Over the years, China has expended considerable effort to improve its neighborhood relations, with the goal of maintaining stable borders and a viable trading environment. In so doing it has undertaken significant diplomatic efforts in maintaining networks among governments and governing elites. As time passes, one of the main shortcomings of this policy approach is becoming evident: China is increasingly finding itself at odds with non-governmental actors. Myanmar is a case study.

China’s interests and investments in ethnic areas of Myanmar, and Kachin State in particular, are increasingly touching on fundamental questions of political self-determination and with it national conciliation. The issue of disposition over land and resources is a matter of a constitutional process, something that Chinese actors seem to ignore.

In dealing with issues concerning Kachin State, a larger pattern of uncoordinated actors and self-serving interference has become evident. Until the transition from the Tatmadaw to civilian rule and the gradual lifting of international sanctions, China almost had carte blanche in its dealings with Myanmar. Deals with the elite did not go unnoticed but had no serious repercussions either inside or outside the country. Now, however, with an evolving civil society and greater prominence of inter-ethnic reconciliation on the national agenda, China’s operations have come under increasing scrutiny.

Officially, China has in the past described its interests in Myanmar as stability, border security, security of its investments, and connecting landlocked Yunnan Province to neighboring markets. In pursuing these interests, however, it has become difficult for Beijing to cover up its shortcomings and deal with increasingly negative perceptions across Myanmar society.

Beijing is being forced to realize that its focus on strictly inter-governmental relations, taking a revisionist stance on the 1947 Panglong agreement on a diplomatic level, while ignoring the needs and interests of ethnic nationalities, no longer serves its interest. Halfhearted engagements at the local level and poor crisis management have added to the widespread perception that China is solely concerned about the security of its business operations. In view of ethnic groups having potentially a greater impact on government policies and with existing investments at stake, China’s approach has become more ambiguous with respect to its intentions and stance towards domestic issues in Myanmar.

In Kachin State, two Chinese investments with diplomatic relevance had been at stake: the Myitsone confluence hydroelectric power plant project and the Sino-Burma pipelines owned by China National Petroleum Corporation (CNPC). In both projects Chinese SOEs by and large lacked long-term vision and ignored the investment environment. Myanmar so far lacks a system that would provide titles for land. Companies such as CNPC and China Power Investment Corporation (CPI) took profit from facile resettlement processes. However, they failed to provide sufficient compensation to enable those displaced to rebuild their livelihoods.

Unlike the pipeline project, the newly formed civilian government suspended the Myitsone Dam construction. The confluence area remained a restricted zone. According to local sources, Chinese companies were using the area for gold mining. As in other places, Chinese companies were able to bring in heavy machinery, thereby putting local extraction enterprises out of business. Mining agents cause major environmental degradation, polluting water sources and are becoming a public health issue.

Charm offensives on the part of Chinese SOEs and agencies to redress negative perceptions among the local population, with the ultimate goal of resuming the project under the next presidency, might backfire and achieve the opposite result. CPI negotiators tried to offer greater incentives by better providing for local needs. Yet, the devil is in the details, and the idea that China is playing a double game is already deeply ingrained in perceptions on the ground. To make a difference, China would have to show sincere interest in developments on the ground and understand the changing political context of its engagements.

The key issue is no longer the unfavorable conduct of different Chinese government actors, SOEs, and entrepreneurs; nor is it about matters of community involvement and compensation. Rather, Chinese investments in Kachin State touch upon the core element of national conciliation: the self-determination of ethnic groups in their traditional territories.

Thus far, the right to make decisions about land use is part of a political process and negotiations that would lead to a constitutionally anchored and treaty-based federal system. The Kachin have so far rejected the central government’s version of a peace process that involves impromptu ceasefire agreements between Kachin rebels and government forces prior to a meaningful political process and confidence building. In short, China’s interests and issues do not correlate with the issues on the ground.

If Kachin demands are not to be overruled once again, in particular over the dam project, this depends on the outcomes of a political process on constitutional matters between the central government and Kachin independence movements. During the first half of 2013, China became involved in mediation efforts but came to the realization that there is no quick fix to the conflict.

Beijing has come to the conclusion that inter-governmental relations alone are not a sufficient means to achieve its goals. During military offensives around the near-border town of Laiza during the first quarter of 2013, Chinese decision-makers realized that the border region was not a stable environment and that it was directly affected by a flow of displaced persons into Kachin minority areas inside China. In reaction, China used a two-pronged approach, which in hindsight did not benefit its image in Myanmar. During the military operations it maintained its intergovernmental approach. As early as January 2013, China officially called the Myanmar government to regain control in the border region and raised issues of border security.

Yet, according to Kachin sources the situation looked different on the ground. Repeated requests by the Kachin Independence Organization (KIO) to the Yunnan government for assistance were rejected. After the Kachin Independence Army (KIA) had blocked the supply route to the northern border outpost of Mu Bum upon allegations that the military was transporting arms and ammunition, in July 2013 China granted military trucks passage through its territory.

On a different note, after Kachin called for support from the United States, Beijing tried to prevent increasing foreign influence in the region. In an unprecedented move, China took the initiative and brought the conflicting parties to the table for peace talks.

During two successive rounds of negotiations in the Chinese town of Ruili in Yunnan province in February and March, the conflicting parties perceived Chinese mediation attempts as highly interventionist and not interest free. The newly appointed Special Envoy for Asian Affairs of the Foreign Ministry and former Ambassador to the United Nations Wang Yingfang oversaw the talks. China intervened after both sides agreed to invite international observers from the UN, U.S., and the U.K. to attend upcoming meetings (and to invite humanitarian assistance into the region). During a third meeting held in Myitkyina in May, Chinese observers showed only halfhearted interest. Yet both sides managed to reach a seven-point agreement about future political dialogue, including a preliminary ceasefire agreement and joint monitoring committees.

For the time being, China will have to deal with the damage that has been done in Myanmar. Combating negative perceptions that it is taking a greater interest in securing its own interests, such as eliminating international competition and playing double games with the sole interest of reinstating business as usual, rather than taking an interest in the political realities in Myanmar will be a difficult task. Yet, in the medium term it will need a broader outlook than suspended investment projects.

Bernt Berger is Head of the Asia Program at the Institute for Security and Development Policy (ISDP) in Stockholm.

Link: http://thediplomat.com/2013/08/23/chinas-troubled-myanmar-policy/?all=true