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Analysis
November 25, 2015 | 09:15 GMT
Forecast
China will remain a major source of foreign investment and trade for Myanmar, even
as Naypyidaw diversifies its partners.
Myanmar's new ruling party will need to compromise with the military establishment
to be able to govern, especially on economic and ethnic militant issues.
China will continue to leverage its influence over militant groups in the border region
to exert pressure on Naypyidaw.
Analysis
The next phase of Myanmar's political transition has been settled. The results of the country's
Nov. 8 elections have confirmed that the opposition National League for Democracy now
holds a healthy majority in parliament and can form a new government without the help of
the formerly ruling Union Solidarity and Development Party. For the first time since
Myanmar's 1962 coup, a fully civilian party will lead the government, although it will still
have to vie for power with the country's military elite.
Meanwhile, China has been watching Myanmar's political transition with growing concern.
Myanmar, which shares a 2,192-kilometer (1,362-mile) border with China that cuts across
rugged highlands, represents access to trade routes in the Indian Ocean Basin and to overland
commerce with the Association of Southeast Asian Nations (ASEAN), now China's largest
trading partner. However, the relationship between the National League for Democracy and
Chinese leaders has been cool; Beijing conspicuously avoided congratulating party chief
Aung San Suu Kyi on her victory. This track record would seem to suggest that she will lead
her party and her country toward the West, in both diplomatic and economic terms. But
Suu Kyi's actions and tactics will still be informed by Myanmar's geopolitical position, and
regardless of the party in power in Naypyidaw, China will continue to play a massive role in
the Myanmar capital.
Since 1962, Myanmar had systematically cut itself off, both economically and politically,
from the fraught Cold War environment in Southeast Asia. The country also faced ethnic and
communist insurgencies, some of which received direct support from Beijing.
Once the Cold War was over, Myanmar tried to turn outward once again, in spite of its need
to maintain tight control at home amid the ongoing unrest. But when the military government
nullified the country's elections in 1990, the West imposed economic sanctions, forcing it to
turn to China for survival. Between 1988 and 2013, 42 percent of Myanmar's total foreign
investment (some $33.67 billion) and 60 percent of its arms imports came from China. By the
early 2000s, some of Myanmar's leaders began to worry that they had become too reliant on
China and began searching for a solution. They eventually settled on a roadmap to democracy
that would gradually open Myanmar's political system to opposition parties primarily the
National League for Democracy to please the West and give Naypyidaw the opportunity to
seek partners other than China.
A Government Divided
The National League for Democracy's Nov. 8 victory was the logical conclusion of this
process and one for which Myanmar's military elite have long been planning. They erected a
constitutional hedge around the military's position and assets, securing 25 percent of the seats
in parliament, consolidating control of several key ministries and economic enterprises, and
ensuring that retired soldiers will be incorporated into the bureaucracy. Consequently, the
new government will need to strike an accord with the military if it hopes to transition into
power smoothly.
Beijing has also been planning for the transition. In June, China invited Suu Kyi to meet with
Prime Minister Li Keqiang and President Xi Jinping in Beijing. It also made a point to reach
out to other parties, meeting with the Union Solidarity and Development Party in April and,
in an unprecedented move, the powerful ethnic minority Arakan National Party in July.
After the vote, China's Ministry of Foreign Affairs was quick to issue its congratulations for
the orderly conduct of elections and to express hope for long-term stability and growth.
However, it omitted any reference to the National League for Democracy, in part because the
elections' outcome has complicated the power structure in Naypyidaw. Now the National
League for Democracy will control the parliament while the military controls the state's more
permanent structures, including the key ministries, economic assets and, of course, hard
power. At the same time, ethnic parties that won at the state level but not in the national
elections may cause trouble as they jockey for position. China will now have to deal with the
multiple power brokers contributing to Myanmar's policy decisions.
Choosing how to deal with ethnic minority insurgents will be a key point of contention in
Myanmar moving forward. For over half a century, the military has fought to regain territory
from and weaken these groups. Now the insurgents are demanding political concessions in
exchange for peace. Beijing, which has long supported the groups on its border (especially
the United Wa State Army and the Kachin Independence Army), has leveraged its influence
over them in the past to check Myanmar's attempts to move away from China. Indeed, the
groups' decision not to sign an Oct. 15 cease-fire deal with Naypyidaw was allegedly made at
Beijing's request. As China continues to bolster Myanmar's insurgencies, the National League
for Democracy will try to make political compromises with Beijing, but it will have to
contend with a military that wants to continue eroding the ethnic groups' position.
needed cash for the Myanmar government, which suffers from limited tax income because of
its weak institutions.
For the most part, China boasts more options in Myanmar and Southeast Asia as a whole
than it had in 2010. Beijing has managed to complete a pipeline connection running
through Myanmar to the Bay of Bengal, a project that is one small component of China's
broader strategy to diversify its energy inputs and pump directly to its poorly developed
interior. However, the accompanying highway project has yet to materialize, and a major
hydropower project, the Myitsone Dam, is on hiatus through the end of the year. Still, China
has plans to send connections into Thailand through Laos and Vietnam. Myanmar is one
option for China's energy schemes, but it is not the only one.
Beijing can afford to play the long game in Myanmar. It can even afford to lose out entirely
on any future business so long as it can retain its current projects. Whatever potential
reorientation Myanmar's new government may bring, China will leverage its significant
influence in the country to seek an advantage over the West, while the West will use
Myanmar in a limited way to balance against China in the Asia-Pacific.