Emerging Fault Lines in Sino-Burmese Relations: The Kokang Incident

Publication: China Brief Volume: 9 Issue: 18

Armed conflict between Burma’s armed forces (known as the Tatmadaw) and the Kokang militia (known as the Myanmar National Democratic Alliance Army, MNDAA), along the Sino-Burmese border in late August brought into sharp focus the complex and sometimes testy relationship between Burma (Myanmar) and the People’s Republic of China (PRC). During the fighting the MNDAA—which has close links to the PRC—was routed, over 40 persons were killed, and tens of thousands of refugees streamed across the border into China. The incident underscored how the ruling junta, the State Peace and Development Council (SPDC), is capable of undertaking actions that challenge Beijing’s interests, belying characterizations of Burma as a client state of China.

Burma and China forged close relations in the late 1980s following international disapprobation and economic sanctions in the wake of their crackdowns on anti-government demonstrators in August 1988 and June 1989, respectively. On balance, both governments benefited greatly from tightening relations: the Burmese military regime was able to consolidate power largely thanks to arms, economic aid and the diplomatic recognition provided by the PRC; in return, China gained privileged access to Burma’s rich natural resources and access to the Indian Ocean (China Brief, February 7, 2007).

China’s economic penetration of Burma deepened in the first decade of the twenty-first century as the West tightened economic sanctions against the regime. Bilateral commerce reached $2.4 billion in 2007-2008, accounting for a quarter of all Burma’s foreign trade and a 60 per cent increase over what it was three years ago (Mizzima News, October 24, 2008). Chinese companies have invested heavily in the country’s manufacturing, mining, power generation and energy sectors, and in 2008-2009 China emerged as Burma’s number one investor, pumping $856 million into the country, or 87 percent of all foreign investments (Deutsche Presse-Agentur, July 14).

Close relations with Burma have also enabled China to improve its energy security situation. In March, after several years of negotiations, an agreement was signed to build twin oil and gas pipelines from the port of Kyaukphyu in Arakan State to Kunming, Yunnan Province. Construction of the 1,200 mile pipelines is scheduled to begin this month, with China footing the $2.5 billion bill. When completed in 2013, the pipelines will not only be used to transport oil and gas from Burma’s offshore energy fields to the PRC, but also from the Middle East and Africa, thereby bypassing the Strait of Malacca, which Chinese strategists view as a strategic vulnerability (China Brief, April 12, 2006).

Despite the obvious gains Burma’s junta has accrued from its ties to the Chinese government, the ruling generals—many of whom fought against the China-backed Communist Party of Burma (CPB) in the 1960s and 1970s—resented their dependence on Beijing and from the mid-1990s moved to lessen that dependence by joining ASEAN and courting other major powers such as India and Russia [1].

Notwithstanding the SPDC’s success in diversifying the country’s foreign relations, China remains Burma’s most important international partner. Moreover, despite the absence of genuine trust between the two governments, China and Burma have arrived at a mutually beneficial arrangement: Beijing provides diplomatic cover for the junta at the United Nations, soft loans and weapons supplies; in return it expects the SPDC to provide stability so Chinese companies can reap long-term returns on their considerable investments.

China has lived up to its side of the bargain. Twice in 2007 it wielded its veto at the United Nations Security Council (UNSC) to protect Burma in the face of international criticism (China Brief, October 17, 2007). More recently, in August, China used its diplomatic clout at the UNSC to dilute a statement of concern following the conviction of Aung San Su Kyi, leader of the opposition National League for Democracy (NLD), for violating the terms of her house arrest with the visit by John Yettaw—an American who swam across Inya Lake to her house—in May (Straits Times, August 15).

On the bilateral front, the PRC has shown increasing signs of frustration, however, with the SPDC for the slow pace of political reform and economic development, both of which it believes would defuse popular resentment against the regime and enhance stability. Beginning in 2004, Chinese leaders publicly called on the junta to move forward with the so-called “roadmap to democracy,” the framing of a new Constitution and national reconciliation. A new Constitution was framed in 2008, but Beijing has kept up pressure on the SPDC to maintain the momentum. In April, for instance, on the sidelines of the Baoa Forum in Hainan Province, Prime Minister Wen Jiabao told his Burmese counterpart Thein Shein that China hoped the SPDC could achieve “political stability, economic development and national reconciliation” (Xinhua News Agency, April 17). The detention of Ms. Suu Kyi in May was a major setback for national reconciliation, and prompted China’s Foreign Ministry to call for reconciliation, stability and development through “dialogue with all parties” (Xinhua News Agency, May 19). According to some reports, China has advised the junta to allow U.N. Special Envoy Ibrahim Gambari to play a more active role in fostering dialogue between the SPDC and Suu Kyi, advice the junta is loath to accept (Mizzima, January 20).

Burma’s Policy Toward Ceasefire Groups Generates Tensions

Another source of instability, and one that puts China in a difficult position and threatens to undermine its economic interests in Burma, is the SPDC’s policy toward ethnic armies in the north and northeast of the country.

During the 1960s and 1970s, the PRC provided the BCP with arms and money to sustain an insurgency against the central government. In the 1980s, however, Beijing phased out its material support to the BCP in the interests of promoting greater economic interaction between the two countries, especially along the 1,300-mile border where fighting had stymied trade. In 1989 the BCP fractured along ethnic lines, and China was able to use its long-standing connections with local leaders to facilitate ceasefire agreements between the Burmese government and ethnic groups such as the Wa, Shan, Kachin, and Kokang. Seventeen ceasefire agreements were reached, (rising to 27 in the 1990s): in return for ending hostilities against the junta, the ceasefire groups were allowed to retain control over their territories, armed militias and lucrative businesses, including gems, lumber and narcotics production. The ceasefires ushered in two decades of uneasy peace.

According to the new Constitution, the Tatmadaw has sole responsibility for national defense. In April, therefore, the SPDC demanded that the ceasefire groups disarm or transform their armies into smaller, lightly armed border guard militias under the command of the Tatmadaw. While some of the smaller ceasefire groups have accepted the government’s demand, the largest ones such as the Wa, Kachin, and Shan have rejected it for fear of losing their autonomy and business interests.

The most important ceasefire group to reject the SPDC’s demand is the United Wa State Army (UWSA) which has an estimated 20,000 men under arms. Formerly the shock troops of the BCP, China has maintained close links to the UWSA over the past two decades. The U.S. government labeled the UWSA a narcotic trafficking organization on May 29, 2003. Chinese businessmen have extensive commercial interests in the Wa region (both legal and illegal) and the area provides a conduit into Burma proper: according to some estimates, one to two million Chinese citizens have taken up residency in the country and now dominate the commercial life of Upper Burma centered on Mandalay. Over the years, China has ensured a steady supply of weapons to the UWSA, including shoulder fired surface to air missiles, artillery and anti-aircraft guns (Jane’s Intelligence Review, March 2008). Moreover, Beijing has been able to use its influence with UWSA leaders to redirect the flow of illegal narcotics produced in the Wa area, including methamphetamines, away from China and into Thailand, Laos and Cambodia [2]. Nevertheless, narcotics produced in Burma continue to find their way into southwest China, fueling a major drug addiction problem there.

Determined to consolidate control over the entire country before elections next year, the SPDC has refused to take no for an answer. In June the Tatmadaw attacked and captured bases belonging to the Karen National Liberation Army along the Thai border. In early August the government shifted attention to the MNDAA in Kokang, an ethnically Chinese region in the northern Shan State bordering China. As with the UWSA, the Kokang have maintained close links with China since the dissolution of the BCP in 1989. On August 24, the Tatmadaw routed the 1,000-strong MNDAA and occupied the capital Laogai. The conflict sparked an exodus of 37,000 refugees—mainly Kokang Chinese but also PRC nationals—into Nansen county, Yunnan (Xinhua News Agency, September 4). Among the refuges were 700 MNDAA fighters who were disarmed by the Chinese authorities (The Irrawaddy, September 1). During the fighting, shells fired by the Tatmadaw landed on the Chinese side of the border, killing one person (Xinhua News Agency, August 30). Beijing issued a sharp rebuke to the SPDC, calling on it to immediately restore stability along the border and, unprecedentedly, to “protect the safety and legal rights of Chinese citizens in Myanmar” (Global Times, August 29). According to both governments the situation has stabilized and the Chinese authorities have been encouraging the refugees to return. According to Chinese official estimates, a total of 9,304 Kokang inhabitants had returned to Laogai (Xinhua News Agency, September 4). Reports suggest, however, that the majority of refugees are reluctant to return home for fear of retribution (The Irrawaddy, September 4). Naypyidaw justified the attacks on the MNDAA as part of a crackdown on illegal narcotics and arms production. Yet, the assault on the Kokang militia can be seen as a warning signal to the UWSA that the SPDC is committed to bringing the border areas under its control before 2010. According to some observers, the junta has been inspired by the Sri Lankan government’s military victory over Tamil separatists earlier this year (Straits Times, August 30). An attack on the UWSA, however, would be a risky undertaking. Although the Tatmadaw is numerically superior, the UWSA is well-armed and knows the territory intimately. Even if the Tatmadaw was able to seize the Wa capital of Panghsang, UWSA fighters could simply melt away into the mountains and forests from where they would be able to mount a lengthy insurgency against government forces.

A protracted and bloody conflict along the border is an unsettling prospect for the PRC for four reasons. First, fighting would severely disrupt bilateral trade, much of which is conducted at the border, and hence the economic development of China’s landlocked southwest provinces. Second, as demonstrated by the Kokang incident, conflict would inevitably trigger an outpouring of refugees into China that the authorities would be forced to feed and house. Third, construction of the Kyaukphyu-Kunming pipelines, which China considers a strategic necessity, may have to be suspended as the proposed route passes close to Wa controlled areas. Fourth, the Wa would likely increase narcotics production to finance operations against the Tatmadaw, which could fuel drug addition in the PRC.

With so much at stake, Chinese officials are undoubtedly working frantically behind the scenes to broker an agreement between the SPDC and UWSA. Such a deal would almost certainly involve China providing financial sweeteners to both sides. If China fails to pull off a deal, a return to hostilities cannot be ruled out. In the final analysis, however, Beijing’s relationship with the SPDC is more highly valued than its ties to the Wa, meaning China might have to cut its proxy loose, and possibly close the border in the event of hostilities.

Instability along the frontier is not the only contentious issue in Sino-Burmese relations. The growing nexus between Burma and North Korea, including allegations that Pyongyang is assisting the junta to acquire nuclear weapons capabilities, has generated a lot of negative publicity for the PRC because of its close links to both governments (Sydney Morning Herald, August 1). If there is any substance to the allegations—and thus far no concrete evidence has been produced—a Burmese nuclear weapons program would pose a major foreign policy headache for Beijing, as it would not want to see two nuclear armed pariah states—North Korea and Burma—along its borders.

China’s increasing frustration with the Burmese government has prompted speculation that Beijing may be hedging its bets by opening a tentative dialogue with the NLD (The Irrawaddy, July 15). Yet, contacts between Chinese diplomats and the Burmese opposition seem to have been initiated by the NLD rather than Beijing, and a dramatic shift in support by China from the SPDC to Ms Suu Kyi’s party is highly improbable: the NLD is a spent force in Burmese politics while the SPDC’s power remains firmly entrenched. Similarly, talk of Naypyidaw hedging its bets with Beijing by exploring a possible rapprochement with the United States seem overdrawn, though the SPDC might be using the prospect of more amicable ties with Washington to pressurize Beijing into using its influence with the ceasefire groups to accept the junta’s demands.

The Kokang Incident has laid bare the fault lines in Sino-Burmese relations. Negotiations aimed to avert renewed conflict along the border will test the limits of these relations over the coming months.


1. Jurgen Haacke, Myanmar’s Foreign Policy: Domestic influences and international implications, IISS Adelphi Paper No. 381 (Oxford: Routledge, 2006).
2. Donald M. Seekins, “Myanmar: Secret Talks and Political Paralysis” in Daljit Singh and Anthony L. Smith (eds.), Southeast Asian Affairs 2002 (Singapore: ISEAS, 2002), p. 208.