Burma Road: China’s path to influence in Myanmar

MUSE, Myanmar — The only land route from China to the Burmese heartland follows the old Burma Road and continues on to the British colonial capital of Mandalay.

On a map, the route south from here on the Chinese border to the Burmese town of Lashio looks fairly direct. But on the ground, slow-moving trucks packed with rice for the kitchens of China’s Yunnan Province and smuggled motorbikes bound for Yangon negotiate stunning mountain switchbacks. On one of the few navigable routes in and out of the country, it is as if these twists and turns record the competing pulls of the foreign powers tied up in its history.

It’s along this 717-mile route that the wave of Chinese goods, people, and money that has washed over Myanmar for the last two decades has poured in. And it’s this wave of capital that in recent years has convinced the country’s ruling generals to embark on a march toward constitutional democracy — part of their bid to engage the West and avoid becoming a vassal of Beijing. In short, democracy is a market play for the Burmese government and its generals as much as it is a quest for freedom for the pro-democracy movement embodied by the Nobel laureate Daw Aung San Suu Kyi.

For China, Burma offers precious natural resources, fertile land, and an outlet for the country’s exports and bulging population. For the United States, the country is an integral part of its “Look East” policy, which aims to strengthen ties in the region and contain the rising superpower of China.

Thant Myint-U, adviser to the newly elected President Thein Sein and author of the acclaimed book “Where India Meets China,” believes Burma is at a “critical moment in its history” and one in which it is destined to play a much more important role in global economic and political matters.

And, he argues, nowhere is the evidence of China’s influence in this geopolitical equation more visible than along the Burma Road, where China is deeply invested in a hydroelectric dam and a natural gas pipeline and where its economic, cultural and political influence can be felt every mile of the way.

For most of time, Burma has stood apart from the rest of the world, separated first by geography then by a self-imposed isolationism that came with 60 years of military rule. With the world descending into World War II, the British and Americans built the road to supply Chiang Kai-shek’s nationalists against China’s Japanese occupiers. In 1942, Japan would seize Burma from the British and briefly occupy it, too. Later, Chinese nationalists would go on to use northern Burma as a base for harassing Mao’s Communist government for years.

Along the road today, Chinese domination achieved under Burma’s military dictatorship looks irreversible. But Western investors are eagerly eyeing one of the last frontier economies, and American icons like GE and Coke have already set up shop in Yangon.

As the country continues its fragile transition to democracy, the hearts and minds of the Burmese people will determine the balance of these powers’ competing interests. From Muse on the Chinese border to Mandalay in the heartland, Burmese up and down the road expressed a wariness of the empire next door. They expressed, too, a cautious hope that American engagement will help lift their long oppressed and poor country. The trucks keep coming from the East, but the Burmese people are looking West.

As Burmese analyst and author Thant Myint-U put it, for many years, “China followed policies that created a very negative image in this country. If China had done things differently, it would be thought of differently. But now Burma will have to think about what’s best for Burma going and try its best not to harbor emotions … It just needs to think clearly about the road ahead.”

Passing Over Their Heads

In Burma, even when the Chinese are out of sight, it is hard to put them out of mind. The Burmese are reminded every time the lights go out. In a country rich in energy resources, power outages are a fact of life, and the hum of generators is audible all along the road.

In part, that’s because Burma’s isolated rulers sold off the country’s natural wealth at rock-bottom prices to Beijing. A pair of controversial pipelines that will deliver gas and oil to China are nearing completion, and an estimated 90 percent of the power from the country’s hydroelectric dams is transferred to China as well. So the Burmese must depend on the inefficient gas generators, imported, of course, down the Burma Road from China.

In a wooden hut on a hillside about 35 miles from Mandalay, Tin Mar, a farmer, said she is angry she lives without electric power. Her hut sits six miles from the 790-megawatt power plant at the Yeywa Dam, but the costs of hooking up a small hamlet like hers, with just a handful of residents, is prohibitively high. The 54-year-old uses candles and a wood-burning stove, her hut’s battery-powered LED lights one of its few signs of modernity.

Many Burmese don’t have official title to the land on which they live and farm, making it easy for the government to seize tracts as it pleases. GlobalPost reported in October on the plight of an entire village forcibly relocated for the project. Land seizures for the pipelines also remain a resonant issue in the country. Tin Mar’s banana orchard was seized to build a small golf course for the dam’s Chinese operators who live in a walled compound and work behind a checkpoint.

The golf course provides a handful of jobs for locals, but not for Tin Mar. To make up for the lost income from bananas, the 54-year-old now raises livestock. As a small black dog yapped under her bed, two chickens wandered around her dirt floor.

Yeywa Dam’s construction was led by Chinese state firms. Most of the power will pass through Mandalay on its way up to China’s Yunnan Province. Imported Chinese workers completed most of the construction and continue to operate the dam. Local Burmese landed some menial work out the project, but many also lost their land.

The power lines from the dam run directly over Tin Mar’s roof.

Business, Not Friendship

In recent years, Burma’s generals began worrying they were getting as raw a deal from their Chinese partnership as villagers like Tin Mar.

Burma’s incipient democratic shift is as much about balancing China by inviting in new friends in the West as it is about anything else.

On the stretch of the Burma Road approaching the city of Muse (pronounced MOO-say) on the Chinese border, the gates have literally been thrown open. The ban on foreigners in the region was lifted in May, and the old checkpoint in the village of Yay Pu lay abandoned.

But the place remains as Chinese as it is Burmese, with little hint that Westerners are now free to enter. The city of 200,000 is hooked up to China’s superior electrical and telecommunications infrastructure, so Facebook and Twitter are both blocked. Chinese concerns dominate the local economy, and signs everywhere are bilingual. An American has never stepped foot in most businesses here.

Chinese businessmen in Muse make themselves scarce around town. More than one Burmese suggested that this is because many of them are involved in smuggling. The one Chinese merchant who would talk to a reporter, the 43-year-old proprietor of an electronics shop, refused to give a name.

He laughed at the notion that impending American competition would be cause for concern. The businessman had more pressing problems. Speaking through two translators, he explained in Mandarin that the price of the cell phones he sold was in free fall. As part of its economic liberalization, the Burmese government had loosened up import licenses, and cheap handsets from Thailand and Singapore have flooded Muse. The price of a basic phone has fallen from $30 a year ago to about half that.

“So what?” the businessman asked, if Americans one day move into Muse. American businesses don’t sell the low-cost, and low-quality, Chinese goods on offer in his little shop.

But the Financial Times reported in June that the brass in Beijing has been asking a very different question: “Who lost Burma?” The same ubiquitous Chinese presence that makes that question seem absurd in Muse also brings out here the Burmese sentiment that makes it apt.

Like most Burmese asked point-blank about the impact of Chinese influence on their country, Ye Aung Hein answered indirectly. “It’s good for the Chinese, for sure,” he said laughing outside his joint DVD and motorcycle repair shop. When the multi-talented 27-year-old isn’t running the shop, he’s playing semi-professional soccer. In relating his experience playing on both sides of the border, he offered a window onto Burmese dissatisfaction with their powerful neighbors.

Even when it comes to leisure, the Chinese are all business, Ye Aung Hein said. When he plays for a Chinese team in the next town over, his teammates pick him up at the border and drop him right off again after the game.

When he plays with other Burmese, a post-game drink-up with both teams is obligatory. “If there’s no party, we won’t play,” said.

“I cannot avoid doing business with the Chinese,” said Ye Aung Hein, “but for friendship, I don’t like them.”

If Ye Aung Hein could have any country on the other side of Muse’s border crossing, it would be Japan. Japanese goods are high-quality, he said, and the Burmese seem acutely aware that they can only afford low-quality Chinese goods. His second choice would be the United States, he said, because he admires the country’s democratic process, freedom of thought, and freedom of expression.

It is a feeling shared by Dr. Maung Maung Aye, the only independent writer in Muse, as well as his many fellow countrymen who also expressed optimism, justified or not, that falling in with the West will ultimately be good for the Burmese people.

“I wish to be influenced by Americans, because the Americans use democratic policy,” Maung Maung Aye said.

China’s Reach

The commerce and investment that truck through Muse drive China’s presence well beyond the borderlands to Lashio, the precise starting point of the original Burma Road, and into Mandalay and beyond.

It is in Lashio that the motorbike smugglers hand over their rides and collect $20-30 for the 5-hour drive from Muse.

In this part of the country, many native Burmese are ethnically Chinese. This group accounts for much of Burma’s merchant class and they tend to take a softer view of their foreign relatives. Those Chinese businessmen who do not buy themselves Burmese ID cards from corrupt officials often enter into joint ventures with the ethnic Chinese residents of Lashio. And as many critics point out, they take most of the profit back over the border.

In Lashio, the mat at the entrance to the Golden Hill Hotel welcomed guests in English and in Chinese. Burmese was left off. In the market, just about anything made in a factory came from China — cookware, toys, simple electronics.

Two hours down the road is Hsipaw, a former seat of power for the region’s native Shan people that today is too insignificant to attract much of a Chinese presence. Most shops and restaurants, as elsewhere along the road, are housed in dated, low-ceilinged buildings.

But even here, the most modern and prosperous shop is the Chinese-owned Yee Shin Electronics, next door to Yee Shin Guesthouse. The goods housed inside the glass storefront come from China. Out front, the Chinese solar panels that have flooded world markets leaned against the façade.

A couple Tata solar panels from India were mixed in, as if to give a perfunctory nod to the country whose presence in Burma currently comes in a distant second, though it, too, is looking eagerly at its smaller neighbor.

Further down the road in Maymyo, the last vestiges of the Burma Road’s original overseers, the British, are fading. The town, because of its cool climate, had been the favored holiday destination for the British in Burma. But the handsome colonial brick buildings that had distinguished the town’s architecture have grown less prominent. The small downtown of a decade ago has swelled with new Chinese-style construction.

A few miles away stood the legendary guest house known as Candacraig, a 1906 attempt to import an English country home to this Burmese hill town. Fittingly, the dilapidated house was rumored to be haunted by ghosts.

Even the weather that made Maymyo a center of British life in Burma has changed. According to Win Myint, who has lived in the town since 1964, it’s gotten hotter as buildings have gone up and trees have come down.

When pressed to consider the British legacy in Burma, the ethnically Chinese 78-year-old came up with “good plumbing.” After a moment of consideration, he added “good roads.”

The Road to Mandalay

Burma’s second city, Mandalay, has long been a catch basin for the waves of Chinese heading south into the country. There has been a Chinese presence here since the days when it served as the site of Burma’s royal court, but a more recent influx of Chinese citizens has altered the character of the city — and priced out many locals — provoking resentment.

One Mandalay-based newspaper editor, San Yu, called the city a “second Yunnan in Burma.”

That feeling may be more common in the ritzier quarters of the city, where Chinese merchants tend to live and work. Down on the banks of the Irrawaddy River, the lifeline of the Burmese heartland, the Chinese presence has not changed life much for the poor, day laborers unloading the raw materials of Mandalay’s economy. But the name emblazoned on the white sacks being unloaded from one ship by a team of shirtless Burmese, “Great Wall Sugar Factory,” did say a lot about who stands atop that economy.

At the same time, the specter of American capitalism is much more real here than at points north. Already, Coca-Cola is looking to complement its new bottling plant in Yangon with a second in Mandalay. A Korean factory is going up here to export clothing to the US.

In March, the American firm ACO Investment Group signed a memorandum of understanding with the regional government to build two solar power plants in the area. Though this power will stay in the country, San Yu, the editor, expressed skepticism that it would do much for Mandalay residents. Instead, he said he expects it will power new businesses.

San Yu did not see the coming industrial growth as a spectacular boon to the many farmers who will remain very poor even after they trade in their plowshares for punch cards.

And if Western engagement enriches a few while trampling the rest, American interests should not expect to benefit from any ingrained Sinophobia. “We hate unfairness, not the Chinese,” said San Yu.

Nonetheless, most Burmese are eager for contact with the United States. The Chinese have wised up quickly to this, and in Mandalay they have begun turning their eyes towards hearts and minds.

Smart Power

Xinzhi Books is a quiet, air-conditioned oasis from the hot and crowded streets of Mandalay. On a Sunday morning in June, four days after its grand opening, the shop was empty. The Chinese-language bookshop caters to the tastes of Mandalay’s affluent class of Chinese merchants — both Burmese citizens and transplants from mainland China — selling an assortment of consumer goods like basketballs, soccer balls and ping-pong paddles that are of higher quality than can be found in most of the rest of the country.

But the store serves another purpose — to spread Chinese culture in Burma. It sells Chinese-Burmese dictionaries, Chinese-language textbooks, and simple books with side-by-side text in both languages.

In a tea room on the shop’s top floor, the branch manager produced a glossy report on Xinzhi’s international march. The report features photos of Chinese and local dignitaries attending Xinzhi openings in Cambodia and Laos, and praise the store has garnered from the Chinese government as an “important project of national cultural export.” The roughly 50 Xinzhi bookshops are concentrated in Yunnan, but that is meant to change.

The report’s last page offers a reminder of the worldwide contest for influence between China and the United States in which Mandalay will be just the next battlefield.

On it is a world map with a snapshot of Xinzhi’s master plan for expansion, with lines emanating from China to planned shops in every corner of the globe. China, at the center of the map, is massive. North America is tiny and relegated to the upper right-hand corner — the United States a shade smaller than Burma.

But inside the bookshop, the United States loomed large. Thet Thet Aung, a 24-year-old clerk of Chinese extraction, said she hopes one day to work at a Xinzhi shop in the US, because it would allow her to improve her English.

“If you know more languages, it’s like having more weapons when you go into a war,” she said. Despite the martial language, she said her dream is to use English to travel the world, a sign that the Sino-American rivalry may prove gentler than great power contests of the past.

American Capital

Before the United States could move materiel up the original Burma Road, it had to land at Yangon. And today, it is Yangon, the country’s biggest and most cosmopolitan city, where American business has made its beachhead. In addition to Coke and GE, The Big 4 accounting firms are here, and Bain and McKinsey have been making forays.

After Burma’s failed 1988 democratic uprising, Chris Tun fled the country as a student dissident. Last year, he returned as an American businessman.

In between, the Berlin Wall fell, and much of the world reached the consensus that the best way to be a humanitarian was to become a capitalist.

That suits Tun, who remembers waiting in line as a child at the village depot for his family’s monthly allowance of two bars of soap, under the country’s disastrous “Burmese Way to Socialism.”

“We hated socialism, so we loved capitalism,” said Tun, 42, who is now the Myanmar director for global accounting firm Deloitte in its Southeast Asia division, over breakfast next door at the American embassy.

He had pledged to himself that he would return to Burma one day to help the country, and said that when the government made it clear that student dissidents were welcome, he had no excuse not to come back.

Tun’s view of American-style capitalism was tempered in the wake of the 2008 financial crisis, when he built a system to help the FDIC better monitor banks’ balance sheets.

“No one system is perfect in this world,” said Tun, who stressed he was speaking on behalf of himself, and not his firm. “Everything has fraud. Humans can always find a way to fail.”

But Tun, who became an American citizen in 2010, said that Western companies are subject to legal and public pressures that make them good corporate citizens. He said he’s confident that their legacy here will be positive and that the Burmese people will benefit from access to outside technology, education, and infrastructure (even in Yangon, Internet access is, in a word, terrible).

In Tun’s view, though, the most important consequence of Western investment may be less direct. In 2011, after, President Thein Sein halted construction of a controversial dam that would send its power to Yunnan, Beijing began to reconsider its domineering attitude towards the country. The lifting of western sanctions has accelerated that shift further, Tun said.

Now, the Chinese are beginning to take seriously the social and environmental impact of their Burmese projects and pay attention to their image here. “They’re learning overnight,” said Tun. “And maybe they’ll even do it better.”

From Yangon, the prospects for Burmese prosperity no longer look so dependent on a single mountain road. And that, both political observers and the people along the road believe, could help the long-oppressed Burmese finally put themselves in the driver’s seat.

With reporting from Aye Thiri Sein.