Not in my backyard: China and the new scramble for Burma

Centre of attention: Aung San Suu Kyi was a key figure at last week’s World Economic Forum in the Burmese capital. World Economic Forum via Creative Commons

The diplomatic bonhomie of last week’s World Economic Forum in East Asia, held in Burma’s new capital, Naypyitaw, could not hide the reality that there is a new international scramble for Burma. The country’s reform has sparked a diplomatic feeding frenzy as Western, Pacific and Asian governments vie for position and influence. But for China, is this a case of NIMBY – “not in my back yard?”

Burma is fiercely and rightly protective of its independence and sovereignty. The new competition offers a new means of leveraging economic gains and political benefits from the international competition, including China.

The competition is potentially sharpest within Asia. Japanese prime minister Shinzo Abe’s recent visit to Burma – the first by a Japanese political leader in well over three decades – shone a spotlight on the challenges it poses for China in its own “backyard”. Premier Abe is far from being alone in courting Burma since it embarked on political reform after nearly 50 years of military rule – most notably, Barack Obama made advances in November last year. Tokyo’s new move, however, may resonate more strongly in Beijing than in other capitals.

Advances: Barack Obama and Aung San Suu Kyi engaged in diplomatic niceties. Reuters via Creative Commons

Why? The answer lies in an agreement for increased bilateral economic, political and strategic cooperation – including a closer dialogue on security and regional issues – as well as the promotion of co-operation and exchange between their defence authorities. Japan wants a slice of the economic action, and Abe’s visit, as a Japan Times commentator put it, could “counter China’s strong influence in the country”. Beijing is not about to be pushed out.

No friends like old friends

Politically, China has been a powerful friend to Burma through the years, protecting it in the United Nations. China’s elite had close relations with Burmese military and there is also a sizable Chinese-Burmese community. Now, though, Burma is open to all-comers, which leaves China as one player among many. Beijing only seemed to wake up to this belatedly with a high-level delegation last year, concluding its own bilateral agreement to strengthen relations; Burma’s president, Thein Sein, assured China’s then vice-president Xi that Burma’s China policy had not altered.

Burma is also politically important to China for the potential of added regional influence. Next year, Burma takes over the chair of the Association of Southeast Asian Nations (ASEAN) and will host its summit. ASEAN has its own economic community coming to fruition and overlaps with China’s ASEAN-China Free Trade Area.

Burma is, it would seem, in transition and could form a soft political underbelly for China. This feeds arguments in China that the West is building a new “containment” ring around China, with Burma as Obama’s “pivot” and Japan as its willing helper. Nationalistic sentiment picked up on this in the latest round of the Sino-Japanese spat over disputed ownership of islands in April and May.

China as backyard bully?

This is a particularly thorny problem for China as it tries to avoid claims of demonstrating colonialist tendencies of its own. Public protests over China’s copper mining and energy pipelines amid accusations of land grabs, environmental disregard and displacement of peoples – some of whom were brutally suppressed by Burmese forces – only help to fuel anti-Chinese feeling. This will not be an easy furrow for Beijing to plough and is probably beyond its people-to-people cultural diplomacy to overcome.

Growth: World Bank president Jim Yong Kim, right, with Burma president Thein Sein.

Economically, the World Bank expects Burma to grow by more than 6% this year. China is already Burma’s top economic partner, accounting for a third of Burma’s trade and, with a shift to a manufacturing and service economy taking place and rising labour costs in China, Burma is set to become even more attractive to Chinese investors.

Already, Chinese investment tops US$8 billion, far outstripping Japan. Burma remains a vital strategic economic interest for Beijing with its large stakes in the mining, oil and gas sectors – in spite of claims of a black economy in illegal logging and narcotics across the border into China.

And Burma is strategically sensitive – neo-containment or not. China imports growing amounts of oil and gas from the Middle East and Burma offers China an important friend along critical supply routes. China has US$2.5 billion worth of new oil and gas lines pipelines through Burma - and while these represent key strategic assets for Beijing, the projects are nevertheless mired in controversy and local protest. For example, Burma’s Rakhine State, where the pipeline begins, has seen severe inter-communal violence.

How to make a bomb in Burma

Arms embargoes will be the last to go. China was a vital supporter during sanctions. The Burmese military again took a massive 21% of last month’s national budget and it is allowed to sell Burma’s resources such as oil and gas to buy arms. China may feel well placed to meet Burma’s needs, but the competition may be too much for Chinese manufacturers.

There are nuclear proliferation concerns too. Burma’s military junta set up a nuclear energy programme – allegedly with North Korean help – raising safety issues and questions around the facility’s “weaponisation”. China, already with one nuclear headache on its borders, does not need a second one on its southern flank.

Has all this any relevance to the UK? There are obvious historical and emotional ties, with British governments having stood against military rule, maintained sanctions, supported human rights and continued to fund development assistance projects, today to the tune of around £43m. The UK, like other states, has an eye for an economic opportunity. Britain used to be Burma’s largest foreign direct investor. Consequently, we see trade and investment minister Lord Green launching a British Business Group in Burma. The government has security interests too – the chief of the UK Defence Staff, Sir David Richards, recently visited the sovereign state.

China’s interests in Burma are clear, but its influence will become less easy to exercise in a more crowded field; trade-offs between its priorities will be more frequent, complex and problematic and requiring careful political judgement. But it will depend on the reform process in Burma and, more disturbingly for the new Beijing leadership, also in China. Burma could prove a litmus test for China’s relations with South-east Asia and the wider East Asian region, including Japan. NIMBYism is simply not an option any more.