Foreign Policy Blogs

The Dragon Next Door

The Dragon Next Door

Chinese construction companies are behind many of the new buildings going up in Yangon

While in Yangon, Myanmar last month, I had a chance to talk with several Myanmarese who naturally asked me where I lived. When I told them I lived in China, what struck me most with their response was their anxiety over their neighbor China. The taxi driver who drove me to my hotel from the airport was perhaps the most vocal, and extremely concerned about growing Chinese ownership of hotels, nightclubs and natural resources. His anxiety was mimicked by many others I spoke with, from real estate agents to businessmen. Being neighbors with the Chinese, the current anxiety is not new. The Myanmarese indeed have a long history of interaction with the Chinese:

  • All schoolchildren learn of the Tayok-pyay-min, the medieval ruler who so feared a Chinese assault that he abandoned the capital;
  • In the 1700s, the Manchus invaded Myanmar four times, each time being driven out by the Myanmarese;
  • Chinese maps once showed vast swathes of territory of northern and eastern Myanmar as part of their territory;
  • Myanmarese complaints to the U.N. went unheeded when the leader of the Chinese Nationalists Chiang Kai-Shek, backed by Washington, secured a considerable tract of land for use as an airstrip to fly to and from Taiwan;
  • In 1967, following anti-Chinese riots, Chinese officers led a large force of exiled Myanmarese communists over the border with the neighboring province of Yunnan, seizing a large slice of territory in the Eastern Hills;
  • In the ’70s, China lent various means of support to the Communist revolutionary movement in Myanmar, providing arms, ammunition, logistical support and volunteers to assist the Burmese Communist Party;
  • In 2005, as a result of too much cash fleeing China and ending up in Chinese-owned casinos in Myanmar, units of the People’s Liberation Army crossed over into Mongla, sealing the border and shutting down the casinos.

In more recent times, the Myanmarese government has been forced to rely on foreign direct investment from China for its social development, due to economic sanctions imposed by Western governments over human rights concerns. While Chinese investment has had a positive effect on development, resulting in improved roads and reliable electricity, certain negative consequences have included flooded plains from hydroelectric dams, hills stripped of their teak-forest, and local markets overwhelmed by cheap Chinese-made goods. The Myanmarese are also concerned about Chinese support of ethnic insurgencies, a thriving cross-border narcotics trade, and an influx of illegal Chinese immigrants.

Now with China increasingly asserting its rights to the vast majority of the South China Sea, along with its increasing economic influence on a global stage, the Myanmarese anxiety has risen once again. Given that China’s claims are largely resource grabs under the guise of recovering lost territory, Myanmar, with its abundant resources and strategic location, has plenty to worry about. Under a 2007 agreement, China Power Investment Corporation has the right to build seven large dams in Kachin State to supply power to Yunnan – the largest dam is under construction at Myitsone. Chinese companies are also building pipelines across Myanmar to funnel natural gas and imported crude oil from ports in Myanmar to southwest China. And Chinese companies also own vast fertile lands being used to farm rubber, cassava, sugar cane and pineapples.

While the Myanmarese have long been fearful of the dragon next door, the latest methods the Chinese have employed to secure resources, at the cost of their neighbors, should serve as a wake up call to the Myanmarese government. Recent reforms by paramount leader Thein Sein have led to a relaxing of sanctions by the U.S. Government, and could lead the way to an increase in investment from American companies. The Myanmarese government is well aware of the need to further push economic and political reform (and quell internal unrest) to help diversify inward foreign investment away from the Chinese and to a variety of nations. The new Chinese leadership will need to be more cognizant of the effects of an increasingly aggressive foreign policy on neighboring populations with long memories.



Gary Sands

Gary Sands is a Senior Analyst at Wikistrat, a crowdsourced consultancy, and a Director at Highway West Capital Advisors, a venture capital, project finance and political risk advisory. He has contributed a number of op-eds for Forbes, U.S. News and World Report, Newsweek, Washington Times, The Diplomat, The National Interest, International Policy Digest, Asia Times, EurasiaNet, Eurasia Review, Indo-Pacific Review, the South China Morning Post, and the Global Times. He was previously employed in lending and advisory roles at Shell Capital, ABB Structured Finance, and the U.S. Overseas Private Investment Corporation. He earned his Masters of Business Administration in International Business from the George Washington University in Washington, D.C. and a Bachelor of Science in Finance at the University of Connecticut in Storrs, Connecticut. He spent six years in Shanghai from 2006-2012, four years in Rio de Janeiro, and is currently based in Ho Chi Minh City, Vietnam. Twitter@ForeignDevil666