to China-Myanmar Economic Corridor(CMEC): Ethnic Protests, and the Cost Overuns
China-Myanmar bilateral relations are marked by the civilizational ties which are better known as the "Paukphaw" (fraternal) friendship. The bilateral ties have improved and both the countries look forward towards deepening the cooperation in various fields benefiting people of both sides. The relations continue to grow on various fronts covering politics, economy, livelihoods and regional cooperation. The bilateral trade between two countries exceeds $17.71 billion. Chinese imports to Myanmar typically focus around oil, steel and textile products, while Myanmar imports a number of commodities ranging from natural rubber to raw wood. Myanmar produces 90 percent of the world's jade-stone and is a leading producer of rubies, sapphires, and other varieties of coloured gemstones. China is the leading buyer of these gemstones, specifically jade, which comprises almost half of Myanmar’s gross domestic product (GDP). China is providing extensive aid and helping to develop industries and infrastructure in Myanmar and aims to be the chief beneficiary from cultivating Myanmar's extensive oil and natural gas reserves.
Myanmar-China bilateral ties took a leap forward almost an year ago, when both signed an agreement establishing the China-Myanmar Economic Corridor (CMEC). The corridor stretches 1700 km in length which includes the construction of new railways, special trade zones, and other major infrastructure projects which aims at improving the economy of Myanmar and expansion of China’s strategic investment in the region.
The relations between the two countries gained momentum as Beijing proposed the development of multi-billion-dollar CMEC (China-Myanmar Economic Corridor). The corridor is a part of China’s ambitious Belt and Road Initiative, which aims to connect Asia with Africa and Europe via land and maritime networks along six corridors to improve regional integration, increasing trade and stimulating economic growth.
The CMEC would stretch out from the Yunnan province of China to the Rakhine and Yangon state of Myanmar. The projects proposed under the scheme have not been made public yet but the official statements suggest that the agreement covers projects like the development of New Yangon City, Kyaukpyu deep seaport, Mandalay-Muse Railway along with some Special Economic Zone on the Sino-Myanmar border. Many of these projects are ongoing and are in various stages of construction and operation. The agreement clearly reflects the Chinese strategic and economic goals in the region.
China has invested heavily in Myanmar with various Oil and Gas installations facilities through China National Petroleum Corporation(CNPC), that cost around $ 2.5 bn. The Myanmar-China Gas Pipeline came into operation in 2013, it starts at Ramree Island in Rakhine State on the western coast of Myanmar and ends at Ruili in China's Yunnan Province, various sources suggest that it has the capacity to carry around 12 Billion cubic meters of gas to China annually. Also, running parallel to the gas pipeline is the Myanmar-China Crude Oil Pipeline, with a length of around 800km, which has the capacity of carrying around 440 thousand barrels of crude oil per day.
China has always looked for the sea connectivity or outlets for its landlocked south-western provinces. Kyaukpyu, a major town in the Rakhine state of Myanmar, gives China access to South and South East Asia, as well as to the entire Indian Ocean region. This access is very important to China, considering the fact that it is in the line of China’s strategy to diversify energy supply away from the strategically vulnerable choke points, like Straits of Malacca. Once fully operational, the twin (oil and gas) pipeline is expected to supply 6-8% of China’s energy needs. This development will affect the business houses in Singapore, Malaysia and Indonesia.
In the framework agreement with Myanmar, China has also signed to develop a new deep-sea port in Myanmar's Kyaukpyu town, which is situated along the Bay of Bengal. The estimated cost of the project is around $ 7 billion. When completed, it is expected to have a capacity of 7.8 million tonnes of bulk cargo. The port would be connected to the Chinese provinces and other major Myanmar cities by rail and road connectivity.
The agreement also lays down the base for the construction of the new railway line between Mandalay and Muse (both in Myanmar), cutting the travel time to just three hours, which currently takes around eight hours. The construction of the railway will cost around $ 9 billion, covering a distance of 431 KM which will connect the Chinese rail network at the border town of Ruili in Yunnan province with the Muse on the Myanmar side and is the largest trade portal between the two nations.
The New Yangon City project is also a part of the China-Myanmar Economic Corridor (CMEC), which aims to construct a 20,000-acre New Yangon City project including five resettlement areas, two bridges, an industrial estate, and commercial and residential areas, as well as related infrastructure and is estimated to cost a total of $8 billion. For the project, Yangon regional government-backed New Yangon Development Company (NYDC) initially signed a US $1.5-billion framework agreement in 2018 with Beijing-based China Communications Construction Company, Ltd. (CCCC) to draw up a proposal for the infrastructure project.
The corridor opens up a lot of opportunities for Naypyidaw with economic prosperity, technological advancement, job creation and better standards of living. Many local groups are hopeful and look forward to the development of all the signed projects.
The corridor sounds very ambitious, but it is mired in conflict between the Myanmar military and ethnic armed groups. The local groups of various regions in the country are opposing one project or the other due to the reasons ranging from environmental, economic and social issues. The economic issues majorly constitute the problems like land grabbing, unfair compensation for the acquired land, delayed projects which cause the loss of job opportunities, pollution, climate change creating the negative impact on fisheries and agricultural activities and non-involvement of local groups in the development projects.
The social issues can be attributed to various factors like the conflict between the ethnic groups which also led to one of Asia’s biggest humanitarian crisis in recent times, where an ethnic Muslim minority group - Rohingyas were forcibly displaced from Myanmar and fled to neighbouring Bangladesh, Malaysia, Indonesia, Cambodia, Thailand, and Laos. The crisis also caused ramifications in the two countries’ bilateral relations. The countries recently also faced some problems due to the conflicts between ethnic Chinese rebels and Myanmar military near the Sino-Myanmar border.
There are some issues at the governmental level as well, wherein there were reports on disagreement over the ownership in various projects to be developed in the region by the Chinese. The Chinese were demanding a stake as much as 85% in the projects, but the Myanmar government wanted a bigger share in the project.
Apart from the local issues, there are various Geopolitical issues too, which are emerging with the increasing footprints of Beijing in Myanmar and the Indian Ocean Region. Almost opposite to Kyaukpyu is India’s naval base INS Varsha, with the fleet of nuclear submarines and ships. Kyuakpyu is the fourth and last Chinese controlled port in the Indian Ocean region, the first in the series is the Gwadar port, situated on the Arabian Sea at Gwadar in Balochistan province of Pakistan, the second one being the Chinese leased Maldivian island of Feydhoo Finolhu, where China has been constructing a military base, and the third one in the series is the Hambantota port in Sri Lanka, which China has leased for 99 years. All these projects enable the Chinese presence in the Indian Ocean region which is in line with its aim of becoming a two-ocean power to which India, Australia, Japan, USA and various ASEAN countries has expressed their concerns time and again.
Although many challenges are there, it is unlikely that these problems will block the Beijing’s plan of the New Silk Road, as the role of Myanmar is very extensive as it is a part of two out of the six economic corridors which aims to connect China to the world.
China and Myanmar have deep historical ties which go back to the violent period in Myanmar’s history, wherein the ethnic groups of the country were fighting the Military Junta and can also be stated as the world’s longest-running civil war. The Military Junta ruled over the country for nearly half a century where it waged war against many ethnic groups and locked up many political prisoners including Aung San Suu Kyi, who is currently serving as the State Counsellor in the country.
The military junta and China maintained cordial relations for most of the time. The Chinese have also emerged as the only major investors in the region and have been investing in the region since the 1980s. During the civil strife in the region, since western countries did not show much of an interest in the region because of an unfavourable investment climate mired by violence, Beijing emerged as the only choice in the region.
The democratic transition started in Myanmar around the year 2012, and western investors looked for favourable market conditions for investing in the region, but with Chinese firms already established there, it was difficult for the new investors to compete and make a profit. Also, the violence between the ethnic groups continued even after the democratic transition, due to which the investors hesitated to step forward in the region’s development.
Again after the Rohingya crisis, when the whole international community was stringently criticising its government and military for their actions, China was the only country that stood by Myanmar and emerged as an all-weather friend. Though Beijing appears to be the only choice for Naypyidaw in the region, Myanmar has now acquired the position with which it negotiates with the Chinese, expressing their concerns and demands on various agreements.
The China-Myanmar Economic Corridor can be seen as a transformative event and even be considered as a “New Chapter being opened” with the ever-lasting friendship between the two countries. The corridor will help in the vision of the “Myanmar-China community with a shared future”, which aims to enhance and deepen the strategic relations between the two countries. It is an open secret that China uses its economic might to lure countries into its infamous ‘Debt Trap’. Therefore, it is yet to be seen that Myanmar is going to have an upper hand in this relationship.
Notes
1. https://www.thethirdpole.net/2019/11/26/china-builds-in-myanmars-conflict-areas/
2. https://www.crisisgroup.org/asia/south-east-asia/myanmar/305-commerce-and-conflict-navigating-myanmars-china-relationship
3. https://www.usip.org/publications/2018/09/chinas-role-myanmars-internal-conflicts
4. https://www.orfonline.org/research/understanding-chinas-response-to-ethnic-conflicts-in-myanmar-49759/
Pic Courtesy - The Myanmar Times
(The views expressed are personal)
