Myanmar’s Kokang rebels threaten trade with China

Myanmar’s Kokang rebels threaten trade with China

A growing ethnic insurgency along Myanmar’s border with China is presenting a host of problems for the country. Ethnic Chinese Kokang rebels have resumed their conflict in the country’s northeast, straining local industry, Myanmar’s reform efforts, and ties with China.

The conflict in the northeastern Shan state’s Kokang region was reignited in February, with the return of 84-year-old insurgent leader Pheung Kya-shin (Peng Jiasheng) from years of exile in China. On February 9th, Pheung’s group, the Myanmar National Democratic Alliance Army (MNDAA), clashed with the Myanmar army near the Chinese border, signalling the resumption of hostilities after six years of relative calm.

Much like the rest of the state, northeast Shan is rich in timber, precious minerals, coal, and metals. Myanmar was previously estimated to have had four-fifths of the world’s teak wood, much of it located in Shan. Massive deforestation and smuggling to China, often carried out by the national army, reduced Myanmar’s forests by as much as 18%  from 1990-2005.

A teak export ban took effect in 2013, but opportunistic generals and the MNDAA may look to this resource to fuel their campaigns. Teak is coveted by the luxury boat industry, which provides a lucrative incentive to do so.

Concerns about President Thein Sein’s stalled reforms are likely only to be compounded by the renewed violence. Myanmar’s central government has long grappled with several ethnic insurgencies, but has prioritized bringing an end to 60 years of internal violence through a nationwide ceasefire agreement (NCA). The draft NCA was signed on March 31.

While efforts to realize such an ambitious project have been broadly successful, there is considerable pressure to finalize the NCA before nationwide elections later this year. A reinvigorated insurgency by the MNDAA presents a direct challenge to this undertaking, particularly as Kokang representatives were notably absent from the draft ceasefire signing.

Relationship with China is key

Myanmar’s complex relationship with China is one of biggest areas at risk from renewed MNDAA activity.

As with many countries in Southeast Asia, China is Myanmar’s largest and most important trading partner. Northeast Shan state is a crucial economic corridor between the two countries. The colonial-era “Burma Road” linking Mandalay to the border town of Mu Se cuts across the northern part of Shan, with a significant portion of two-way trade pass along this route.

Kokang rebels have historically been active near Mu Se, engaging in resource, drug, and arms smuggling. Should the insurgency continue to grow, there exists the possibility of a disruption of trade along this route. Given the vital importance of Chinese investment in Myanmar, it is difficult to see how the Kokang conflict could remain a local issue if fighting severely impacts bilateral trade.

The bilateral relationship is already in the process of being redefined in light of the country’s reforms, and the Kokang insurgency is creating a host of complicating factors.

Suspicions of Chinese support for the MNDAA, as well as allegations of Chinese mercenaries crossing the border to fight are straining official ties. These reports are not entirely unfounded – in early March, Chinese General Huang Xing was charged with leaking state secrets to the MNDAA. Pheung’s interview in the Global Times, a Chinese state-owned media outlet, adds fuel to claims that the Kokang rebels have sympathizers in the Chinese bureaucracy.

Since fighting began in February, some 40,000 people have been displaced, with a large number seeking refuge in China. New reports of cross-border bombings, including one in March that left four Chinese farmers dead, mean that Beijing is under unusually strong pressure to act. The Chinese government is likely to lean on the Burmese government to bring an end to the fighting.

Myanmar’s long history of putting down ethnic insurgencies means that the government has considerable experience in this field. However, deepening economic linkages with China and the fact that violence is now spilling across the border puts Naypyidaw in a bind.

The government will have to tread carefully to avoid antagonising China while ensuring that this renewed conflict does not torpedo the comprehensive nation-wide ceasefire agreement.

Categories: Asia Pacific, Security

About Author

Daniel Bodirsky

Daniel was previously a Program Editor and Asia-Pacific Analyst at the NATO Council of Canada, the Canadian representative at the Atlantic Treaty Association. Daniel is an MSc candidate in Strategic Studies at the S. Rajaratnam School of International Studies in Singapore.