Opinion | Why China is succeeding in Myanmar while the West has been sidelined
The West’s incoherent strategy is no match for a ruthless, integrated Chinese approach that leverages economic links to its advantage
China has done so by combining its economic heft and proximity to Myanmar with a policy of fostering ties with both state and non-state actors, then leveraging these to its advantage.
Western countries, by contrast, have imposed sanctions yet continue to trade with the SSPC-controlled state. This is despite the SSPC’s numerous changes to the trading system, which have given it extraordinary control and benefits. The result is that Western economic engagement with Myanmar is indirectly undermining its political objectives and the impact of development aid. This is the main reason why China has been increasingly influential in Myanmar while Western countries have been sidelined.
Despite a stated policy of non-interference, China has repeatedly used economic pressure to shape the actions of these non-state groups. It has halted trade, closed borders, cut off critical supplies and clamped down on financial services – part of a so-called five-cut policy to force non-state groups into submission.
There are many examples of this approach. In July, China threatened to stop buying rare earths from mines in Kachin Independence Army-controlled areas unless the group stopped trying to seize Bhamo. China cut power, water and internet to pressure the Myanmar National Democratic Alliance Army to halt its advance beyond Lashio and distance itself from the exiled National Unity Government, which Beijing perceives as aligned with the West. It also pressured the United Wa State Army in northern Myanmar to stop providing arms to other groups by freezing assets and sealing border crossings.
China has exerted similar leverage over the SSPC itself. Most notably, it pushed the military to allow a joint venture security company that allows Chinese security guards to protect cross-border investments, and it also pressed for the expedited development of the deep-sea port at Kyaukphyu.
In the short term, this approach has proven effective. Fighting in northern Shan state has eased and trade looks increasingly likely to restart. But China’s strategy does little to advance lasting peace or stability in Myanmar. This may be intentional, however. According to the US Institute of Peace, China’s goal is to keep Myanmar “a weak and fragmented country with just enough stability to protect Beijing’s strategic economic interests”.
Although both the US and EU have imposed sanctions, they have not substantially altered their trade relations with Myanmar. Meanwhile, the military has fundamentally transformed the country’s economic framework, adopting draconian trade licensing, capital controls, mandatory foreign currency surrender and multiple exchange rates. A number of these policies directly contradict core principles of the international trading order, yet Western governments have done little in response.
This new system allows the military regime to capture significant rents from trade and financial flows and determine who can access foreign exchange and trade licences – concentrating economic power in ways crucial to its political survival.
For the West, this presents an uncomfortable truth: its economic approach to Myanmar is undermining its political goals and support for the pro-democracy movement.
Western governments rationalise continued trade by arguing that it sustains the livelihoods of millions of Myanmar’s workers. While it is true that many rely on export-oriented sectors, poverty and declining incomes – largely driven by the military’s economic policies – raise doubts about whether trade with the SSPC is really helping ordinary people.
China’s approach has been more effective at achieving its aims
This is important: raising living standards and ensuring full employment are primary justifications for the global trading system, but the SSPC’s post-coup policies make these goals hard to achieve.
In the short term, China’s approach has been more effective at achieving its aims. Its economic engagement, particularly with non-state actors, is a vital tool to advance its interests in Myanmar, providing leverage that has been repeatedly exploited.
Meanwhile, the shortcomings of the West’s approach are increasingly clear. If Western countries wish to advance their political and humanitarian goals in Myanmar, a fundamental rethink of their strategy is needed.