China is pouring money into junta-ruled Myanmar to secure a ‘back door’ to the Indian Ocean

The fate of Myanmar has major implications for a free and open Indo-Pacific.

An undemocratic Myanmar serves no one’s interests except China, which is consolidating its economic and strategic influence on its smaller neighbour in pursuit of its two-ocean strategy.

Since the coup China has been – by far – the main source of foreign investment in Myanmar.

This includes $2.5 billion in a gas-fired power plant to be built west of Myanmar’s capital, Yangon, that will be 81% owned and operated by Chinese companies.

Among the dozens of infrastructure projects China is funding are high-speed rail links and dams. But its most strategically important investment is the China-Myanmar Economic Corridor, encompassing oil and gas pipelines, roads and rail links costing many tens of billions of dollars.

The corridor’s “jewel in the crown” is a deep-sea port to be built at Kyaukphyu, on Myanmar’s west coast, at an estimated cost of $7 billion.

This will finally give China its long-desired “back door” to the Indian Ocean.

Natural gas from Myanmar can help China reduce its dependence on imports from suppliers such as Australia. Access to the Indian Ocean will enable China to import gas and oil from the West Asia, Africa and Venezuela without ships having to pass through the contested waters of the South China Sea to Chinese ports.

About 80% of China’s oil imports now move through the South China Sea via the Malacca Strait, which is just 65-km wide at its narrowest point between the Malay Peninsula and Indonesia’s Sumatra.

Overcoming this strategic vulnerability arguably makes the Kyaukphyu port and pipelines the most important element of China’s Belt and Road initiative to reshape global trade routes and assert its influence over other nations.

Deepening relationship

Most of China’s infrastructure investment was planned before Myanmar’s coup. But whereas other governments and foreign investors have sought to distance themselves from the junta since it overthrew Myanmar’s elected government in February 2021, China has deepened its relationship.

China is the Myanmar regime’s most important international supporter. In April, Foreign Minister Wang Yi said China would support Myanmar “no matter how the situation changes”. In May, it used its veto power on the United Nations Security Council to thwart a statement expressing concern about violence and the growing humanitarian crisis in Myanmar.

Work continues on projects associated with the China-Myanmar Economic Corridor. New ventures (such as the aforementioned power station) have been approved. More projects are on the cards. In June, for example, China’s embassy in Myanmar announced the completion of a feasibility study to upgrade the Wan Pong port on the Lancang-Mekong River in Myanmar’s east.

Debt-trap warnings

In 2020, before the coup, Myanmar’s auditor general Maw Than warned of growing indebtedness to China, with Chinese lenders charging higher interest payments than those from the International Monetary Fund or World Bank.

At that time about 40% of Myanmar’s foreign debt of $10 billion was owed to China. It is likely to be greater now. It will only increase the longer a military dictatorship, with few other supporters or sources of foreign money, remains in power, dragging down Myanmar’s economy.

Efforts to restore democracy in Myanmar should therefore be seen as crucial to the long-term strategic interests of the region’s democracies, and to global peace and prosperity, given the increasing belligerence of China under Xi Jinping.

Xi, now president for life, this month told the People’s Liberation Army to prepare for war. A compliant and indebted Myanmar with a deep-sea port controlled by Chinese interests tips the scales towards that happening.

A democratic and independent Myanmar is a counter-strategy to this potential.

Calls for sanctions

Myanmar’s democracy movement wants the international community to impose tough sanctions on the junta. But few have responded.

The United States and United Kingdom have gone furthest, banning business dealings with Myanmar military officials and state-owned or private companies controlled by the military.

The European Union and Canada have imposed sanctions against a more limited range of individuals and economic entities.

South Korea has suspended financing new infrastructure projects. Japan has suspended aid and postponed the launch of Myanmar’s first satellite. New Zealand has suspended political and military contact.

Australia has suspended military cooperation (with some pre-existing restrictions on dealing with military leaders imposed following the human rights atrocities committed against the Rohingya in 2017.

But that’s about it.

Myanmar’s closest neighbours in the ten-member Association of South-East Asian Nations are still committed to a policy of dialogue and “non-interference” – though Malaysia and Indonesia are increasingly arguing for a tougher approach as the atrocities mount.

The Armed Conflict Location and Event Data Project says the only country now more violent than Myanmar is Ukraine.

Given its unique geo-strategic position, self-interest alone should be enough for the international community to take greater action.

Htwe Htwe Thein is Associate professor, Curtin University.

This article first appeared on The Conversation.