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Myanmar’s bargaining power rises along the Belt and Road

AS Hong Kong’s second Belt and Road Summit started today in the city The Myanmar Times asked two experts from The Economist Intelligence Unit and Lau China Institute at King’s College, London for their input regarding the dynamics of the Belt and Road Initiative (BRI) and China in relation to Myanmar and ASEAN.

Much of the focus on China’s grand scheme in Myanmar has surrounded the development of the proposed Kyaukphyu Special Economic Zone (SEZ) and deep-sea port in Rakhine State. However, the BRI has a much broader implication on Myanmar both economically and politically.

Back in 2014, Professor Kerry Brown, professor of Chinese Studies and director of the Lau China Institute at King’s College, London, wrote that China can no longer reign supreme in many ASEAN member states, despite its economic muscle.

“Chinese investment and trade are all welcome [in Cambodia], but the days of Beijing supremacy are long over,” he wrote in an article.

“A similar pattern can be seen in Vietnam, Myanmar, the Philippines and Laos. The era of stark choices between friends and enemies fostered by the Cold War has left a region with blurred allegiances and almost constantly changing loyalties,” he argued, adding that “China can search for leverage in vain in this new context, but it knows than even endless amounts of trade, aid, and financial largesse don’t buy much any longer.”

Myanmar’s trump card

These days, Nay Pyi Taw has more options beyond Beijing.

“Myanmar occupies a unique position. It has travelled in the last few years from being a relatively dependent partner of China because of its diplomatic and economic isolation to one which, because of reforms and changes in the country, now has a much more diverse group of relations.

“This has allowed it more autonomy and a less severe form of China-centric links. It’s newly evolving relations with the US and the EU mean it simply has, very suddenly, more options,” he said.

Still, China’s leverage over some ethnic armed groups in Myanmar can be seen as a political “trump card” over Nay Pyi Taw. The ethnic peace process is a top priority for State Counsellor Daw Aung San Suu Kyi and the participation of those ethnic armed groups is essential for the peace process.

Dan Wang, an analyst in The Economist Intelligence Unit‘s Access China service, told The Myanmar Times that Beijing’s sway over some ethnic armed groups has given China significantly more leverage over Myanmar than many ASEAN countries.

“China has a bigger influence over Myanmar than other ASEAN members, because Myanmar relies on China to be a mediator in its ethnic civil wars. Other ASEAN countries do not face similar challenge in domestic stability.

“Many of the ethnic armed groups have strong ethnic and cultural ties with China. For Aung San Suu Kyi, the top priority is to achieve peace and unity within the country. The National League for Democracy is unlikely to power through the democratic reform in the next two years, the military threat to take over power remains a real threat,” the Beijing-based analyst said.

According to Ms Wang, China has several additional advantages over the US in terms of influence over Myanmar: China’s geographical proximity, Beijing’s willingness to extensively offer loans, technology and investment in the country’s infrastructure through BRI framework, and the Chinese government has a relatively generous policy in taking in Myanmar refugees. The combination of these factors means China has a larger say in Myanmar’s internal affairs, compared to the US.

However, Professor Brown argued that China would be hesitant to use this “trump card” in order to gain Nay Pyi Taw’s backing for its Belt and Road Initiative.

“It [pushing those ethnic armed groups loyal to Beijing towards Nay Pyi Taw in exchange for Myanmar’s support of BRI] would be a very extreme form of China trying to gain influence, particularly in view of its own vulnerability with regard to the management of ethnic minority issues.

“It would also lay it exposed to the accusation that it was violating one of the most important parts of its rhetoric of diplomacy – non-interference in the affairs of others. This does not preclude informal and under-hand contact and support from Beijing – but the risks of being found out would be high, as would reputational loss.

“China can use overt means to influence other countries now. Its covert era of activity belongs more to the past, particularly the Maoist past,” he said.

Benefiting from China

Ms Wang said that Myanmar should leverage not only China’s investments, but also the Chinese market.

“The best strategy for Myanmar would be to leverage on China’s willingness to invest and expand its influence in Asia. China could be intimidating with its economic size and aggressive investment plans, but it is also the largest market.

“As Myanmar becomes more open, tourist arrivals from China have surged; foreign trade also rose rapidly with improved infrastructure,” she said.

The analyst added that Yunnan will play a pivotal role as a transport hub with South Asia and ASEAN, under the BRI, pointing to examples such as the Bangladesh-China-India-Myanmar Corridor (BCIM) and high-speed railway links with Southeast Asia.

“The province shares a border with Myanmar, Laos and Vietnam, which gives it a natural strategic importance.

“Commercial ties between Yunnan and ASEAN countries, especially with Myanmar, have expanded since the signing of a free-trade agreement between China and ASEAN in 2010.

“Electricity exports to Vietnam and Laos by Yunnan Power Grid, a subsidiary of the state-owned China Southern Power Grid, are growing quickly, highlighting the province’s expanding role as a power supplier to neighbouring countries. Yunnan Power Grid sources some of its energy supply from Myanmar, where the company is involved in a controversial hydropower dam project,” she said.

Bargaining power

Myanmar and other ASEAN countries should strategically work out what things they actually want from China in terms of investment, economic and political links, according to the professor at King’s College. They should also work out the benefits and risks of having deeper links with China, and more solid partnerships and trying to set out ways in which these can be mitigated and work out their own strengths and weaknesses regarding how to deal with China and what China wants from them.

“The Belt and Road Initiative is an invitation by China to deal more with its growth, development and opportunities that flow from this. But every country in the region will have different perspectives on how best to deal with this opportunity,” Professor Brown said.

Ms Wang argued that the BRI focuses on bilateral frameworks than ASEAN as a bloc.

“The BRI has a strong influence to ASEAN development, but more on the bilateral terms, rather than with ASEAN as a whole. In recent years especially, as China has advanced aggressive territorial claims in the South China Sea, ASEAN has struggled to establish a common position on the disputes. In fact, aside from rough geography, there is no obvious trait that binds the ten nations together.

“China has less trouble in its investment plans in small countries like Cambodia, Laos and Myanmar, but more in Vietnam, Thailand and Indonesia over issues like environment, labour dispute and crowding out local businesses,” she explained.

More significantly, the EIU analyst pointed out that Myanmar does not have much bargaining power over China’s scheme, contrary to what many domestic politicians and pundits said.

“Myanmar’s bargaining power over China’s investment plan is relatively weak, for its lack of infrastructure and funding.

“From experiences of African countries, the locals benefit from improved roads and rails, although environmental issues become acute in certain areas,” she said.

Dan Wang stressed that Myanmar should take advantage of this scheme when Chinese President Xi Jinping is still in office.

“Given that Xi Jinping is the major force behind BRI, Myanmar is best to take advantage of the policy when he is still in power [possibly till 2022 or even five more years after that],” she said.

Source: Myanmar Times

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