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China's Cousin-Cousin Relations With Myanmar

Chinese Vice President Xi Jinping visited Myanmar on December 19 and 20,2009, during the course of a four-nation tour covering Japan, South Korea, Myanmar and Cambodia. He went to Cambodia from Myanmar. Xi, who undertook the visit at the invitation of Vice Senior-General Maung Aye, Vice-Chairman of the State Peace and Development Council (SPDC), called on SPDC Chairman Senior-General Than Shwe in Nay Pyi Taw.

2.Xi is believed to be in the run to succeed President Hu Jintao, when he completes his tenure. His visit to Myanmar was significant for three reasons.

3.Firstly, through the importance accorded to the visit, the Myanmar military junta sought to reassure Beijing that despite recent moves for increased contacts between the junta and the Obama administration, the junta continued to give priority to Myanmar’s relations with China. Improved relations with the US will not be at the expense of the relations with China. Xi as well as his Myanmar hosts described the relations between the two countries as “baobo relationship”, which has been interpreted by local analysts as cousin-cousin relationship. The next door cousin is more important than the distant US—that was the message of the Junta to the Obama Administration.

4.Secondly, China reiterated its determination to go ahead with the construction of the parallel oil and gas pipelines between the Arakan area of Myanmar and Yunnan despite opposition from the local residents and insecurity along the route of the pipelines. China has accorded greater priority to the Arakan-Yunnan pipeline than to the Gwadar-Xinjiang pipeline proposed by the Pakistan Government. The Chinese Government has greater confidence in the ability of the Myanmar Army to ensure the security of the parallel pipelines passing through Myanmar territory than in the ability of the Pakistan Government to ensure the security of any pipeline passing through Pakistani territory. Moreover, with the recent commissioning of the first stage of the pipeline connecting Xinjiang with the Central Asian Republics, the need for a Gwadar-Xinjiang pipeline is not that urgent. Whereas the Arakan-Yunnan pipelines will have the dual purpose of transporting oil brought by Chinese tankers from West Asia and Africa thereby reducing the present Chinese dependence on the Malacca Strait and transporting the gas procured locally in Arakan by Chinese companies, any pipeline from Gwadar will have to be exclusively for transporting oil/gas from West Asia. Pakistan does not have any oil or gas to sell to China.

5.Thirdly, the visit underlined the concerns of Beijing over the anti-Chinese riots in the Kokang area of the Shan State in August,2009, when thousands of Chinese traders, who had illegally settled down in the Kokang area, had to flee to Yunnan following attacks on them. The attacks on the “Chinese cousins” —- and the action of the Myanmar Army in closing its eyes to these attacks—-were a rude shock to Beijing.

6. In an editorial published on December 22,2009, the Government-owned “ New Light of Myanmar” said that Xi’s visit strengthened the mutual friendship and the bilateral cooperation between the two countries. It added: “The peoples of the two countries have mutual respect and deep friendship as they have been dealing with each other like brothers for a long time. With reciprocal goodwill visits by the leaders of the two nations, bilateral relations and cooperation are thriving.”

7.It was stated by official spokesmen that Xi discussed with Maung Aye matters relating to the further improvement of bilateral relations and cooperation in the agriculture, transport, energy, electricity and communications sectors. The two countries signed five agreements on the development of trade, economy, the transport infrastructure, technological cooperation and purchase of machinery; seven financial agreements, three agreements on hydroelectric power; and one agreement on the energy sector and the oil and natural gas pipelines.

8. Among the MoUs signed during the visit was an agreement to allow the China National Petroleum Corporation (CNPC) exclusive rights to build and operate a Myanmar-China Crude Oil Pipeline. According to a press release issued by the CNPC on December 21, the agreement grants the CNPC rights relating to tax concessions, transport of crude oil through Myanmar, customs clearance and road operations.

9.The press release added: “The agreement also stipulates that the Myanmar Government shall ensure the company’s ownership and exclusionary (exclusive?) right to the pipeline and guarantee the safety of the pipeline.” 10.The pipeline will be constructed and run by a subsidiary of the the CNPC called the South-East Asia Crude Oil Pipeline Ltd. Earlier in June, 2009, the CNPC and the Myanmar Government had signed an MOU, agreeing that the CNPC would be responsible for the design, construction, and operation of the pipeline.

11.The CNPC started building a crude oil port on October 31 as part of the 771-kilometre pipeline project, which will start from the Maday Island in the Arakan state on the western coast of Myanmar and run through the Arakan State, the Magway division, the Mandalay division and the Shan State, and will finally enter Ruili in China’s Yunnan Province. Some reports have estimated the length of the pipeline as 1100 kms. This probably includes its length from Ruili to Kunming too.

12.The natural gas pipeline is proposed to be extended from Ruili to Kunming and then to the Guizhou province and the Guangxi Zhuang Autonomous Region, covering a total distance of 2806 kms.

13. Earlier, in March 2009, the two Governments had signed an agreement which provided for the construction of a parallel oil-gas pipelines starting from the Kyaukpru port in the Arakan State. The construction is scheduled to be completed by 2013. According to the March,2009, agreement, a gas collection terminal and a port for oil tankers will be constructed on the Maday Island.

14. The Chinese state-owned CNPC will hold a 50.9-percent share in partnership with the Myanmar Oil and Gas Enterprise (MOGE) in the company which will construct and run the pipelines. The project is expected to yield $29 billion over 30 years to the Myanmar military junta. Initially, the gas to be transported by the gas pipeline will be bought from the Shwe Gas consortium, which has already struck gas in the blocks for exploration allotted to it by the Myanmar Government, but it hopes to supplement it with gas found by Chinese companies in the blocks allotted to them by the Myanmar Government.

15.The Daewoo International from South Korea, holds 51 percent of the shares in the Shwe Gas Consortium, the Oil and Natural Gas Corporation (ONGC) of India 17 percent and the Gas Authority of India Limited (GAIL), 8.5 percent. 16. This will be the third oil/gas pipeline being developed by China—the other two being the oil and gas pipelines from the Central Asian Republics the first stage of which was recently commissioned by President Hu Jintao and the proposed Sino-Russian oil pipeline. Pakistan is interested in making the Chinese agree to the construction of a gas pipeline from Gwadar to Xinjiang. Talks in this regard between the two countries are still in the preliminary stage. Bejing has so far not shown much enthusiasm for this project due to the deteriorating security situation in Balochistan.

17. The importance of maintaining peace and stability in the areas near the Sino-Myanmar border was repeatedly emphasized by the leaders of the two countries during their interactions. The junta sought to reassure the visiting Chinese leader of its sincerity and determination in this regard. Beijing’s suspicion that despite the repeatedly professed friendship of the junta for China, Myanmar Army units were complicit in the attacks on the Chinese in the Kokang area remains strong.

18. According to a statement posted on the web site of the Chinese Foreign Ministry on December 21,2009, Than Shwe assured Xi that Myanmar will work with China to preserve peace and stability in the border areas. He reportedly added that he understood that China and Myanmar shared a long border and maintaining peace and stability on the border was extremely important to both the countries.

19. China’s State-owned Xinhua news agency reported that Xi said China wanted stability on the Sino-Myanmar border. He reportedly said: “China believes the Myanmar side would settle the relevant problems through peaceful ways such as dialogues and consultation so as to guarantee the stability in its border area with China.”

20. The Xinhua reported that Than Shwe assured Xi that his Government would continue to work with Beijing to ensure peace and development in the border areas. It would demonstrate good neighborly friendship and cooperation, he said. 21. Interestingly, the Myanmar-Government owned “The New Light of Myanmar” remained silent on these exchanges between Than Shwe and Xi. It merely said that the two leaders exchanged views on “matters to which two neighboring countries should pay serious attention.”

22. The August attacks on the illegal Chinese traders in the Kokang capital Laogai were triggered off by the refusal of anti-junta Kokang ethnic groups such as the United Wa State Army to disband themselves and join a border force formed by the Myanmar Army unless some of their conditions regarding the command and control of the proposed border force were met. The Myanmar Army seems to have suspected that these groups were being instigated by the illegal Chinese settlers from Yunnan living in the Kokang area not to accept the order of the Army. These dissident groups continue to defy the Army which has given them time till December 31,2009, to disband themselves and join the border force of the Army. It is not clear whether Xi pressed Than Shwe to withdraw this order and, if so, whether Than Shwe agreed to it. If the junta insists on enforcing its order after January 1, one could expect more violence. The fact that the Chinese are going ahead with the construction of the pipelines without worrying about the disturbed situation in the Shan State gives rise to the suspicion that some kind of an assurance might have been conveyed to Xi in this regard by Than Shwe. A possible face-saving for both will be to keep the order in force, but not to enforce it.

23. Lt-Gen Ai Husheng of the Chinese Chengdu Military Region that oversees Sino-Myanmar border security paid a six-day visit to Myanmar from December 5 to 10,2009, and met, among others, Maj-Gen Kyaw Phyoe, of the Triangle Region Command, Lt-Gen Min Aung Hlaing, Commander of Shan and Kayah states, and Maj-Gen Aung Than Tut, of the Northeastern Region Command.

( The writer, Mr B.Raman, is Additional Secretary (retd), Cabinet Secretariat, Govt. of India, New Delhi, and, presently, Director, Institute For Topical Studies, Chennai. He is also associated with the Chennai Centre For China Studies. E-mail: )

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