Burma Westren News

Economic and Military Cooperation between China and Burma

(A brief report on China’s support of economic and military development in Burma)

Nyi Nyi Lwin
September 2006

Introduction

China is located in the eastern part of Burma and bordering with Kachin state and Shan state. Its population is 1.3 billion people. Burma, with current population of 50 million people, has maintained good relation with China since 1948. After 1988 popular democracy uprising and the military junta, State Law and Order Restoration Council (SLORC) and successive regime, State Peace and Development Council (SPDC), took over power, China has become a key factor in economic and military development in Burma. China’s objectives in pursuing its relationship with Burma are two-interest. First, China seeks natural resources. Second, China wants to improve its security capabilities by expanding its access to military assistance in Burma. In addition, China ranks number 15 investors along with other nations, including India and Thailand.

Contract and Memoranda of Understanding

Up until September 2006, China has initiated 825 projects and labor contracts in Burma. By the end of 1999, Burma had signed 507 memoranda of understanding and agreements with China worth $1.4 billion (Genser, Jared. Testimony to U.S.-China Economic and Security Review Commission. Aug.3, 2006). By October 2002, Chinese companies had contracted a further 293 projects for a total value of over $2.1 billion. In March 2004, China and Burma signed 21 agreements. The agreements included economic and technical cooperation of concessional loans to Burma. Other Memoranda of Understanding covered on projects of communication, power plants, agricultural technology, agricultural machinery manufacturing, mineral exploration, fertilizer and railways (People’s Daily. March 24, 2004). In July 2005, Burma and China signed a trade deal in worth of $300 million. in September 2005, China signed a $46 million contract to provide Burma with equipment and power cables for the construction of Burma’s biggest hydropower plant (Financial Times, Jan. 18, 2006). In July 2006, China’s Sinohydro signed an agreement with Burma's military regime and the Electricity Generating Authority of Thailand to build a US$1 billion dam at Hat Gyi in Karen state. The dam project world blocked 2,800 Kilometer long from Nu River to Salween River (China Digital Time, Sept. 13, 2006). In November 2005, PetroChina signed a gas development agreement with Burma that deals for 6.5 trillion cubic feet of gas to be piped from offshore A-1 Block from Arakan State, western Burma to China (China Digital Time, Sept. 13, 2006).

Contract and Memoranda of Understanding and Entry US $ in Million

Year	No. Agreement	Sector	Entry Amount	Total
1999s	507	Energy, Highways, Agricultural Technology	1,400	1,400
2002	293	Machines, communication, electric equipments	2,100	2,100
2004	21	Railway, power plant, and mineral exploration	Not Available	00.00
2005	2	Power cable and Construction	346	346
2006	2	Dam and gas	1,000	1,000
TOTAL	825			4,846

(Sources: Financial Time, New Light of Myanmar, People’s Daily, US House Testimony, and Xinhua)

Aids and Loans

China has provided larger aids to Burma for decades. Between 1962 and 1994 China gave Burma roughly $62.5 million aid (Genser, Jared. Testimony to U.S.-China Economic and Security Review Commission. August 3, 2006). In 2005, China has committed US$100 million in aid to Burma (Japan Focus. 2006).

China has also given many loans to Burma. In 1998, when Burma was faced a debt crisis, China loaned $180 million (US Department of State, 2001). In 2003, China loaned Burma $200 million (US Department of State, 2004). In 2004, China granted Burma a new preferential loan and funded the second phase of a 2000 loan agreement worth $20 million (Georgetown Southeast Asia Survey 2003-2004). In February 2006, China loaned Burma $85 million to finance the purchase of two new oil rigs (Energy Intelligence Group, Inc. April 2006). In June 2006, China publicly agreed to provide Burma with a special low-interest loan of $200 million for five unspecified government ministries. (Genser, Jared. Testimony to U.S.-China Economic and Security Review Commission. Aug.3, 2006).

China Aids and Loans to Burma of US$ in Million

(Sources: US Department of State, Japan Focus, and George Town University)_______________________________

Trade

China is even credited the largest trader with Burma. China’s trade with Burma reached $1.2 billion in 2005, a total Burma trade of $5 billion. It even expected to reach the trade volume of $4 billion in 2008 (Kolås and Tønnesson. Burma and Its Neighbours: Geopolitics of Gas. September 7, 2006).

China imports from Burma are timber, teak, gem, seafood, marble, coal, and nickel. It exports goods to Burma are electronic devices, heavy construction machines, electric cables, communication equipments, household appliances, chemical, medicines, and agricultural machine and technology. Burma plans to export to China 596 items, including meat, dairy products, fruits and vegetables. Burma will likely remove the tariff by 2009 (Time Asia. February 23, 2006).

Between 1988 and 1989, the two nations’ trade increased from $9.5 million to $76 million. In 1995, the trade grew to $767 million. By 2000, it covered $621 million. In 2005, the trade value was $257 million. The first half of 2006 trade between Burma and China estimated 311 million (People’s Daily. September 14, 2006).

China imported larger amount of timbers from northern Burma. In 2004, China illegally imported 1 million cubic meters of timber in amount of $250 million and 95% of official export timber to China. In 2005 alone China brought 1.5 million cubic meters of wood worth around $350 million from Burma (Global Witness. October 2005).

Trade Amount US$ in Million

(Sources: People’s Daily, Global Witness, and Time Asia)--*Six month trade amount of US$ in millions.

Seaports and Highways Projects

China has been assisting Burma to build seaports, railways, and highways. It also signed to build hydraulics power dams in Burma.

China is currently building deep seaports in Sittway and Kyukpyu in Arakan State. Kyukpyu port has a water depth of 20 meter and is capable of accommodating 4,000 ETU, (20-foot equivalent units) container vessels. Kyukpyu is located on the route connecting to southwestern China’s Kunming city and Sittway (Deepak V. Ganapathy, 2003).

In 2005, a joint engineering team from China and Burma conducted surveys on deep seaports and highways construction in the Arakan State. The study outlined a highway project, Kunming-Mandalay-Kyaukpyu-Sittwe, connected from Burma to China. The highway is length 1,943 kilometers (Wikipedia. Retrieved from ' Foreign relations of Myanmar'. 2006).

Chinese companies have built a 305 kilometres highway in Burma. They will soon construct a 107-kilometre rail link to Lashio in Shan state, a final link of a pan-Asia network. China provides all technology, equipments and labors for the constructions (Financial Post, March 13, 2006).

Gas Pipeline and Water Dam Projects

China has recently signed several agreements with Burma to buy gas and oil and to build dams. In November 2005, PetroChina won a contract to buy 6.5 trillion cubic feet of offshore gas from the Arakan state of Burma. China will build a gas pipeline from Burma to China as soon as gas developments are completed in A-1, A-2, and A-4 blocks in Bay of Bengal. In the same month, China Oilfield Service Ltd. agreed to lend an oil drill machine to Burma to conduct oil exploration in the Arakan seas. It costs $6 million for a 6 months period use (Sher Gas Bulletin, November 2005).

China’s Sinohydro signed an agreement with Burma's military regime and the Electricity Generating Authority of Thailand to build a US$1 billion dam at Hat Gyi in Karen state. The dam will provide electricity to millions of customer in Thailand (China Digital Time. September 13, 2006).

Military Supplies and Navy Ports

For decades, China has sold $2 billion military equipments and fighter jets to Burma and built navy bases in several islands.

China is major exporter of arms to Burma. It supplied 90% of armaments. China signed an arms deal with Burma in 1989, one year after military junta took over power. The $1.2 billion deals assisted Burma substantial arms, military technology, and training.

Throughout 1990s, China sold Burma 100 medium-sized tanks, 100 light tanks, 24 dozen fighter planes, 250 armored personnel-carriers, multiple-launch rocket systems, howitzers, anti-aircraft guns, surface-to-air missiles, mortars, assault rifles, grenade launchers, heavy trucks, and numerous patrol boats, guided-missile fast-attack craft, minesweepers, and small gunboats (Genser, Jared. Testimony to U.S.-China Economic and Security Review Commission. Aug.3, 2006).

In 1994, Burma singed another phase of arm deals with value of $400 million in which Burma received naval vessels and armored vehicles, which were aimed at modernizing Burma’s military capabilities, as well as helicopters, small arms, and artillery. In 2002, China sent Burma 200 military trucks and 5 new warships. From 2002 to 2004, China trained navy officers and conducted joint naval exercises along Burma’s southern coast. In 2005, China sold 400 military trucks to Burma, bringing the total sales of 1,500 military trucks (Asia Time Feb. 11, 2005. Burma Issue. 2005. Irrawaddy. May 26, 2005. Genser, Jared. Testimony to U.S.-China Economic and Security Review Commission. Aug.3, 2006).

In addition to selling weapons to Burma, China builds up a triangle-shaped series of four naval bases connecting Coco Island, Haigyi island, Mergui and Thilawa. Coco Island is located in the Andaman Sea. Haigyi Island lies at the mouth of the Bassain River, while Mergui is a Tennasserin costal town. Thilawa is the gateway from Rangoon to the Andaman Sea.

In the mid-1990s, the Burmese regime granted access for Chinese intelligence services to Zedetkyi Kyun Island, located off the coast of Burma's southernmost tip, Kawthaung or Victoria Point (Kolås and Tønnesson. Burma and Its Neighbours: The Geopolitics of Gas. September 7, 2006).

Conclusion

It is undeniable fact that, over the decades, China has increased economic and military cooperation with Burma. Multimillion dollars aids and loans, billions dollars trades, billions dollar arms and military technology supplies from China has eventually strengthened Burma’s military junta. And, China’s military access in Burma intends balance of its power in Asia.

(Nyi Nyi Lwin is team leader of ENC Economic and Development Planning Committee)

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