Since the 2021 military coup in Myanmar, the country has experienced a resurgence of political violence. Fighting has flared up along old and new conflict lines: the military and democratic opposition forces are contesting control of Myanmar’s heartlands populated by the Bamar majority, while several powerful ethnic armed organizations (EAOs) have strengthened their control over the country’s periphery. An EAO offensive that began in October 2023 has dealt a particularly heavy blow to the military, ejecting its forces from the frontier territory of Kokang in northern Shan State and pushing it back in Rakhine State. The military-backed State Administrative Council (SAC) has lost control of vast swathes of Myanmar, and the country has fractured into a series of disconnected territories, each held by different forces claiming sovereign authority.
Despite the escalating violence and the lack of an effective, legitimate government in Myanmar, China has stuck with plans to build an ambitious China-Myanmar Economic Corridor (CMEC) across its neighbor’s territory, running from the port of Kyaukphyu on the coast to the city of Muse on the Chinese border. CMEC is one of the larger national-level implementations of the Belt and Road Initiative (BRI): according to known details of its components it would cost over $15 billion, run over 1,000 kilometers, and crucially, cross several lines of control in Myanmar’s civil war. Progress has been severely disrupted by the fighting, with the centerpiece Muse-Mandalay railway line on hold, and construction so far only advancing in Kyaukphyu and several smaller connectivity projects.
The case of CMEC, and other Chinese business activities in Myanmar, show how exposed China is to escalating conflict risks, and can help us understand what role it plays in the ongoing civil war.
In a recent co-authored article in The Pacific Review, we studied how CMEC has fared in post-coup Myanmar, how it is being perceived by locals, how it has influenced conflict dynamics, and how it has shaped China’s agency in Myanmar. Two findings stand out: first, the exposure of Chinese overseas investments under the BRI to conflict risks is a major driver of changes in Chinese foreign and security policy. And second, CMEC shows that China’s agency in relation to the BRI is nowhere near as strategic, coherent, and top-down as commonly assumed. The need to navigate Myanmar’s fragmented political landscape has resulted in mounting conflicts of interest between the involved Chinese actors, a fraying of the “BRI” label and its connection to extractive and illicit business activities, and constant renegotiation with changing power holders across the country.
In Myanmar, CMEC was a highly ambitious and controversial project even before the post-coup war. Apart from prevalent anti-Chinese sentiment in the country, it also touches on two fault lines that have long plagued Myanmar’s politics: center-periphery tensions between the Bamar-dominated central government and outer regions populated by minority ethnic groups, and the civilian-military power struggle that ultimately led to the 2021 coup.
Major CMEC projects, such as Kyaukphyu port, have been the locus for struggles over project and revenue control between different authorities, and have seen repeated, significant changes after power shifts. Still, the democratically-elected National League for Democracy government that negotiated and inaugurated CMEC was able to somewhat navigate these problems, with governance innovations intended to strengthen local ownership and sustainability. The coup effectively removed the only legitimate authority that could have overseen a project of this size in a fragmented country. According to interviews undertaken by the authors, in junta-governed Myanmar CMEC is predominantly seen as sustaining the junta’s war efforts and benefiting its cronies.
The “CMEC” label is also associated with a broader complex of Chinese business activities in Myanmar, including rare earths mining that is highly environmentally damaging and fuels local war economies. The overall perception is of a resource-extractive rather than developmental project. And the cross-border economic activity that it promotes is entangled with Myanmar’s conflict dynamics: the ability to extract customs and fees has made border crossings and nearby roads attractive targets in warfare, and they were the focal point of the major EAO offensive in 2023 in the Kokang region.
For different Chinese actors, Myanmar’s conflict has brought challenges as well as opportunities, which have led to increased conflicts of interest between them and thus a less coherent policy. China’s central government has focused on protecting its investments, enlisting belligerents from the junta to its EAO opponents for this purpose. It has expanded its diplomatic influence with the internationally-isolated junta government, managing to obtain support for new CMEC projects and other investments. Beijing has intervened in the conflict by brokering a (short-lived) ceasefire agreement in the Kokang region in early 2024, and more recently placed economic pressure on EAO combatants to cease their offensive in the borderlands. At other times, China has enlisted the same EAOs in its sweeping crackdown on cybercrime syndicates operating in the border area.
Beijing’s security-first approach has effectively cut off cross-border migration and commerce, rendering CMEC non-functional and placing a serious economic strain on Yunnan Province, where the corridor was supposed to aid development. Unsurprisingly, the provincial government in Yunnan has balked at this shift in policy, and pursues a parallel diplomacy of its own.
Meanwhile, Chinese businesses have reacted differently to the new situation: the state-owned enterprises constructing CMEC are primarily concerned with the security of their highly visible, vulnerable projects, grappling with previously overlooked conflict risks, and pushing for more direct protection from their own government. Private enterprises have been nimbler in taking advantage of the breakdown of much of Myanmar’s regulatory regime. This is, unfortunately, especially true for businesses in the extractive industries, some of which are pursuing outright illegal activities; or the aforementioned cybercrime syndicates, which are often operated by and target Chinese citizens.
The result has been a fraying of Chinese agency in Myanmar, and of the “CMEC” label that was supposed to encapsulate it. While enlisting the junta has allowed the project to proceed, CMEC has been emptied of its original developmental promise and is now associated with wartime resource exploitation. This has dealt a further blow to China’s image and the popularity of its economic presence in Myanmar.
The original plan for a country-spanning corridor is on hold, and progress is most likely to occur for smaller projects in isolated, relatively secure pockets, which allow their respective protectors to extract rents. Instead of tying Myanmar closer to China, however, such a version of CMEC would further increase its fragmentation.
Finally, the unfolding violence in a major BRI investment destination is forcing China out of its diplomatic comfort zone, with likely long-term consequences. China has had to adopt a much more active role in the protection of its overseas assets, and needs to negotiate their safety with actors beyond the central government. China also must pay greater heed to conflict risks when committing to major investments under the BRI, and also play an active role in resolving them. This is a case that has broader, global relevance for Beijing, as Myanmar is far from the only country where the BRI is heavily exposed to conflict risks.
This article expands on the findings of a co-authored research paper published in The Pacific Review; an international relations journal covering the interactions of the countries of the Asia-Pacific.