Myanmar Embraces China’s Belt Road Initiative

China’s Belt Road Initiative (BRI) has finally reached Myanmar’s shores after nearly five years of its official announcement by Chinese President Xi Jinping in 2013. Naypyidaw has embraced the BRI to fill critical gaps in its domestic infrastructure which according to the Asian Development Bank (ADB) require nearly US$ 120 billion over the next 12 years. The embrace is also seen as a way to address the rising global pressure and sanctions by the western world against Myanmar over the ethnic cleansing of Rohingyas in Rakhine State, as also human rights abuses by the military in Kachin and Shan States. Besides, foreign investment into Myanmar has been declining (US$7.8 billion in 2016 to US$5.6 billion in 2017) and World Bank in its economic outlook for Myanmar observed ‘[Rakhine] crisis could negatively affect investment flows already affected by investor perceptions of slowing reforms,”

China and Myanmar have formally announced plans to connect Kunming, the capital of Yunnan Province, with Kyaukphyu, a port town in Myanmar, overlooking the Bay of Bengal. The project has been labeled as China Myanmar Economic Corridor (CMEC) and was first discussed between President Xi Jinping and State Councilor Aung San Suu Kyi during latter’s visit to Beijing in December 2017.

The CMEC is part of multi-sector MoUs signed by the two countries to collaborate on ‘basic infrastructure, construction, manufacturing, agriculture, transport, finance, human resources development, telecommunications, and research and technology’. China has been careful to address Myanmar’s concerns over ‘debt burden’ that may accrue from such projects (as seen from the Sri Lankan case of Hambantota), and U Set Aung, the chairman of the Kyaukphyu SEZ’s management committee assured that the “project will not [make] the Myanmar government bear the debt burden,”

The China International Trust and Investment Corporation (CITIC) won the bid in 2016 for dredging the deep-sea port Kyaukphyu and creation of SEZ. The agreement was signed during former President Thein Sein regime, and China secured 85 percent stake in the project. However, the new government led by the National League for Democracy has been able to double Myanmar’s stake to 30 percent. The SEZ will have a dedicated deep sea port (valued at $7.3 billion), industrial parks (valued at $2.7 billion), fishery development projects, and small enterprises including garment factories.

However, there are naysayers too who argue that the price tag for the port project is too high and Sean Turnell, special economic consultant to Aung San Suu Kyi, has observed that “The idea that a port in Myanmar would cost $7 billion is absurd,” given that the cost of Panama Canal expansion project only cost $5.25 billion.

The CMEC will pass through Myanmar’s major economic hubs i.e. Mandalay and Yangon, and terminate at Kyaukphyu. It is useful to mention that Kyaukphyu has high economic value and is the seaward node of the parallel oil and natural gas pipeline (valued at $1.5 billion) running to Kunming. It also facilitates the land locked Yunnan Province access to the sea and engages in global commerce.

There are at least two issues which worry India, Myanmar’s closest neighbour. First, development of maritime infrastructure by China in Myanmar has been an issue of concern to New Delhi since the 1990s. These projects were labeled as ‘String of Pearls’ strategy aimed at ‘strategic encirclement’ of India. Among the Chinese supported projects were roads, communication and electronic intelligence networks at Hainggyi Island and Great Coco Islands, and military/naval facilities at Akyab, Kyaukpyu, Mergui, Sittwe and Zedetkyi Kyun. Kyaukpyu has once again appeared on Indian strategic radar.

Second, CMEC is a notional barrier to India’s Act East Policy in which its Northeast region plays an important role. It can potentially subvert a number of connectivity projects involving India and Myanmar that are at different stages of implementation i.e. Kaladan Multimodal Transit Transport Project; the 1400 kilometres long India-Myanmar-Thailand Trilateral Highway (TH); and extension of the TH to Cambodia, Laos and Vietnam. In Thailand, China also plans to build the Kra Canal.

The ‘content and process’ of conceptualization and development of CMEC is not new, and has a number of parallels in the China Pakistan Economic Corridor (CPEC), the infrastructure projects in Sri Lanka, the East Coast Rail Line (ECRL) project in Malaysia, to name a few. The seaward nodes of such corridors and connectivity links are often projected as economic hubs but have the overt capacity to upgrade to strategic and military levels. In fact many ports across the globe are co-located with naval bases and can provide for as also service military assets of friendly foreign navies during long distance deployments. Under the circumstances, future use of Kyaukphyu for military purposes is not unique to China.

It will be useful for New Delhi to secure an assurance from Myanmar that Kyaukpyu will not be used for military purposes similar to Sri Lanka’s announcement that Hambantota (developed by China and leased for 99 years) will not be offered to any country for positioning military / naval assets.

Dr Vijay Sakhuja is former Director National Maritime Foundation, New Delhi and is associated with the Kalinga International Foundation, New Delhi.

© 2018 Kalinga International Foundation Designed by Nescant Info Systems