Cashing in on a Coup, Beijing Style

THE CHINESE METAPHOR ‘walking on two legs’ is probably the best way to explain Chinese policy and actions towards Myanmar, which is today the cumulative recipient of $21.5 billion in Chinese investments. China accounts for 25 per cent of the foreign direct investment (FDI) in Myanmar. China’s interests in Myanmar are political, economic and strategic. The country is a rich source of natural resources like timber, jade and natural gas. It also offers China potential access to the Indian Ocean on its southwestern flank, something which is now vital for Beijing to counter the tactical vulnerability of its merchant shipping through the Malacca Straits. The Malacca Straits are theoretically and practically now under Quad naval domination, and so is 90 per cent of China’s trade that flows through these straits.

The current political crisis in Myanmar has been adroitly exploited by China as it has played off both the military junta and the National League for Democracy (NLD) simultaneously, keeping both happy yet insecure. While China ostensibly kept a low profile in Myanmar since General Ne Win’s coup in 1962, it began a policy of discreet cultivation of Aung San Suu Kyi from 1988 onwards. This influencing of Suu Kyi was led by the then Chinese Ambassador Cheng Ruisheng who, when he periodically met her, shed crocodile tears at her plight under house arrest and enforced separation from her family. This was complemented by staunchly wooing the junta as well.

However, the dawn of the 21st century led to the realisation among the junta that because of their policy of isolationism coupled with intense internal repression that relied on solid Chinese support, they were rapidly slipping into becoming an institutionalised Chinese vassal. The turning point ushering in a change in perception about the Chinese happened in 2009 when the current leader of the junta, General Min Aung Hlaing, commanded a large military force engaged in suppressing an insurrection by the Myanmar National Democratic Alliance Army (MNDAA) in Myanmar’s Shan State next to China’s Yunnan province. This uprising was led by ethnic Chinese MNDAA leader and Golden Triangle opium lord Peng Jiasheng. Peng escaped to Yunnan under Chinese protection and went underground. He was rehabilitated in December 2014 when he appeared in a Global Times interview and resumed his insurrection against the Myanmar military, albeit on a limited scale.

Outreach to the rest of the globalising world was vital for Myanmar and a lot of catching up was needed. In 2010, after elections, Suu Kyi was invited to head a quasi-civilian government in partnership with the junta. The moderate, former soldier, General Thein Sein who was then in 2011 president of Myanmar, halted the construction of the Myitsone Dam on the Irrawaddy River in the Shan State. Collective opposition to this dam came from both Suu Kyi and General Hlaing. This was a vital project for Beijing to supply electricity to its many projects running in China and Myanmar under the aegis of the China-Myanmar Economic Corridor (CMEC), a part of the Belt and Road Initiative (BRI). Under CMEC, Myanmar had approved only nine of the 38 projects China proposed and told Beijing that it would only approve projects that would be mutually beneficial.

Realising that soft intermediation was once again needed, China dispatched Yang Houlan, an academic and soft-spoken diplomat as ambassador to Myanmar in 2013. Yang, who was then Chinese ambassador to Nepal, had been instrumental in deposing the pro-India Nepalese government of Baburam Bhattarai in 2012. Yang was shifted to Myanmar because the pro-India slide in Myanmar had to be halted. Yang undertook a massive PR exercise wooing NLD officials across all levels of the political organisation. Public outreach by China paid great dividends as the NLD became an enthusiastic supporter of its playbook. Control over the political system in Myanmar became a reality by 2015 when Yang was posted out after his success.

China steadfastly stood by Myanmar and Suu Kyi in her government’s repression against the Rohingyas. Suu Kyi aligned with China on the most important issues that Beijing valued, namely, Tibet, Xinjiang and Taiwan. Finally, in 2020, Suu Kyi threw her support behind China’s suppression of democracy in Hong Kong and also turned a blind eye to Chinese aggression against India in Ladakh. Officials within Myanmar were encouraged to execute deals with Chinese companies at the expense of the West. For China, this was manna from the heavens. Burying Myanmar under a Chinese debt trap was the first step of the plan. By the end of 2020, China was Myanmar’s second biggest investor after Singapore and now accounts for one-third of the country’s foreign trade.

The dual -use infrastructure projects being funded by China in Myanmar have important military applications. These infrastructure projects have ensnared Myanmar in a massive Chinese debt trap and account for over 40 per cent of its current $10 billion national debt.

When China’s Foreign Minister Wang Yi visited General Hlaing in Naypyidaw, Myanmar, on January 12th, he indicated that China would “continue to back Myanmar in safeguarding its sovereignty, national dignity and legitimate rights and interests” on a “development path suited to its own national conditions.” It appears a deal was struck to allay and compensate General Hlaing’s fears about China and its intentions towards Myanmar. Also, China’s access via Myanmar’s ports to the warm waters of the Bay of Bengal was on top of the agenda. So was a revival of the stalled Myitsone dam project.

The new Biden administration’s continuation of Donald Trump’s demonstrative hard line towards China saw the US and Chinese navies once again confront one another in the South China Sea on January 23rd, when the People’s Liberation Army (PLA) aircraft conducted a simulated strike against the USS Theodore Roosevelt carrier strike group as it entered the South China Sea through the Bashi Channel, south of Taiwan. Unlike the Trump administration, Biden and his team appear keen on bringing the US and its Quad allies of India, Japan and Australia together to form a ‘united front’ on the military, economic and diplomatic aspects of their collective relationships with China.

General Hlaing’s meeting with Wang Yi in January is being seen as the precursor to the military’s seizure of power on February 1st. Calling Myanmar a brother, China praised the junta’s national revitalisation efforts. The apprehension of China’s concealed involvement was exacerbated when General Hlaing declared on February 16th that the junta wanted to restart various hydropower projects that had been stalled.

Although China may not have given any overt support to the military coup, it has only to gain from it. Beijing might have assured General Hlaing that it would stop arming and funding Myanmarese insurgent groups and Peng Jiasheng’s army if Myanmar had a pro-China government that could approve Chinese BRI projects in Myanmar, including the Myitsone dam, without delay. Further, there is speculation that China wants to oust India from the Sittwe deepwater port in Myanmar as well as the India-Myanmar-Thailand Trilateral Highway and the Kaladan Multi-Modal Transit Transport project.

Clearly, after its earlier failure in the first decade of this century, China wants to revive its strategy of turning Myanmar into an economic and military satellite and increase its options in combating the emergence of an institutionalised Quad. A pro-Beijing government in Myanmar means India’s land gateway to Southeast Asia is going to be nipped in the bud.

About The Author

Iqbal Chand Malhotra

Iqbal Malhotra is an award-winning TV producer and the author of Red Fear: The China Threat