China’s economic presence in South Asia

On September 9, 2018 Myanmar and China signed a memorandum of understanding (MoU) for establishing the China-Myanmar Economic Corridor (CMEC) as part of China’s ambitious Belt and Road Initiative. The corridor, will traverse a distance of approximately 1700 kilometres and seeks to connect Kunming (Yunnan Province) with Myanmar’s key economic points – Mandalay, Yangon and Kyauphyu.

According to the MOU, both sides have agreed to collaborate in a number of areas. Some of the important areas identified for collaboration by both countries are; infrastructure, construction, manufacturing, agriculture, transport, finance, human resources development, telecommunications, and research and technology

Chinese Foreign Minister, Wang Yi, had first announced the proposal to build CMEC, during his meeting with State Counselor Aung San Suu Kyi in November 2017. The MOU had been finalized in February 2018.

The CMEC is an ambitious project from which Myanmar could benefit immensely. Yet, there have been apprehensions with regard to the economic feasibility, and the fact that Myanmar should not meet the fate of other countries which have fallen into what has been dubbed as a ‘Debt Trap’.

Opposition to Kyauphkyu

There has been skepticism with regard to the BRI project in particular, and China’s involvement in the SEZ and Sea Port to be set up in Kyauphyu (a coastal town in the Rakhine Province) in particular. Large sections of the population have been questioning the economic rationale of the project – and the benefits for Myanmar. CITIC (China’s biggest financial conglomerate) was awarded both projects, but it had to reduce its stake from 85 percent to 70 percent in the Sea Port, after vehement opposition from local population. Locals found the 85-15 arrangement unreasonable. Fearing a debt trap, the NLD government in Myanmar has also reduced the initial value of the Sea Port project – a whopping 7.3 Billion USD to 1.3 Billion USD.There has been opposition to the SEZ as well on environmental grounds, while the initial Chinese take in the SEZ (initially valued at 2.7 Billion USD) was 51 percent, it is likely to be revised.

U Kan Zaw a Minister in the erstwhile Than Sein government (and Chairman of the Kyauphkyu SEZ tender committee), confessed that Myanmar was not very keen for Chinese investment (it had sought investments from UK and Europe), but it was not left with no option once other countries declined to invest.

China beginning to acknowledge shortcomings of BRI projects

It is not just some of the negotiations pertaining to BRI related projects (including CMEC and the China Pakistan Economic Corridor – CPEC) where Beijing seems to have been more accommodating, at least to some degree, to the concerns of host countries.

Chinese media itself is trying to send a message, that Beijing is responsive to the concerns of other countries with regard to the BRI.

It was interesting to note an article in CGTN which acknowledged not just the drawbacks of the project, but also the fact that the response to CMEC has been tepid so far. Said the article:‘CMEC is temporarily suffering from a cold reception, we believe that it is an excellent endeavor’

The authors of the article also make a significant point, that Chinese businessmen are not familiar with Myanmar. While the article could be referring to the lack of familiarity with Myanmar’s policies. Many host countries have been critical not just of the ‘one sided’ nature of Chinese economic investments, but their unwillingness to understand local cultures, and the fact that they remain aloof from the local population.

On a number of occasions, Chinese businessmen have even misbehaved with locals. In Pakistan, on two occasions Chinese businessmen have beaten up policeman and this did not go down well with the local population.

While alluding to the failure of big ticket infrastructure projects, the article also refers to the need for Chinese investments in‘light industry’ as opposed to ‘heavy industry’ (in a reference to infrastructural mega projects, such as those which were scrapped by Malaysian Prime Minister Mahathir Mohammad).

One of the interesting aspects of CMEC is that Myanmar was keen to have third party investments, and not restrict itself only to Chinese investments. Investments will come from countries in South East Asia and East Asia — Thailand, South Korea and Japan. While China’s economic presence in Myanmar is staggering, this has not gone unchallenged and off late countries like South Korea too are increasing their presence in Myanmar. The authors of the CGTN article, also try to pitch for Chinese cooperation with other countries, arguing that joint investments will not mean lesser economic and political burden for China, but could also reduce hostilities between Western and Chinese companies.

Finally, the article refers to the need for greater cooperation between Myanmar and China in the sphere of agriculture (especially aquaculture), and that this cooperation should be economically beneficial for the local population.


It remains to be seen, whether China will actually acknowledge the genuine concerns of countries participating in the BRI, and whether or not it will actually take some tangible steps to address the apprehensions. As stated earlier, Beijing seems slightly more flexible in it’s negotiations, whether this is a short term trend (which many would argue is a consequence of Malaysian PM, Mahathir Mohammad’s straight talking with China) is short lived or not remains to be seen.

China may be further compelled to change its approach towards overseas economic investments after the recent electoral rout of Abdulla Yameen, considered to be Pro-China. One trend which is clearly emerging, as was evident from the electoral results of Maldives was that blindly following Chinese diktats for short term economic goals does not go down well, and China may need to address it’s perception problem by looking beyond cheque book Diplomacy.

Tridivesh Singh Maini
Tridivesh Singh Maini
Tridivesh Singh Maini is a New Delhi based Policy Analyst associated with The Jindal School of International Affairs, OP Jindal Global University, Sonipat, India