Development along the border between Myanmar and China has heated up as trade between the two countries has surged. Few places represent this trend as well as this town in Myanmar’s Shan State, on the opposite bank of the Shweli River from China’s Yunnan Province.

The trip from Lashio, a major city in Shan State, to Muse — which is Myanmar’s largest trade hub on the border — involves a four-hour trek through the mountains. Travelers emerging from this nigh-deserted area are greeted by the sight of skyscrapers. Beside the river, work is proceeding apace on the Muse Central Business District.

Abuzz with activity

The Shan State government and local developer New Star Light Construction are investing more than 100 billion kyat ($81.8 million) to turn 120 hectares of grassland into a business district, complete with a shopping mall and luxury residences. Though the project as a whole is slated for completion in 2022, the core structures are almost done. The district is slated to open next year.

France’s AccorHotels group will open a roughly 200-room hotel in the district by 2018. Some Chinese-funded restaurant chains have begun operating there, and a wholesale market and a big exhibition hall have been set up nearby.

The project is more than just a redevelopment, said Maung Sein, who leads New Star Light’s local operations. The company is building a new economic hub linking Myanmar and China, Maung Sein said.

During the Second Sino-Japanese War, the Muse area lay along a route used by the U.S. and the U.K. to send supplies to Chiang Kai-shek’s Nationalist government. But since the 1960s the region has been a hot spot for clashes between Myanmar government forces and armed ethnic groups. The former military junta also imposed import restrictions to head off a foreign-currency exodus. Muse became little more than a minor distribution point for lumber and jade produced in Myanmar.

A turning point came in the late 2000s, when the junta, seeking closer ties with China, encouraged cross-border trade. This made Muse a hub for consumer goods and construction materials flooding in from China.

About 70-80% of trade across Myanmar’s border with China goes through Muse. The value of trade passing through the town reached roughly $5.4 billion in fiscal 2015, quadrupling in five years

A long line of Myanmarese headed for China snakes in front of a massive border gateway opened in spring of last year. A visa costing a mere 1,000 kyat lets Myanmar citizens stay in China for a week. One person from the central region of Magway works for a construction company in Ruili while moonlighting as an interpreter using Chinese picked up on the job. The 29-year-old can earn 20,000 kyat on a good day — double or triple the average income of a factory worker in Yangon.

The number of people living in Muse and working in Ruili has grown fast, though no solid data exists. Official statistics pegged Muse’s population at roughly 120,000 in 2014. But more than 100,000 workers from surrounding areas and China are believed to have poured into the town.

Some are finding ways to capitalize on Muse’s growth on the Chinese side of the river. BAIC Group broke ground on a factory in 2013 that will churn out 150,000 cars a year. The plant, costing an estimated 3.6 billion yuan ($538 million), will begin partial operation as early as this year. The automaker aims to use cheap labor from Myanmar to create an export base to Southeast Asia. Hopes are high that Muse will become not only a commercial center, but also a hub for parts production and other manufacturing through its link with Ruili.

Companies from the Muse area are rising to prominence as well. One is Great Hor Kham, a Muse-based construction company formed in 2012 whose chairman, Sai Ohn Myint, is a local. Great Hor Kham has benefited from the construction boom, working on such projects as infrastructure for the Muse Central Business District. The company was among the six candidates for the first listing on the Yangon Stock Exchange, which began trading in late March.

China National Petroleum Corp. started up a pipeline last year linking the port of Kyaukpyu in western Myanmar with inland China, with Muse as an important stop along the way. The pipeline carries crude oil from the Middle East — equivalent to about 10% of China’s imports — to mainland China via the Indian Ocean.

A big currency exchange handling yuan and kyat has been set up on the Myanmar-China border. The move was spearheaded by the Chinese government as part of its drive to make the yuan an international currency.

Myanmar’s new government under de facto leader Aung San Suu Kyi is shifting its focus back to China, seeking investment and aiming to spur trade. This is a boon to Muse, which is again in the limelight more than seven decades after its days as a wartime supply route. If the flow of people, goods and money to and from China picks up, the border town could become a new focal point of Myanmar’s economy.

Link: http://asia.nikkei.com/Politics-Economy/International-Relations/Myanmar-China-trade-breathes-life-into-wartime-supply-hub