appConfigEntityId

bodyType

customContents

entityId

entityUuid

isVideo

articlePageQuery

article

articleSchemaContent

content

hooksArticlePageAdvertisementConfigArticle

hooksArticlePageFloatingButtonConfigArticle

appConfig

filter

json

liveArticle

Jared Bissinger

Over the past year, China has increasingly wielded its economic leverage in Myanmar to tilt the scales towards the military’s State Security and Peace Commission (SSPC), helping it retake territory and re-exert control over the economy.
China has done so by combining its economic heft and proximity to Myanmar with a policy of fostering ties with both state and non-state actors, then leveraging these to its advantage.
Western countries, by contrast, have imposed sanctions yet continue to trade with the SSPC-controlled state. This is despite the SSPC’s numerous changes to the trading system, which have given it extraordinary control and benefits. The result is that Western economic engagement with Myanmar is indirectly undermining its political objectives and the impact of development aid. This is the main reason why China has been increasingly influential in Myanmar while Western countries have been sidelined.
China’s approach has largely been guided by protecting its interests, many of which are economic. These include ensuring access to natural resources like rare earths and keeping other countries from buying them, and protecting infrastructure projects such as the Myanmar-China oil and gas pipelines. China also wants to ensure the uninterrupted flow of cross-border trade, so it trades not only with the SSPC but also with non-state groups, often through a network of unofficial border checkpoints.

Despite a stated policy of non-interference, China has repeatedly used economic pressure to shape the actions of these non-state groups. It has halted trade, closed borders, cut off critical supplies and clamped down on financial services – part of a so-called five-cut policy to force non-state groups into submission.
There are many examples of this approach. In July, China threatened to stop buying rare earths from mines in Kachin Independence Army-controlled areas unless the group stopped trying to seize Bhamo. China cut power, water and internet to pressure the Myanmar National Democratic Alliance Army to halt its advance beyond Lashio and distance itself from the exiled National Unity Government, which Beijing perceives as aligned with the West. It also pressured the United Wa State Army in northern Myanmar to stop providing arms to other groups by freezing assets and sealing border crossings.
China has exerted similar leverage over the SSPC itself. Most notably, it pushed the military to allow a joint venture security company that allows Chinese security guards to protect cross-border investments, and it also pressed for the expedited development of the deep-sea port at Kyaukphyu.

In the short term, this approach has proven effective. Fighting in northern Shan state has eased and trade looks increasingly likely to restart. But China’s strategy does little to advance lasting peace or stability in Myanmar. This may be intentional, however. According to the US Institute of Peace, China’s goal is to keep Myanmar “a weak and fragmented country with just enough stability to protect Beijing’s strategic economic interests”.
Western countries have taken a markedly different path. Their economic interests and engagement in Myanmar are relatively limited compared to China’s, with greater emphasis instead on development and peacebuilding. While the Trump administration in the US has not yet released a policy on Myanmar, the Biden administration framed its interest around promoting a “peaceful, prosperous and democratic” country. The European Union similarly grounds its development cooperation in its priorities of peace, governance and sustainable livelihoods.
Although both the US and EU have imposed sanctions, they have not substantially altered their trade relations with Myanmar. Meanwhile, the military has fundamentally transformed the country’s economic framework, adopting draconian trade licensing, capital controls, mandatory foreign currency surrender and multiple exchange rates. A number of these policies directly contradict core principles of the international trading order, yet Western governments have done little in response.
This new system allows the military regime to capture significant rents from trade and financial flows and determine who can access foreign exchange and trade licences – concentrating economic power in ways crucial to its political survival.
For the West, this presents an uncomfortable truth: its economic approach to Myanmar is undermining its political goals and support for the pro-democracy movement.
Western governments rationalise continued trade by arguing that it sustains the livelihoods of millions of Myanmar’s workers. While it is true that many rely on export-oriented sectors, poverty and declining incomes – largely driven by the military’s economic policies – raise doubts about whether trade with the SSPC is really helping ordinary people.
China’s approach has been more effective at achieving its aims

This is important: raising living standards and ensuring full employment are primary justifications for the global trading system, but the SSPC’s post-coup policies make these goals hard to achieve.
In the short term, China’s approach has been more effective at achieving its aims. Its economic engagement, particularly with non-state actors, is a vital tool to advance its interests in Myanmar, providing leverage that has been repeatedly exploited.
Meanwhile, the shortcomings of the West’s approach are increasingly clear. If Western countries wish to advance their political and humanitarian goals in Myanmar, a fundamental rethink of their strategy is needed.
Jared Bissinger is a Visiting Fellow with the Myanmar Studies Programme at ISEAS – Yusof Ishak Institute, and the Research Lead at Catalyst Economics. This article was first published by ISEAS – Yusof Ishak Institute’s commentary website fulcrum.sg.


Why is the National Archives the last stop on Xi and Trump’s summit itinerary?

Rohingya who fled Myanmar chaos now dread return from Malaysia

Chinese live-streamer reportedly held for US$90,000 ransom in Myanmar

Beatings, electric shocks, sexual violence: women endure torture in Myanmar prisons

Myanmar

Why China is succeeding in Myanmar while the West has been sidelined

Chinese President Xi Jinping shakes hands with Myanmar leader Min Aung Hlaing in Moscow in May, on the sidelines of celebrations marking the 80th anniversary of the Soviet victory in World War II. Photo: Xinhua

The city of Ruili in southwest China’s Yunnan province, a land port on the China-Myanmar border. Photo: Xinhua

The development of Kyaukpyu is part of Beijing’s wider plan to expand its footprint in South Asia. Photo: Xinhua

In its year under Malaysia, Asean tried to set systemic reform in motion

Malaysian Prime Minister Anwar Ibrahim hands the gavel over to Philippine President Ferdinand Marcos Jnr at the closing ceremony of the 47th Asean summit in Kuala Lumpur, Malaysia, on October 28. The Philippines takes over as Asean chair on January 1. Photo: Xinhua

US President Donald Trump (left) and Malaysia’s Prime Minister Anwar Ibrahim hold the reciprocal trade agreement both parties signed during a bilateral meeting on the sidelines of the 47th Asean Summit on October 26. Photo: AFP

Can Asean maintain its neutrality as Manila takes the chair?

Illustration: Craig Stephens

US President Donald Trump (right) speaks after presiding over the signing of a Cambodia-Thailand peace deal as (from the left) Malaysian Prime Minister Anwar Ibrahim, Cambodian Prime Minister Hun Manet and Thai Prime Minister Anutin Charnvirakul talk together at the Kuala Lumpur Convention Centre on October 26 in Malaysia. Photo: Getty Images/TNS

While Trump boasts about ending wars, China quietly works towards peace

Cambodia’s Foreign Minister Prak Sokhonn, China’s Foreign Minister Wang Yi and Thailand’s Foreign Minister Maris Sangiampongsa meet in Anning in China’s Yunnan province, on the sidelines of the 10th Mekong-Lancang Cooperation Foreign Ministers’ Meeting on August 14. Photo: AFP/Royal Thai government

This Week in Asia

Opinion

Asia Opinion

The West’s incoherent strategy is no match for a ruthless, integrated Chinese approach that leverages economic links to its advantage


The West’s incoherent strategy is no match for a ruthless, integrated Chinese approach that leverages economic links to its advantage.


War and conflict

China

Myanmar’s changing ties with China

European Union

Diplomacy

Rare earths

China-Asean relations

Asean

Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The West’s incoherent strategy is no match for a ruthless, integrated Chinese approach that leverages economic links to its advantage

The West’s incoherent strategy is no match for a ruthless, integrated Chinese approach that leverages economic links to its advantage