asiaweek: A growing presence from n

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Subject: asiaweek: A growing presence from next door spurs a rethink in  Yangon







CHINA'S SHADOW
A growing presence from next door spurs a rethink in Yangon
Dermot Tatlow 

WHEN THE SUN SETS in Mandalay, northern Myanmar, the money heads to the
intersection of 30th and 66th streets. Bright lights, loud music and a lively
crowd attest to the popularity of new Chinese restaurants serving grilled
meat,
fish and beer. Many of the entrepreneurs and customers there are not
traditional Mandalay Chinese. They are Mandarin-speaking "new Chinese" - from
across the China border or the city's emerging suburbs. Indeed, the
presence of
ethnic Chinese in Mandalay has been growing rapidly. By some estimates, they
now constitute up to 30% of the local population. "Chinatown used to be just
around 80th Street," recalls a local Burmese. "Now the whole town is
Chinatown.
The Chinese have bought property all over." 
Nor are the new arrivals just an urban phenomenon. After two years of flooding
in southern China, many farmers there have moved across the ill-controlled
border into northern Myanmar. Estimates run from hundreds of thousands to well
over a million during the period. The virtually unreported influx is, as one
Thailand-based foreign expert puts it, "changing the whole demographic balance
in north Burma." It has also made locals increasingly unhappy with both the
migrants and the ruling junta in Yangon. "The military leaders have opened the
door because without Chinese support, they couldn't have lasted," says one
dissident Burmese intellectual. "For that, the Burmese people can never
forgive
them." 
Even so, the influx is occurring in border areas Yangon scarcely controls.
Most
affected are Kokang district and regions of northern Shan state run by former
insurgents now in fragile ceasefire accords with the junta. The guerrillas
include ethnic Chinese of the ex-Burma Communist Party and the larger and
well-armed United Wa State Army - both active in the narcotics trade. "The
Chinese government was paying flood relief of RMB 20,000 a family," says a
diplomatic source. "The going rate for a Wa guard to look the other way is RMB
5,000, while another 5,000 can buy identity documents." Typically, ID cards
can
be purchased from Burmese families in which someone just died, then altered
and
resold to a new migrant. In the border area, whole Chinese villages are
springing up. 

The human influx is but one facet of a wider expansion of Chinese influence
into a strategic Southeast Asian nation, which has stirred concern in Myanmar
and beyond. Following the 1988 and 1989 crackdowns on democracy movements in
both Myanmar and China, close ties - military, economic and political -
developed between two authoritarian regimes facing international hostility.
Attracting most attention have been Chinese military sales to Yangon,
involving
jet fighters, armored vehicles and naval vessels. Estimated at $1 billion
to $2
billion in the past decade, the sales enabled the Myanmar Army to expand from
180,000 men to 450,000 today. 
But Chinese aid and investment have also gone into infrastructure and
industrial projects, ranging from dams, bridges and roads to factories and
ports. And China is interested in opening an Irrawaddy River trade route from
its Yunnan province to the Bay of Bengal, as cheap consumer goods from the
Chinese southwest flood markets in northern Myanmar. "Myanmar is close to
being
a Chinese satellite," says an Asian diplomat in Bangkok. 
Well, not quite. Yangon, worried by its dependency on China and a groundswell
of popular discontent over Chinese penetration, is trying to pull back from
the
embrace of its giant neighbor. What was a virtual strategic alliance in the
mid-1990s is now infused with a new wariness. The junta, says an Asian
intelligence source, "wants to diversify into other areas." 
The first signs of a rethink came in late 1997, when the junta, renamed the
State Peace and Development Council, instituted a new regime for border trade
with its neighbors. Prompted by Yangon's widening trade deficit and a loss of
hard currency and natural resources, the scheme sought to bring booming
frontier commerce under government control. Among Myanmar's neighbors, China
was the hardest hit. From November 1997 to mid-1998, the frontier was
officially closed to much of the trade between Muse in Myanmar and Ruili in
Yunnan. "Ruili almost died," says one observer. "A boom town suddenly went
bust." The Chinese pressed the generals to reopen the border - which they did
in June last year. But with new controls in place, trade declined from $659
million in 1996 and $749 million in 1997 to $400 million last year. 
The row heralded a new prickliness in bilateral ties. High-level visits
dropped
off. When intelligence chief Khin Nyunt goes to Beijing next month, he will be
the first Burmese leader to do so since October 1996. Nor has Yangon shown
much
interest in the touted Irrawaddy route from China to the Bay of Bengal.
Floated
in 1996, the scheme would allow Chinese goods to bypass the port of Yangon -
long plagued by silting and shallow draft - and give southwest China a key
commercial outlet into the Indian Ocean region. It would also give Beijing a
strategic foothold there. "By early 1998, talks on river access had come to a
grinding halt," says a diplomat. "Right now there's nothing happening." The
projected development of a deep-sea port at Kyaukphyu, in which a Singapore
company was interested, also seems on the back burner. 
Military sales have leveled off as well. In the past year, new Chinese tanks

have been delivered and Myanmar has bought some Karakorum trainer aircraft,
co-produced by China and Pakistan. But significantly, says a senior diplomatic
source, the junta turned down a Chinese offer of a $100-million credit for
military purchases late last year. Yangon not only wants to diversify its
supply sources, says an analyst, but is "unhappy about the quality of some
Chinese systems." 
The new skepticism is not one-sided. The Chinese themselves are increasingly
frustrated with Myanmar's inability to sort out its international
relationships
or kick-start its floundering economy. Chinese companies and businessmen have
been badly burned by their investments in an economy bedeviled by rising
prices
for essentials and an urban inflation rate of up to 80%. "The Bank of China
refuses to lend any more capital to Chinese firms that want to invest," says
one diplomat. Beijing was also miffed when Yangon recently considered giving
the lease on domestic routes to Taiwan's EVA Air, which wanted to buy into
Myanmar Airways. 
India has benefited from the new tensions between Myanmar and China. Since
1996, New Delhi has been trying to improve its relations with Yangon to
counter
Chinese influence and curb insurgents from its own troubled northeast, who
find
sanctuary inside Myanmar. India's Border Roads Organization has been upgrading
a route on the Burmese side of the frontier. And in late February, Indian
Foreign Secretary K. Raghunath visited Yangon - the first such trip in six
years. 
Still, there is only so much that India can bring to the table. And ASEAN,
which Myanmar joined in 1997, has been beset by the Crisis and unable to
provide investments that could have lifted the Burmese economy. Yangon may
well
be able to attenuate Chinese penetration, but for the foreseeable future,
China's economic embrace will remain a fact of life. Equally inevitable but
far
more difficult to temper will be the continuing flow of Chinese migrants into
northern Myanmar. Soon, that influx will be measured not in the thousands but
in the millions.