Myanmar Cannot Ignore China

8/19/2019 Myanmar Cannot Ignore China

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Myanmar Cannot Ignore China

Analysis

November 25, 2015 | 09:15 GMT

Forecast

• China will remain a major source of foreign investment and trade for Myanmar, even

as Naypyidaw diversifies its partners.

• Myanmar's new ruling party will need to compromise with the military establishment

to be able to govern, especially on economic and ethnic militant issues.

• China will continue to leverage its influence over militant groups in the border regionto exert pressure on Naypyidaw.

Analysis

The next phase of Myanmars politi!al transition has been settle"# The res$lts of the !o$ntrys Nov# % ele!tions have !onfirme" that the opposition National &ea'$e for (emo!ra!y no)hol"s a healthy ma*ority in parliament an" !an form a ne) 'overnment )itho$t the help ofthe formerly r$lin' +nion oli"arity an" (evelopment -arty# .or the first time sin!eMyanmars 19/2 !o$p, a f$lly !ivilian party )ill lea" the 'overnment, altho$'h it )ill still

have to vie for po)er )ith the !o$ntrys military elite#

Mean)hile, hina has been )at!hin' Myanmars politi!al transition )ith 'ro)in' !on!ern#Myanmar, )hi!h shares a 2,192ilometer 31,4/2mile bor"er )ith hina that !$ts a!rossr$''e" hi'hlan"s, represents a!!ess to tra"e ro$tes in the 6n"ian 7!ean 8asin an" to overlan"!ommer!e )ith the Asso!iation of o$theast Asian Nations 3AAN, no) hinas lar'esttra"in' partner# o)ever, the relationship bet)een the National &ea'$e for (emo!ra!y an"hinese lea"ers has been !ool; 8ei*in' !onspi!$o$sly avoi"e" !on'rat$latin' party !hiefA$n' an $$


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in!e 19/2, Myanmar ha" systemati!ally !$t itself off, both e!onomi!ally an" politi!ally,from the fra$'ht ol" >ar environment in o$theast Asia# The !o$ntry also fa!e" ethni! an"!omm$nist ins$r'en!ies, some of )hi!h re!eive" "ire!t s$pport from 8ei*in'#

7n!e the ol" >ar )as over, Myanmar trie" to t$rn o$t)ar" on!e a'ain, in spite of its nee"

to maintain ti'ht !ontrol at home ami" the on'oin' $nrest# 8$t )hen the military 'overnmentn$llifie" the !o$ntrys ele!tions in 1990, the >est impose" e!onomi! san!tions, for!in' it tot$rn to hina for s$rvival# 8et)een 19%% an" 2014, @2 per!ent of Myanmars total forei'ninvestment 3some 44#/B billion an" /0 per!ent of its arms imports !ame from hina# 8y theearly 2000s, some of Myanmars lea"ers be'an to )orry that they ha" be!ome too reliant onhina an" be'an sear!hin' for a sol$tion# They event$ally settle" on a roa"map to "emo!ra!ythat )o$l" 'ra"$ally open Myanmars politi!al system to opposition parties = primarily the

National &ea'$e for (emo!ra!y = to please the >est an" 'ive Naypyi"a) the opport$nity tosee partners other than hina#

A Government Divided

The National &ea'$e for (emo!ra!ys Nov# % vi!tory )as the lo'i!al !on!l$sion of this pro!ess an" one for )hi!h Myanmars military elite have lon' been plannin'# They ere!te" a!onstit$tional he"'e aro$n" the militarys position an" assets, se!$rin' 25 per!ent of the seatsin parliament, !onsoli"atin' !ontrol of several ey ministries an" e!onomi! enterprises, an"ens$rin' that retire" sol"iers )ill be in!orporate" into the b$rea$!ra!y# onse?$ently, thene) 'overnment )ill nee" to strie an a!!or" )ith the military if it hopes to transition into

po)er smoothly#

8ei*in' has also been plannin' for the transition# 6n C$ne, hina invite" $$


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Finding New Trade Partners

M$!h has been ma"e of Myanmars s$ppose" pivot a)ay from hina, an" the !o$ntry has!ertainly mana'e" to "iversify its so$r!es of forei'n investment sin!e its 2010 transition# 8$tMyanmars 'eo'raphy limits ho) far it !an stray from hina# hinas E$nnan provin!e,

tho$'h poor by hinese stan"ar"s, is ?$ite "ynami! !ompare" )ith the fo$r remote 6n"ianstates to Myanmars )est or 8an'la"esh to the so$th)est# 6n a bi" to "evelop its interior,hina )ants to b$il" o$tlets for the lan"lo!e" E$nnan = o$tlets that )o$l" r$n thro$'h&aos, Fietnam an" Myanmar# As a res$lt, tho$'h Myanmar )ill see to balan!e its nei'hborto the east, hina )ill !ontin$e to be an essential tra"in' partner#

Myanmar's Geographic Challenge

M$!h has also been ma"e of the "e!line of the hinese e!onomy sin!e 2010, b$t hina still plays the most important role in Myanmars e!onomy an" )ill !ontin$e to "o so for theforeseeable f$t$re# 6t is simply too bi' an" too near to expe!t other)ise# 6n 201@, hinaa!!o$nte" for @2#B per!ent of Myanmars imports by val$e an" /5#2 per!ent of its exports#Myanmars nextlar'est partner, Thailan", is ")arfe" by !omparison, a!!o$ntin' for 19#4

per!ent of Myanmars imports by val$e an" 1/#@ per!ent of its exports# An" the offi!ialstatisti!s "o not a!!o$nt for the massive o$tflo) of nar!oti!s, bla! maret timber, an"minerals or 'ems that also brin' hinese money into Myanmar# 6n the fa!e of this reality, the>est !o$l" only play the role of a spoiler at best, possibly !$ttin' tra"e "eals an" provi"in'"iplomati! an" te!hni!al assistan!e to Myanmar in the hope of stren'thenin' ties# 8$t eventhat )ill have its limits; the +nite" tates is m$!h more !on!erne" )ith the balan!e of po)erin the o$th hina ea than it is )ith a ne)ly open Myanmar#

8$t )hat is "ifferent this year is that Myanmar has broa"ene" its so$r!es of e!onomi!s$pport# The Asia i'h)ay !onne!tin' Thailan" an" 6n"ia via Myanmar )as !omplete" in2015# This )ill tie Myanmar to the more "ynami! Thai e!onomy# Myanmar an" Thailan" alsolai" the poli!y 'ro$n")or for a spe!ial e!onomi! one bet)een the Thai bor"er to)n of Maeot an" Myanmars Mya)a""y, )hi!h have ha" limite" formal bor"er !onne!tivity in the

past# This h$'e step )ill be f$rther enhan!e" by !onne!tions to a planne" "eep sea port in(a)ei, Myanmar# As Thailan" tries to move $p the e!onomi! val$e !hain, it )ill she" some

pro"$!tion that )ill fall to Myanmar, in t$rn movin' Myanmars e!onomy a)ay from primary reso$r!e extra!tion#

Mean)hile, the >ests m$!hto$te" entran!e into Myanmar has remaine" !omparatively

limite"# Tra"e )ith the +nite" tates an" $rope is still anemi!: xports to the +nite" tatesa!!o$nte" for only 0#@ per!ent of Myanmars tra"e, an" imports "i" not fare m$!h better#$rope has f$lly repeale" its san!tions a'ainst the 'overnment# The +nite" tates lifte" itsinvestment ban in C$ly 2012, b$t it still has tar'ete" san!tions in pla!e on ey in"$stries an"

b$siness lea"ers# $$ esterninvolvement is ener'y# 6n Mar!h, hevrons +no!al Myanmar 7ffshore o# si'ne" a 2BBmillion !ontra!t for one blo! an" 8G Gro$p an" partner >oo"si"e -etrole$m to'ether

si'ne" a 1 billion "eal to explore fo$r offshore blo!s# These "eals )ill provi"e m$!h

https://www.stratfor.com/video/myanmars-geographic-challenge?__hstc=43953530.05cb22cefa87b3083278e19f4876e964.1458190199255.1458190199255.1458190199255.1&__hssc=43953530.1.1458190199261&__hsfp=1135427136https://www.stratfor.com/analysis/great-power-politics-south-china-sea?__hstc=43953530.05cb22cefa87b3083278e19f4876e964.1458190199255.1458190199255.1458190199255.1&__hssc=43953530.1.1458190199261&__hsfp=1135427136https://www.stratfor.com/video/myanmars-geographic-challenge?__hstc=43953530.05cb22cefa87b3083278e19f4876e964.1458190199255.1458190199255.1458190199255.1&__hssc=43953530.1.1458190199261&__hsfp=1135427136https://www.stratfor.com/analysis/great-power-politics-south-china-sea?__hstc=43953530.05cb22cefa87b3083278e19f4876e964.1458190199255.1458190199255.1458190199255.1&__hssc=43953530.1.1458190199261&__hsfp=1135427136


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nee"e" !ash for the Myanmar 'overnment, )hi!h s$ffers from limite" tax in!ome be!a$se ofits )ea instit$tions#

.or the most part, hina boasts more options in Myanmar = an" o$theast Asia as a )hole = than it ha" in 2010# 8ei*in' has mana'e" to !omplete a pipeline !onne!tion r$nnin'

thro$'h Myanmar to the 8ay of 8en'al, a pro*e!t that is one small !omponent of hinas broa"er strate'y to "iversify its ener'y inp$ts an" p$mp "ire!tly to its poorly "evelope"interior# o)ever, the a!!ompanyin' hi'h)ay pro*e!t has yet to materialie, an" a ma*orhy"ropo)er pro*e!t, the Myitsone (am, is on hiat$s thro$'h the en" of the year# till, hinahas plans to sen" !onne!tions into Thailan" thro$'h &aos an" Fietnam# Myanmar is oneoption for hinas ener'y s!hemes, b$t it is not the only one#

8ei*in' !an affor" to play the lon' 'ame in Myanmar# 6t !an even affor" to lose o$t entirelyon any f$t$re b$siness so lon' as it !an retain its !$rrent pro*e!ts# >hatever potentialreorientation Myanmars ne) 'overnment may brin', hina )ill levera'e its si'nifi!antinfl$en!e in the !o$ntry to see an a"vanta'e over the >est, )hile the >est )ill $se

Myanmar in a limite" )ay to balan!e a'ainst hina in the Asia-a!ifi!#

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Myanmar Cannot Ignore China