Author: Nian Peng, National Institute for South China Sea Studies

Since State Counsellor Aung San Suu Kyi assumed office in March 2016, Myanmar has attempted to consolidate its friendship with China. Aung San Suu Kyi’s National League for Democracy (NLD) government has resumed the controversial Letpadaung mining project, re-opened the China–Myanmar oil pipeline, and signed agreements on constructing a deep-water port in Kyaukpyu and establishing a China–Myanmar border economic cooperation zone.

More recently, Director-General of Myanmar’s Directorate of Investment and Company Administration, U Aung Naing Oo, said that Myanmar and China will soon sign an agreement on the construction of the Myanmar–China Economic Corridor — one of the highlight projects of China’s Belt and Road Initiative (BRI). The corridor will connect China’s Yunnan province with three economic centres in Myanmar (Mandalay, Yangon New City and Kyaukpyu Special Economic Zone). It aims to upgrade economic relations and improve mutual trust between Myanmar and China.

In return for Myanmar’s cooperation, Beijing has provided economic assistance and political support to the Myanmar government with respect to the Rohingya crisis and the peace talks in northern Myanmar.

China, a permanent member of the UN Security Council (UNSC), won favour from Myanmar when it used its veto power to resist the West-led push at the UNSC to pressure Myanmar to put on trial those responsible for the attacks on the Rohingya. China also proposed the ‘three-phase’ plan for solving the Rohingya issue and facilitated a dialogue between Myanmar and Bangladesh regarding the repatriation of Rohingya refugees.

China has also supported the ‘21st Century Panglong Conferences’ (launched by the NLD government to address Myanmar’s long-running ethnic conflicts), taken measures to restrain the ethnic armed groups fighting against Myanmar’s military and prohibited Chinese involvement in the ethnic conflicts in northern Myanmar.

Owing to these efforts, China has improved its image in Myanmar and boosted China–Myanmar relations to new levels of cooperation.

For Myanmar, China is the only country that is both willing and able to provide the economic assistance, political support and military cooperation that it currently needs. Its increasing reliance on China is partly due to the lack of support from other potential sources of assistance like the United States and the European Union.

Indeed, Myanmar is concerned about its growing dependence on China but believes it has few other options. As Vice President of the Union of Myanmar Federation of Chambers of Commerce and Industry U Maung Maung Lay explained: ‘Myanmar can’t sidestep [the] BRI, even though we have many views regarding the debt threat’.

For China, Myanmar is a key component of the BRI and of China’s strategic outreach to the Indian Ocean. Given this mutual dependence, China–Myanmar relations are likely to continue to move forward in the coming years.

But there are two issues that could complicate the future of China–Myanmar relations: the Myitsone dam and the US–Myanmar relationship.

So far, the NLD government has remained silent about the sensitive Myitsone dam so that it would not hamper economic cooperation with China. The dam is controversial mainly because of its potential environmental impact and large flooding area. China fully understands the political significance of the Myitsone dam in Myanmar and tries to avoid aggravating its adverse effects on China–Myanmar relations.

But both sides have not yet reached a deal on the final solution to the Myitsone issue, and this leaves an unresolved source of tension in the relationship. The Myitsone dam could be a main target of opposition parties during Myanmar’s November 2020 general elections, and this would test Myanmar–China relations severely.

Since US President Donald Trump took office in January 2017, US–Myanmar ties have deteriorated. It was the United States that raised the case against Myanmar at the UNSC to increase pressure on the Myanmar government. The United States has also revived sanctions on Myanmar’s military, which is accused of human rights abuses against the Rohingya.

Yet it is possible that the United States may shift its stance on Myanmar from one of criticism to one of rapprochement due to the improved human rights situation in Rakhine State and Trump’s hostile policy towards China. In that case, Myanmar could be an element of a US balancing act against China in the near future.

The China–Myanmar relationship is at its best and moving forward. But the unresolved Myitsone issue, Myanmar’s wariness about overdependence on China or a potential revival of US–China competition in Myanmar could all damage this momentum if not properly managed.

Nian Peng is an Assistant Research Fellow at the National Institute for South China Sea Studies in Hainan, China.