Although China has thus far been able to keep the Burmese leaders in their hip pocket while heavily investing in Burma to further both its economic and strategic interests, the Chinese may be on a collision course with Burma’s general population.

The growing animosity of the Burmese people towards Chinese who have come to do business in Burma was highlighted by a clash in Mandalay’s jade market on June 27th.

A group of Chinese buyers allegedly agreed to buy a jade stone from a Burmese gems trader for a price of 4 million kyat (US $5,000), but when they returned to collect the item, the Burmese vendor had already sold it to another customer.

Yeni is news editor of the Irrawaddy magazine. He can be reached at [email protected].

Although police officers were quickly deployed and brought the situation under control, local Burmese residents who heard about the incident ratcheted up the tension by gathering at the jewelry store and singing the Burmese national anthem. As a result, the police were required to escort the Chinese traders out of the market via a squad car.

No charges were pressed against the Chinese for physical abuse, but the next day they were deported to Yunnan and reportedly banned from reentering Burma (although there were subsequent reports that they were seen at the recent annual gem expo in Naypyidaw).

Although in this instant the lit powder keg was diffused, the rapid and intense anger displayed by the local Burmese community towards the Chinese traders is indicative of the Burmese population’s simmering resentment of the growing Chinese influence over both the social and economic life inside their country.

The Chinese “invasion” of Burma is highly visible in Mandalay, Burma’s second largest city, as well as in Upper Burma, where growing numbers of Chinese migrants have poured in over the last 20 years, secured citizenship cards from corrupt Burmese officials and established successful businesses.

Today, the Chinese are believed to make up 30–40 percent of the 1 million people residing in Mandalay, the capital of Burma’s last kingdom and a hub of traditional Burmese culture and Buddhism.

While the Chinese are largely responsible for the economic revitalization of Mandalay’s downtown area—which has been rebuilt with apartment blocks, hotels and shopping malls—and for returning the city to its role as the trading hub connecting Lower Burma, Upper Burma, China and India, their dominance of the city center has pushed Mandalay’s Burmese residents out to the suburbs.

Ludu Daw Amar, who was Burma’s best-known female journalist and social critic before her death in April 2008, once told The Irrawaddy that Mandalay felt like "an undeclared colony of Yunnan," and the recognition of this by the local Burmese community has fueled the fire of anti-Chinese sentiment in the city. 

But the Chinese, whose business interests in Burma are supported by their national government, are not going away. As a growing powerhouse in the regional and global economy and geopolitical landscape, China has a clear strategy of using Burma to advance its interests in those areas.

China is now Burma's second-largest trading partner and biggest foreign investor. The latest official Chinese statistics reveal that the country’s investment in Burma reached $12.32 billion, primarily in oil, gas and hydroelectric ventures.

Experts have noted that Burma is an important part of China’s effort to revive its “Southwestern Silk Road,” running from Yunnan Province down to Burma, and then westward to Bangladesh, India and the Indian Ocean.

 One of the biggest Chinese projects is construction of pipelines that will annually bring 12 million tons of crude oil from Africa and the Middle East through one pipeline, and 12 billion cubic meters of Burmese gas through another, into China’s Yunnan Province from Burma’s western Arakanese coast. Chinese companies are also involved in an estimated 60 hydropower projects in Burma.

To first grease the wheels for these investments, and then protect them once they were underway, China has supported the Burmese generals with military and economic assistance since the 1988 military coup, while at the same time most Western governments have placed sanctions on the Burmese military and its leaders.

The Chinese support of the oppressive regime is no surprise—China has displayed its habit of coddling repressive regimes in countries such as Sudan, Iran, and Zimbabwe. In all of these countries as well as in Burma, China has stepped in with diplomatic protection, usually in exchange for access to local market for its goods or a stake in oil fields or other natural resources.

But while the Chinese businessmen and Burmese military leaders will make out like bandits from the activities of the unaccountable Chinese state-run resource companies, the local Burmese people are expected to see almost no profit, while at the same time suffering severe damage to their environment and being forced in many cases to relocate.

The easily understood resentment of the Burmese population has recently begun to result in violent attacks in northern Burma.

Burma Rivers Network, an advocacy group that represents communities affected by hydro-power dam projects being constructed by Chinese companies, said that much of the recent fighting in Kachin State has occurred near Chinese-backed dams that are opposed by local residents. In mid-June, the group said the dams are "fueling further conflict" and "not benefiting the people of Burma.”

But Burma as a whole depends heavily on China for everything from military hardware to consumer goods, and therefore even attacks by ethnic armed groups have not persuaded the Burmese government to either slow or halt the Chinese economic invasion of their region.

 During his first visit to Beijing after the formation of Burma’s “new” government, President Thein Sein signed a slew of financial pacts, including an agreement for a $763 million line of credit from the China Development Bank, as the two countries upgraded their ties to a "comprehensive strategic cooperation partnership."

Meanwhile, Chinese goods now account for about 80 percent of Burma's imports, ranging from electronic devices to cement, paint, flour, textiles, iron products and raw materials for soap, reported the Rangoon-based newspaper Biweekly Eleven.

Although greater Burmese dependence should logically result in greater Chinese influence, the Burmese regime has always in the past managed to fend off outside pressure, including that of China. Part of the Burmese leaders’ willingness and ability to remain semi-independent politically, although increasingly dependent economically, is cultural.

Dr Poon Kim Shee, a scholar in international relations, pointed out in a paper called “The Political Economy of China-Myanmar [Burma] Relations: Strategic and Economic Dimension,” that the Burmese military never completely trusted any external major power because Burmese leaders have deep seated feelings of “sinophobia as well as xenophobia.”

Burmese leaders “were socialized in a political culture of distrust,” he said, quoting the late China scholar Lucian Pye, who was a political scientist and sinologist who also worked in Burma and concluded that psychology was more important than economics in explaining development.

But at the top level, Burmese and Chinese government leaders still call each other “Paukphaw,” a Burmese word for fraternal, which reflects the close and cordial relationship between the two countries. The clash in Mandalay, however, reveals a more antagonistic relationship at the grass-roots level, and if the leaders of the two nations are not careful, there could be a repeat of the anti-Chinese riots of 1967.

This must be prevented, but the question is how to do so.

One way is for both the Burmese and Chinese governments to recognize that it is in their own best interests for them and the Chinese businesses to act responsibly towards the Burmese population and environment.

For a start, the globally emerging sense of corporate social responsibility—a practice that requires companies to address social and environmental considerations alongside the drive for profits, a concept that remains unfamiliar to most Chinese businesses—should be required of Chinese enterprises in Burma.

On the Burmese side, new labor laws should be created to counter the increasing labor discontent and abuses and secure the rights of workers. This would develop trust by creating a perception of flexibility that would be beneficial to both the Burmese hosts and the Chinese investors.

Like it or not, China’s influence both on the Burmese and global economy, energy supplies, environment and security are growing. The best way for Burma to positively assimilate this outside influence is to achieve greater efficiency in its economy, and the best way to do that is to undertake political and economic reform and accept democracy.

 Improvements in respect for human rights are also necessary, as they are tied to aid and investment. Also vital is the protection and training of Burma’s local work force, as the country’s most valuable resource is its human capital, i.e. the resources, talent and expertise of its workforce.

There is no quick fix, however, and what is most frightening for the people of Burma is that their leaders still lack the political will and policy to work with all stakeholders to rebuild the military-ruled failed state.

But the Chinese are coming, and if the Burmese leaders won’t retool themselves to fit the needs of their outside investors, big brother to the north may do it for them.