China’s stability would be strengthened if Burma were economically stable and prosperous. Thus it should increase efforts to work for the economic and political changes in Burma that would allow the country to receive international assistance.

The modernization of China initiated by Deng Xiaoping involved a shift in the conception of national power from a narrow military perspective to Comprehensive National Power, or CNP, currently seen as consisting of the “eight capabilities” of domestic economic activities, science and technology, foreign economic activities, social development, military, government regulation and control, foreign affairs and natural resources.

Recent public statements by Chinese leaders on international relations stress regional and global cooperation in the context of (economic) globalization and (political) multi-polarization. They also say that regional approaches are needed to tackle non-traditional security, or NTS, problems such as drug trafficking, other criminal activities and the trans-border spread of diseases such as SARS and HIV/AIDS. China sees its CNP as ever more dependent on collaboration with other countries and is involved in a large number of multilateral groupings and agreements—the World Trade Organization, or WTO, Asia-Pacific Economic Cooperation, the Asian Regional Forum, Asean (Association of Southeast Asian Nations) plus 3—and preparation for an Asian Free Trade Area (China-Asean).

Regional Disparity in China

Regional economic disparity between China’s rich eastern seaboard and the poor inland provinces like Yunnan is a major problem that has the potential to destabilize the country. For several years, and particularly since the launch of the Great Western Development Strategy (xibu da kaifa) in January 2000, Beijing and local governments in China have put considerable effort into reducing this disparity. In 2000, for instance, US $45.5 billion in development funds was poured into projects to develop this area. The undertaking has seen only limited success so far, partly because of the weakness of the Burmese economy.

THE TRUCK STOP in Jiegong, on the China-Burma border, opposite Muse.

A major plank of China’s strategy for boosting its southwestern provinces’ fortunes is by integrating their economies with those of South and Southeast Asia through such structures as the Greater Mekong Subregion, or GMS. As an example, as well as exporting electricity to the eastern seaboard, Yunnan is to be wired into the planned Greater Mekong Subregion power grid.

For this planned integration to succeed there must be fast transport links and efficient bureaucratic infrastructure to facilitate trade with regional markets. This has become more urgent since China acceded to the WTO—competition from foreign goods following the scheduled reduction of tariffs and relaxation of non-tariff barriers is likely to damage Yunnan’s industrial base (reduced tariffs on cigarettes or leaf tobacco, for instance, could hurt its tobacco sector). In addition, unemployment could increase, with the restructuring of the state-owned enterprises which are the largest employers in the urban southwest.

China Needs a Prosperous Burma

The regional economic integration that China needs to help boost its southwestern provinces would be considerably enhanced if the Burmese economy were vigorous rather than the basket-case it is currently. Burma could buy more Chinese exports and provide fast transport networks to link the west of China with South Asian markets.  Foreign investment in Yunnan and the rest of the region would also rise. Such a scenario would be of huge benefit to all three nations (increased trade with India would also help assuage Sino-Indian security tensions).

Due to Burma’s moribund economy, China’s trade with the country is extremely limited. Total legal trade for 2003 stood at about $1 billion, of which about half was border trade with Yunnan (by contrast, China’s trade with Asean as a whole was $78.25 billion in 2003). A great deal of the existing exports from Burma, moreover, are ecologically and therefore economically unsustainable—for example the massive export to Yunnan of Burmese teak is devastating large tracts of Kachin State.

Such extractive activities, while earning short-term profits for some industries in Yunnan, do not assist the sustainable economic development of this or other regions of Burma and do not augur well for long-term economic or political relations between China and Burma.

Burma’s Weak Economy

There are many reasons for Burma’s weak economy. These include the generals’ lack of understanding of economics, inadequate banking and taxation systems, the absence of the rule of law, military monopolies in key sectors of the economy, an unfriendly investment climate, corruption, economic sanctions, and inadequate infrastructure.

On this last point—which impacts directly on economic relations with China—Burma, with its dilapidated rail and road systems, and inability to access international funding to upgrade them, constitutes a black hole in the fabric of the various Asian Development Bank-funded development programs in the region comprising Yunnan, Southeast Asia and South Asia.

These include the Greater Mekong Subregion and various other regional triangles and quadrangles and wider projects such as the Trans-Asian Railway and the Asian Highway, designed to speed up the transport of goods within Asia and between Asia and Europe. There are a number of Track-2 projects to promote these networks that Burma takes part in, including the Kunming Initiative made up of Bangladesh, China, India and Burma and the Ganga-Mekong project; but so far these have not progressed beyond the talking stage. In the meantime, Burma has been exporting its troubles to its neighbors.

Non-traditional Security Problems

The non-traditional security problems entering China from Burma (including a crime wave led by drug-trafficking, more than a million heroin addicts and the spread of HIV/AIDS) will not be substantially reduced without political reform in Rangoon and an economic revival in northern Burma.

The bulk of Burmese heroin is consumed in Asia, primarily in China. Addiction rates are climbing as heroin becomes cheaper and China more urbanized. “The domestic consumption of narcotics is growing, and the kinds of drugs that are consumed have diversified,” said Luo Feng, vice minister of Public Security, quoted in the San Jose Mercury News on March 4 this year.

Luo claimed that expanding problems with narcotics abuse impose “heavy losses” to China’s economy amounting to billions of dollars a year and that crime rates climb with drug use. In an annual report, the country’s National Narcotics Control Commission said the number of drug addicts rose from about 900,000 people in 2002 to 1.05 million people in 2003, 740,000 of them heroin users.

“In China, 10 million people may be infected with HIV by 2010 unless effective action is urgently taken,” according to the UNAIDS Global Report. According to papers delivered at the recent Bangkok conference on HIV/AIDS, “HIV/AIDS was identified in China in 1989 in intravenous drug-users in Ruili … bordering Myanmar [Burma]. Ruili has Yunnan’s highest HIV prevalence [province with highest prevalence in China]” and “the epidemic in Yunnan is being driven by injecting drug users.”

The principal vector of HIV/AIDS transmission is needles shared by intravenous drug users, as documented along the drug trafficking routes from the Burmese border to Kunming and beyond.

These are some of the trans-border issues whose causes cannot be claimed to be the “internal affairs” of Burma, and which cannot be solved unilaterally but must be combated at the regional level. The Chinese have tried tackling the symptoms—helping Burma with crop substitution programs, training Burma’s police in drug control—but they are aware that these only touch the surface and that the drug economy of Burma’s northeast is unlikely to decline markedly until the underlying issues are dealt with.

To be effective, crop-substitution programs, for instance, require a substantial road-building effort to allow the alternative crops to be taken to market, within the large-scale economic development schemes needed to address the poverty most of the poppy farmers endure. In addition, the narco-lords (most have non-hostility arrangements with Rangoon) are unlikely to abandon their careers unless they are challenged by a political leadership working with authentic local representatives, based on political agreements which meet local needs and aspirations.

This requires a political process that is well beyond the capacity of Burma’s military government, as was witnessed from the proceedings at the generals’ re-launched “National Convention” which they hoped would complete the “basic elements” for a new constitution, but which failed to win national or international credibility and has been adjourned to an unspecified date.

Political Conditions for International Assistance

Burma desperately needs international development aid to begin improving the general economy and infrastructure and to tackle the underlying economic causes of the NTS problems it is exporting to China, Thailand and other countries. Such assistance is not available under present conditions—from the Asian Development Bank, or ADB, for instance (apart from funds channeled indirectly through GMS programs—see “The Multilateral Banks and Burma” by Yuki Akimoto, The Irrawaddy, Vol. 12, No. 4, April 2004).

According to the ADB website: “No loan has been provided to Myanmar since 1986 and no technical assistance since 1987. All 32 loans approved prior to 1986 were closed by end-1998.” The ADB and other multilateral and bilateral assistance was cut or substantially reduced after the suppression of the democracy movement in 1988 and will not be resumed significantly until the institutions are given permission by their masters (including the US and EU) to fund programs in Burma.

This permission will not be granted until there is a genuine, substantial and irreversible process of democratization, national reconciliation and economic reform which involves the main opposition National League for Democracy and the non-Burman ethnic groups as well as the Burmese military.

It would therefore be in China’s interests to increase its efforts to work with the Burmese military, the UN, Asean and other relevant national, regional and international actors to encourage such a process.

David Arnott is the Secretary of the Burma Peace Foundation and Librarian of the Online Burma/Myanmar Library at http://www.burmalibrary.org