Journal of Current
Southeast Asian Affairs
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Sharing the Spoils:
Winners and Losers in
the Belt and Road
Initiative in Myanmar
SiuSue Mark1 , Indra Overland2, and Roman Vakulchuk2
This article studies the impact of China’s Belt and Road Initiative (BRI) on eco-
nomic actors in Myanmar. It hypothesizes that the BRI has strong transformative
potential, because Chinese projects are likely to transform Myanmar’s economy on
different scales and inﬂuence the allocation of economic beneﬁts and losses for dif-
ferent actors. The study identiﬁes economic actors in Myanmar who are likely to be
most affected by BRI projects. It also discusses how BRI- related investments could
affect the country’s complex conﬂict dynamics. The article concludes with policy
recommendations for decision makers in Myanmar, China, and the international
community for mitigating the BRI’s possible negative impacts. The analysis draws on
secondary sources and primary data collection in the form of interviews with key
actors in Hsipaw, Lashio, and Yangon, involved with and informed about the BRI in
Myanmar at the local, regional, and national levels.
Manuscript received 17 June 2020; accepted 2 September 2020
Myanmar, Belt and Road Initiative, China, economic impact, conﬂict dynamics
Journal of Current
Southeast Asian Affairs
2020, Vol. 39(3) 381–404
© The Author(s) 2020
Article reuse guidelines:
sagepub. com/ journals- permissions
DOI: 10. 1177/ 1868 1034 20962116
journals. sagepub. com/ home/ saa
1Political Economist, USA
2Norwegian Institute of International Affairs (NUPI), Oslo, Norway
Email: sm1169@ caa. columbia. edu
Journal of Current Southeast Asian Affairs 39(3)382
China’s Belt and Road Initiative (BRI), rst announced by President Xi Jinping in
2013, seeks to strengthen infrastructure connectivity between China, the rest of Asia,
Europe, and Africa. The BRI is considered to play a central role in Myanmar’s eco-
nomic development (Myint, 2019; Sun, 2017). This article argues that the ocial
rhetoric has primarily emphasised positive aspects of the BRI in Myanmar and masks
the complications that the BRI may bring to Myanmar’s prospects for sustainable and
equitable development. The rhetoric also does not reect the deep- seated scepticism
of the majority of Myanmar people towards Chinese investments. At this juncture in
Myanmar’s immature democracy, which most scholars consider to be a hybrid regime
with authoritarian and democratic traits (Bünte et al., 2019; Egreteau, 2016), this
issue merits closer investigation. In this article, we therefore examine the range of
risks that the BRI poses to Myanmar’s prospects for economic development and dura-
Since 2013, the BRI and its global impacts have increasingly drawn attention, garner-
ing extensive coverage by the mass media, policy makers, and scholars (e.g. Beeson,
2018; Carrai et al., 2020; Flint and Zhu, 2019; Jetin, 2018; Kamel, 2018; Vakulchuk and
Overland, 2019). A systematic search for academic literature on the BRI from 2013 to
2020, conducted on 5 May 2020 via CrossRef, Scopus, and Web of Science, resulted in
610 publications. Out of these, only nine focus on the BRI in Myanmar (e.g. Hameiri
et al., 2018; Jones and Zeng, 2019; Myint, 2019). By comparison, reports by interna-
tional organisations on the topic are more numerous (e.g. Helsingen et al., 2017; Sun,
2019; Transnational Institute [TNI], 2019a) and media coverage is yet more extensive.
This article studies how the BRI has already transformed and may further transform
the allocation of economic benets and losses among actors in Myanmar. We argue that
BRI projects are likely to drastically change the economies of participating countries,
including Myanmar, reallocating economic benets and losses unequally among dier-
ent types of actors. Unchecked, this may exacerbate a governance regime that pays insuf-
cient attention to inequality in its single- minded pursuit of economic growth (McCarthy,
To date, only a few studies have focused on prospective gains and losses from the
BRI. The World Bank (2019) published a report analysing potential risks and opportuni-
ties of BRI transport corridors at the macro level. This and similar studies model future
scenarios and consider BRI gains from a national perspective: total trade gains, import–
export dynamics, income gains, reduced transport costs, poverty reduction, and others.
Similarly, BRI losses are framed through countries’ indebtedness, scal risks, environ-
mental threats, and others (e.g. Fernholz, 2018). Some studies examine more local eects
of BRI projects. According to the World Bank (2019), BRI- related infrastructure may
have had disproportionate eects on wages in the local communities around Almaty, the
largest city in Kazakhstan.
To the best of our knowledge, no analysis has been carried out of the BRI’s systemic
actual and projected impact on Myanmar’s various population groups. Only Helsingen
et al. (2017) note that BRI projects may negatively aect 24 million people in Myanmar
Mark et al. 383
living in the BRI corridors, as river- related infrastructure development, deforestation,
and changing land use can induce ooding, sedimentation, and water pollution.
While the BRI projects in Myanmar are still in their early stages, we have identied
some trends that are already recognisable on the ground. BRI projects are most likely to
benet major economic actors who are ethnically Chinese or have Chinese partners,
have networks with political and business elites in China, and are favoured by the
Myanmar government. Several ethnic armed organisations (EAOs) have also indicated
their interest in building BRI partnerships, but only those with sucient autonomy will
likely be able to realise these ambitions. As for small- and medium- sized actors, traders
tend to be positive towards the BRI with the expectation that it will improve the terms of
trade between Myanmar and China. Yet, local communities will bear the brunt of the
BRI’s social and environmental costs unless they are able to mount strong resistance and
receive adequate support from the state.
In the next section we present our analytical approach, and after that we describe the
methodology. Following this, we contextualise the Chinese presence in Myanmar. Then,
we empirically outline the impacts of BRI on dierent types of actors and their interac-
tions with each other. In the Discussion section we summarise our ndings and discuss
the winners and losers. Finally, we make three concrete recommendations for policy-
makers in Myanmar, China, and the international community that can help them ensure
the equitable and sustainable implementation of the BRI.
BRI projects can transform the structure of local economies and thus disproportionally
reallocate economic benets and losses among dierent actors and industries. We argue
that while the overall impact of the BRI on Myanmar’s total economic growth (in terms
of gross domestic product) could be positive, its redistributive economic eects may
vary signicantly and further undermine the well- being of some societal groups.
Moreover, these eects could also intensify existing tensions and conicts in Myanmar.
Some scholars argue that many BRI projects are not economically rational, and can
increase negative externalities (Jones and Zeng, 2019), while others argue that subna-
tional actors pursue a “rapacious form of development” that fuels insecurity in Myanmar’s
borderlands (Hameiri et al., 2018).
A source of inspiration for our analysis is the experience of the European Union (EU)
and its neighbours. The awarding of EU association agreements to countries that are
seeking to join the EU can have a major eect on those countries (Monastiriotis et al.,
2014; Petrakos et al., 2016). While candidate countries are likely to experience overall
economic growth after the signing of association agreements, regions within these coun-
tries are likely to experience uneven growth and reallocation of economic benets. EU
association agreements provide for large- scale change of industrial growth patterns
within a country. We can draw a parallel here with the redistributive eects that BRI
infrastructure projects may bring to participating states, including Myanmar.
Journal of Current Southeast Asian Affairs 39(3)384
We identify Burmese economic players who have been aected by BRI projects or
are likely to be aected in the future. Given the paucity of ocial statistics available on
economic interaction between China and Myanmar, and their limited reliability, our
analysis is based on qualitative data from interviews of respondents, supported by sec-
ondary data. Our units of analysis are the groups of economic actors most likely to be
impacted by the BRI in Myanmar: local communities, traders, small- and medium- sized
enterprises (SMEs), and large companies. Given the limited research in this area, our
study can provide new insights into the impact of the BRI on Myanmar from an actor-
The article draws on a mix of primary and secondary data. In order to elicit expert opin-
ion about the impact of the BRI on dierent economic actors and segments of society in
Myanmar, nineteen semi- structured interviews were carried out in January and February
2020 in Yangon, Hsipaw, and Lashio in northern Shan State (Table 1).
Since the topic under investigation is highly sensitive, it was an advantage that we
already had personal and professional networks upon which we could draw. Because we
were able to build rapport with the respondents while assuring their condentiality,
respondents openly discussed their views on this topic.
Interviews sought to extract information about risks and opportunities related to the
BRI; key Myanmar economic players involved in the BRI, both large actors and SMEs;
actual and expected economic and development impacts of the BRI; and actual and
expected impacts on local communities and on the peace process in Myanmar. All inter-
views were conducted in English, except for three that were conducted in Burmese with
an interpreter. Primary data were supplemented by secondary research and media cover-
age of recent developments.
Table 1. Interviewees by Sector and Organisation.
Ofﬁcial sources • Myanmar ministry closely involved with the BRI
• The Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI)
• BRI project staff (project prioritised by the Myanmar and Chinese governments)
• A former Shan State parliamentarian
• An executive member of an EAO
Business • Agriculture traders and trade associations in Lashio and Hsipaw
• A national food retail company impacted by trade with China
Civil society • Representatives of local civil society organisations in Lashio and Yangon
Experts • Myanmar and foreign analysts focused on China–Myanmar relations
Note: BRI: Belt and Road Initiative.
Mark et al. 385
What is a BRI Project?
According to the Government of the People’s Republic of China (2016), the BRI covers
ve broad areas: (1) free trade and investment, (2) policy co- ordination, (3) infrastruc-
ture connectivity, (4) nancial integration, and (5) closer ties between people and insti-
tutions. Given the broadness of this framework, almost any project between companies
or governments in any sector could be included. The lack of consistent standards or a
singular body to co- ordinate BRI projects leads to weak governance of these projects
globally (Transnational Institute [TNI], 2019a). Relatedly, a major challenge to discuss-
ing the BRI is the lack of clarity about which projects are part of the BRI. Many projects
that had a Memorandum of Understanding (MoU) signed before the China–Myanmar
Economic Corridor (CMEC) Agreement was signed in September 2018 were later
rebranded as BRI projects to raise their standing and attract nancial support.
We draw on the approach of Aminjonov et al. (2019), who in their assessment of the
impact of the BRI on Central Asia dene a “BRI project” as (1) being publicly reported
as a BRI project, (2) launched after the rst announcement of the BRI in Central Asia in
2013, (3) fully or partially nanced by the BRI nancial institutions, and (4) imple-
mented in either a bilateral or multi- lateral format. Similarly, the current article consid-
ers investments approved by the Myanmar Investment Commission after November
2017, when the BRI was rst introduced by Chinese Foreign Minister Wang Yi (Sun,
2017), and fully or partially nanced by the BRI nancial institutions to be part of the
BRI. Given the expansiveness and ambiguity of the BRI’s scope, our empirical research
focuses on projects prioritised by the government of Myanmar at the time the research
was conducted. According to the Union Minister for Planning and Finance, nine out of
forty projects proposed by China have been prioritised by Myanmar (Phyo, 2018). These
include the four large projects in Table 2.
On his January 2020 visit to Myanmar, President Xi Jinping focused on the New
Yangon City Project, the border economic zones, and the Kyaukphyu Special Economic
Zone (SEZ) (Xinhua, 2020), which is the most advanced as it already has a framework
and shareholder agreement in place.
Table 2. Four Major BRI Projects in Myanmar.
BRI project Status
1. Kyaukphyu Deep Seaport and Special Economic Zone Framework agreement signed in
2. The Muse–Mandalay Railway Project MoU signed in 2020
3. Three border economic zones in Shan and Kachin States MoU for the Muse- Ruili zone
signed in 2020
4. The New Yangon City Development Project Letter of Intent signed in 2020
Note: BRI: Belt and Road Initiative; MoU: Memorandum of Understanding.
Journal of Current Southeast Asian Affairs 39(3)386
The Context: Myanmar in the BRI and the BRI in Myanmar
For several reasons, Myanmar has a pivotal role in the BRI. First is its unique geograph-
ical location. China has many contiguous neighbours, and some of them are landlocked
(e.g. Kyrgyzstan, Mongolia, and Nepal). The heart of the BRI is transport and mobility;
every landlocked country adds additional layers of risk represented by the other coun-
tries on which onward transport depends. Second, some other countries that have gured
prominently in the BRI are not landlocked but are also located much further away from
China (e.g. Sri Lanka, where there have been extensive discussions regarding the BRI).
While the assets of these countries might be nice for China to access, Myanmar assets
are more of a necessity. This was made clear by Xi Jinping’s visit to Myanmar in January
2020, the rst by a Chinese head of state in nearly two decades, to cement the BRI
(Xinhua, 2020). A Myanmar expert on China explained that “Myanmar is a huge missing
link for BRI. China–Pakistan Economic Corridor (CPEC) is for the western part of
China, while China–Myanmar Economic Corridor (CMEC) is for the southeast part of
While Myanmar is important for the BRI, the BRI also has profound implications for
Myanmar. The size of the BRI, its intricate web of capital and political elites, and the
way it has brought China a more central role in the peace process have signicant impli-
cations for the trajectory of economic development as well as peace and security issues
in the country. Additionally, Myanmar’s isolation during the military dictatorship and its
alienation from the West over the Rohingya issue leave it open to Chinese inuence.
Currently, China holds a greater share of Myanmar’s foreign debt than does any other
country, valued at USD 4 billion (40 per cent of total Myanmar foreign debt), while
bilateral trade was worth USD 16.8 billion in 2019 (Zhou, 2020).
While Myanmar saw a dip in Chinese investments after President Thein Sein sus-
pended the Myitsone Dam in September 2011, the international condemnation heaped
on Myanmar following the ethnic cleansing of the Rohingya population created an ideal
context for China’s re- engagement through the BRI in 2017. In September 2018, the two
governments signed a framework agreement to implement the BRI, centred on the
1700- kilometre CMEC. Soon afterwards, the Myanmar government established a BRI
steering committee. The CMEC starts in China’s Yunnan Province and goes through
Myanmar’s major cities before reaching the western coast at the Kyaukphyu SEZ. This
transportation corridor is often considered the linchpin of the BRI in Myanmar.
On the Myanmar side, an ocial from a ministry heavily involved with the BRI
explained in one of our interviews that the government has been setting up a mechanism
to vet projects.2 The ocial explained that the government developed the Myanmar
Sustainable Development Plan (MSDP) to ensure better projects and is scrutinising proj-
ects to determine their nancial feasibility and relevance for the MSDP. Once a project
is included in the project bank, it is considered for funding either via public or private–
public channels or in the form of ocial development assistance (ODA). Despite these
plans, analysts tracking these developments are concerned that no central body is eec-
tively managing the aggregate impact of the BRI on the country and fear that projects
will be prioritised in response to lobbying from investors.3 One of our interviewees, who
Mark et al. 387
is the head of a company that imports food from China, worried that Myanmar will be
pressured to deliver and that it might not have time to carry out the projects.4 An aca-
demic we interviewed also summarised a number of weaknesses that may reduce
Myanmar’s ability to benet from the BRI investments:
If you look at the legal structure, we are weak to protect labour and environment. Institutional
structure, checks and balances are not balanced. Corruption is rampant. There are a lot of
loopholes so we can easily bribe. Infrastructure, there are still many electricity cuts, despite
being better. Road connection is still poor. The labour pool is still unskilled and labour
eciency is low.5
There is also a looming threat of a debt trap. The example of Sri Lanka caused
Myanmar to signicantly reduce Kyaukphyu’s budget from USD 7.3 billion to 1.3 bil-
lion (Emont and Myo, 2018).6 However, the former manager of a BRI project whom we
interviewed argued that the rhetoric about the debt trap might be overblown, and should
not be seen as something that China forces upon Myanmar but something that can be
proactively managed. According to her,
[t]he ocials in Sri Lanka knew the terms of the loans and that the costs of the loans are
very high, but they pocketed a lot too. They don’t speak about this experience, but they just
blame China. If you know there is a debt trap, you don’t continue with the project. Both
countries have an equal role to play – it isn’t a condition imposed by one side.7
Despite these risks, there are important reasons for the Myanmar government to back
the BRI. In the November 2020 elections, it is in the interest of the National League for
Democracy (NLD) government to prove that it can create economic growth. Since after
the Rohingya crisis erupted in late 2017, the country has seen lower foreign direct invest-
ment inows compared to the period from 2014 to 2017.8 A former Shan State parlia-
mentarian whom we interviewed said, “[i]f BRI succeeds, it will bring more jobs to
people. They will earn more and spend more in local markets. If BRI succeeds, they will
say that the NLD can manage the country.”9 While Myanmar indicated a wish to diver-
sify its investment portfolio after its democratic opening in 2012, the West is sometimes
seen as attaching too many conditions to its investments. Statements made by state coun-
sellor Aung San Suu Kyi in reference to the Myitsone Dam in 2019 indicated a change
of tone in how she views the country’s needs to balance prot and sustainability, thus
favouring investment from China. She said that while the environment should be pro-
tected, it should not come to the point of hindering development (Nanda, 2019).
As of June 2020, the actual progress of the BRI in Myanmar has been slow and faces
numerous diculties. By comparison, within two years of the launch of CPEC, fty- one
agreements totalling more than USD 46 billion were signed between China and Pakistan,
and by May 2019, eleven projects were completed with eleven more underway (Sun,
2019). Since the CMEC framework was signed in 2018 (with the exception of the three
border economic zones and Kyaukphyu SEZ, which had an earlier start), none of the
Journal of Current Southeast Asian Affairs 39(3)388
prioritised projects have materialised. The slow progress is due to a highly volatile and
It came as no surprise that the introduction of the BRI coincided with China’s more
proactive role in the peace process. China’s role became more pronounced in 2017, when
it became a broker between the military and members of the Federal Political Negotiation
Consultative Committee (FPNCC).10 Soon afterwards, the Tatmadaw announced a
ceasere in the north, which lasted from December 2018 to August 2019. In that time,
the feasibility study for the Muse–Mandalay railroad was completed.
Impacts on Large Economic Actors
Since 2000, Chinese state- owned enterprises (SOEs) have dominated infrastructure
projects in Myanmar, particularly hydropower dams and transport infrastructure.
However, since the military government adopted a market economy in 1988 to reverse
the economic decline after decades of isolation and weak management, infrastructure
projects could only be carried out in joint ventures with Myanmar investors, mainly
large “family- owned diversied conglomerates that dominate the construction sector”
(Overseas Development Institute (ODI), 2017). Under state- mediated capitalism, where
the military controlled the country’s transition from a modied form of socialism,
favoured conglomerates were given joint- venture deals with foreign investors, military
conglomerates and SOEs, import–export licenses, and land concessions (Jones, 2014).
Having used their networks to leverage licenses, contracts, and subsidies, these con-
glomerates accumulated wealth in the 1990s and 2000s, and they continued to do so after
the country’s economic liberalisation from 2012 onwards.
There is a strong indication that this way of doing business is alive and well in the
current phase of economic development under the BRI umbrella. Given the scarcity of
information on the specics of BRI projects, only those with a certain level of net wealth,
political connections, and information can become the “rst movers.” When asked
which prominent companies are involved in the BRI, a Union of Myanmar Federation of
Chambers of Commerce and Industry (UMFCCI) executive named Asia World, Shwe
Taung, and the companies owned by Serge Pun. All these companies have a track record
of working with Chinese investments. For example, Asia World was the former domestic
partner of the Chinese SOE China Railway Group for the Kyaukphyu–Kunming railway
before the plan was cancelled in 2014 (Transnational Institute [TNI], 2019a). A former
BRI project manager said, “[y]ou can be a Myanmar business, but if you know how to
do business with China, you will have an advantage. These companies are owned by
ethnic Chinese or have a Chinese partner.”11
Despite the fact that wealthy individuals donate to Suu Kyi’s campaign and are said
to inuence members of parliament and the government (Tun, 2013), the NLD govern-
ment has brandished an anti- corruption campaign in an attempt to be seen as transparent.
It formed the Anti- Corruption Commission in 2014 in accordance with Order 6/2014 of
the President’s Oce. Regarding crony companies, a UMFCCI executive said:
Mark et al. 389
From the government side, they are allergic to them. Many are scared to associate with
them. Spectators will think that the new political leaders are collaborating with the old guys.
They are trying to be transparent and cautious in doing things.12
For this reason, the NLD government via the president’s oce issued a directive in 2017
that requires all major projects over 2 billion Myanmar kyats (MMK) to go through a com-
petitive tender, as a high- level ocial in a ministry closely involved with the BRI explained.13
For example, the website of the New Yangon Development Corporation announced that it
will use the “Swiss Challenge” model to carry out the tender.14 This means that one com-
pany would be selected to conduct a feasibility study, but other companies would be able to
compete with it in the project implementation phase. A former BRI project manager
explained the problem with this:
Before the tender was launched, they [China and Myanmar] signed the Letter of Agreement.
You can’t brand a project a BRI and then open it for tender. This means that the project will
already benet from Chinese government loans and only Chinese companies can compete.
From the Myanmar side, they want to make it look competitive, so they will make it com-
petitive. People know.15
The situation is somewhat dierent in the northern ethnic states where EAOs control
more territory. As with larger CMEC projects, the investment climate in the ethnic states
also favours investors who are Sino- Burmese. However, ethnic minority investors also
have a comparative advantage in these areas. An executive of a large cement company
that conducts border trade in the north said:
In the north, there are more chances for ethnic nationalities and Chinese–Myanmar busi-
nesses to compete. The situation is not safe for Bamar businesses because EAOs do not
trust them. It is much easier for ethnic and Chinese- Myanmar businesses to operate in this
For example, in the Muse Border Economic Zone, one of the major investors is the
New Starlight Group, a company headed by a Chinese- Myanmar individual who estab-
lished the business in 1999 as a trading and logistics company and then moved into
construction in 2006.17 According to its website, the company will invest in the Muse
Central Business District, a public–private partnership project with the Shan State gov-
ernment spanning more than 294 acres on which hotels, shopping centres, and commer-
cial and residential buildings will be built.
In the northern ethnic states, there are dierences, however, in which economic actors
are prioritised for larger BRI projects negotiated at the union level, such as the Muse
Border Trade Zone, as compared to projects negotiated at the subnational level. Projects
negotiated at the union level are often granted to larger economic actors with connec-
tions to higher levels of the military and government, while those negotiated at the state
level often favour economic actors with operations based in the Myanmar states. A case
Journal of Current Southeast Asian Affairs 39(3)390
in point is the new Namjin Industrial Zone in Kachin State, located 25 kilometres from
Myitkyina and spanning about 5000 acres. An MoU for the industrial zone was signed
between the Kachin State government and the Yunnan Tengchong Heng Yong Investment
Company on 8 May 2018, but the consortium will also include companies based in
Kachin State (Lwin, 2019b). The domestic companies are headed by Kachin people or
people of other nationalities who have lived in the state for a long period, have an estab-
lished presence in the state, and were selected for these projects without tender by the
Kachin State government.18
There is also an emergent trend that distinguishes the current wave of investments
under the BRI from earlier ones. According to a military analyst, since 2014, China has
been making a concerted eort to bring all major EAOs into its economic sphere of
inuence, not only in the north where it has traditionally held sway, but also in the south-
east along the Thai border.19 He explained that groups wanting Chinese investments tend
to be in the north, including most members of the Northern Alliance, which have tradi-
tionally had close military ties with the Chinese government.
The interviewees also pointed out that some EAOs have signicant autonomy to
make their own deals with China, which allows China to wield greater inuence in the
north.20 For example, the United Wa State Party signed an MoU with the Pu’er city gov-
ernment in Yunnan to develop a new industrial zone.21 With the Wa as a model, some of
the smaller northern groups may want to ensure that they also benet from BRI invest-
ments in the same way.22 On 15 August 2019, the Arakan Army, Ta’ang National
Liberation Army (TNLA), and Myanmar National Democratic Alliance Army blew up
bridges along the main route to the most important trade hubs on the northern border in
Muse and Chinshwehaw (Mathieson, 2019). Several analysts, including an executive
member of an EAO party to the ceasere, concluded that the northern groups wanted to
make it clear that excluding them from these deals would backre.23 After the attacks,
the TNLA made a statement saying that China needs to negotiate with the EAOs in the
CMEC (Weng, 2019).
The military analyst further explained that, since 2014, China has been more aggres-
sive in approaching the groups on the Thai border as well. In December 2016, an MoU
to implement a multi- component project was signed between the Karen National Union
(KNU)- owned company Noble Prince, the private Sun and Rainbow Company, and the
Chinese SOE Power China. The project includes the construction of a dam on the
Tanintharyi River and the Mae Tha Mee Khee Industrial Estate Project, for which a fea-
sibility study is planned to be carried out in 2020 (Lwin, 2020a). In addition, members
of the KNU have apparently been in discussion with Chinese investors for the Huanya
International City Project in Myawaddy. However, there has been little transparency,
while preliminary research has indicated the illicit nature of some Chinese sources of
funding (United States Institute of Peace, 2020).
Most BRI projects are planned with little public involvement or awareness, but proj-
ects involving armed groups, including the Tatmadaw- aligned Border Guard Forces,
seem to be shrouded in even more secrecy. Hameiri et al. (2018) argue that the extractive
cross- border economic activities carried out by subnational Chinese companies
Mark et al. 391
operating in and through Yunnan province have worsened security and fuelled conict in
northern Myanmar. A China analyst argues that although the Chinese rhetoric empha-
sises the need to raise the development level of ethnic minority communities, this is not
occurring in practice. Based on interviews with the Chinese authorities, the analyst said
that because the provincial authorities (e.g. those of Ruili in Dehong Prefecture on the
border to Myanmar) prioritise their personal promotions and local revenue streams, their
main objective is to bring in investments regardless of the source. Additionally, since a
majority of the CMEC negotiations are centralised at the union level, with little involve-
ment of ethnic minorities, the narrative of a benevolent development model focused on
ethnic minorities does not match reality.24 However, analysts informed about the situa-
tion generally believe that China does not want the level of conict to spiral to a point
where it hinders business. A military analyst we interviewed succinctly summarised
China’s overall strategy towards Myanmar: “China plays a risky game. They are always
promoting the EAOs. That approach will never bring stability. They never seriously push
the Northern groups to sign […] China wants Myanmar politically weak, economically
reliant and functionally stable to some extent.”25
It appears that the Chinese government and private investors may be pursuing a strat-
egy of economic co- optation of ethnic elites, a strategy also used by the Tatmadaw after
the rst round of ceaseres in the 1990s to make them “both attractive and relatively
durable” (Sherman, 2003: 226). In the short term, EAO leaders may benet materially.
However, the history of the Kachin Independence Organisation (KIO) over its seventeen-
year ceasere indicates that co- optation can lead to heavy natural resources exploitation
(Woods, 2011) while weakening the organisation’s legitimacy and fomenting divisive
internal politics (McCarthy and Farrelly, 2020). These dynamics eventually forced the
replacement of many leaders and a resurgence of conict when the KIO’s bilateral cease-
re agreement broke down in 2011.
Impact on Small and Medium Economic Actors
In addition to the nine major infrastructure projects signed at the second BRI Forum, an
MOU was signed by China’s Ministry of Commerce and Myanmar’s Ministry of
Investment and Foreign Economic Relations outlining a ve- year framework for the
development of trade and the economic sector (Lwin, 2019c). As part of this, an agree-
ment was signed between the governments of Myanmar and Yunnan province to pro-
mote trade co- operation, under which Myanmar will export agricultural products to
China via the Muse Border Trade Zone and, in return, buy farm inputs and construction
materials from China.
Compared to the often sceptical view towards the BRI among pundits, the percep-
tions of the BRI among the local traders interviewed in Myanmar’s northern regions are
mostly more positive. Similar to large economic actors, there is reason to believe that
Chinese and ethnic Chinese Myanmar traders would have an advantage in the potentially
increased trade in the north. This was the case after the border trade between the two
countries was legalised in 1985, after the Chinese Communist Party signicantly reduced
Journal of Current Southeast Asian Affairs 39(3)392
their support for the Communist Party of Burma (Steinberg and Fan, 2012). Since then,
trade has been facilitated by ethnic Chinese traders from both sides of the border (Kudo,
2006). One of the most successful corn traders interviewed for this study is an ethnic
Chinese Myanmar national operating from Lashio with both the capital and the networks
to have acquired a formal trading license to sell directly to buyers on the China side. He
expressed optimism for the potential gains that the BRI would bring to Myanmar and
lamented the negative sentiment towards Chinese investments:26
Generally, businesses here all have positive views of the BRI, but not everyone has the same
capacity. Everyone will have benets, but not everyone understands that. Even Aung San
Suu Kyi supports the BRI! Those who have no business involvement just sit in the teashops
and chitchat. They blame the Chinese for everything. I ask them what other options are
there and they cannot give an answer. It is like rain all over the country–if you are clever,
you can make a lot of money.
Almost 70 per cent of Myanmar’s agricultural products are exported to China (Kubo,
2016), and demand for Myanmar’s rice is expected to grow with planned improvements
in the supply chain (Overseas Development Institute [ODI], 2017). Due to deregulation
of the rice trade in 2011, border rice trade with China increased from zero to 747,000
tons in 2013 (World Bank and LIFT, 2014), nearly doubling to 1.365 million tons in FY
2014/15 (ODI, 2017). After rice, corn is the second most exported crop and nearly all of
it goes to China (ODI, 2017). Corn dominates cultivation in northern Shan State.
However, for reasons that are unclear but related to China’s ocial border trade pol-
icies, corn traders report that the volume exported through the Chinese border has
become increasingly restricted over the last two years. The corn traders also said that the
price dropped from an average of 500 MMK per viss (1.6 kg) to 340–380 MMK per viss
by early 2020.27
While illegal routes were preferred before the Thein Sein government, the streamlin-
ing of border trade has signicantly reduced traders’ desire to continue using these
routes. However, the corn surplus has forced traders to resort to new routes through
Myawaddy and Kawkareik in Karen State or Tachileik in Shan State. The higher trans-
portation cost (35 MMK a viss through Muse to at least 120 MMK a viss through
Myawaddy) is passed on from traders to small farmers.28 Many small farmers are worse
o in the corn trade because they take input loans from traders, which they then have to
repay in corn at lower prices. This often leads to indebtedness and the loss of farmers’
land (Woods, forthcoming).
The share of informal trade remains high and BRI investment has not led to the for-
malisation of small- scale informal trade between China and Myanmar (Stokke et al.,
2018). During Xi Jinping’s visit in 2020, China and Myanmar signed exchange letters
including plans to set up an agriculture product quality control centre and a hybrid- rice
research centre (Lwin, 2020b), a move that can potentially help formalise trade.
Further complicating matters, Myanmar itself lacks a cohesive strategy for which
agricultural products to prioritise. With reference to the agreements signed between the
Mark et al. 393
two countries during Xi Jinping’s visit, a China analyst questioned them as follows: “[i]
n the last 32 points signed, there were many norms and values, but no clear points about
what kind of export strategy or the quality of Chinese goods [coming] into Myanmar
[were included]. Without this, dierent lobbies, such as rice and sugar, can try to pres-
sure the government.”29 While it would make sense for the UMFCCI to advise on such
a plan, an executive member interviewed said that it is not ocially tasked with fullling
Effects on Local Communities
Similar to the way BRI projects have been carried out in other parts of the world
(Chansok, 2019; Vakulchuk and Overland, 2019; Wissenbach, 2020), local communities
in Myanmar remain poorly informed about the specics of high- level agreements.
However, local communities are at the greatest risk from the potential negative external-
ities of the planned BRI projects. This situation is exacerbated by the fact that represen-
tation of ethnic nationalities in the BRI decision- making committees is negligible
(Transnational Institute [TNI], 2019b).
In the early years of Myanmar’s transition, as the government was seeking to reduce its
dependence on Chinese investment, the country saw eorts to strengthen its social and
environmental regulations, including more progressive land policies. However, follow-
ing the drop in investments after 2017, the government mounted a vigorous attempt to
attract new investments, especially from China. An amendment to the 2012 Vacant,
Fallow and Virgin (VFV) Land Law passed in September 2018 indicates weakened pro-
tection of smallholder farmers. The law threatens cultivators using VFV land without
registration, with criminal prosecution for trespassing on state land. The government is
reportedly creating a “land bank,” a digital platform that will inform investors of the
availability of land to facilitate investments (Lwin, 2019d).
Populations in the ethnic uplands are signicantly at risk because Myanmar law pro-
vides weak protection for customary land. Although the VFV Land Law exempts cus-
tomary land from being allocated for other uses, there is no clear understanding of what
it is or how it would be excluded in practice. Per the government’s own estimates, 75 per
cent of all of the country’s VFV land is within the seven ethnic states (37.24 out of 49.39
million acres), while VFV land makes up about 30 per cent of [all] land across the coun-
try (Table 3). Given this situation, the possibility of widespread land conscation for
BRI projects is high. Unless stronger laws are introduced to protect the rights of ethnic
communities to their lands, BRI projects could have far- reaching impacts on ethnic com-
munities’ access to natural resources and ability to sustain their livelihoods.
Contrasting with the optimistic perspectives voiced by business people, many land-
dependent communities and the civil society organisations (CSOs) that work with them
see China as being much more extractive. One interviewee from a Shan CSO working in
Lashio described the weak consultation process with local communities for the
Journal of Current Southeast Asian Affairs 39(3)394
Muse–Mandalay Railroad project.31 He said that the local authorities only invited com-
munity representatives from Lashio, not the villagers who will be directly impacted by
the construction of the railroad. The government called it a consultation, but it was
instead a one- way presentation of the plan that only told villagers about positive aspects
such as job opportunities. Because there is little public information about these plans,
CSOs plan to set up a monitoring team to collect data in the six townships of northern
Shan State: Muse, Kutkai, Lashio, Hsipaw, Kyaukme, and Naungcho. While communi-
ties’ lands have so far not been conscated, CSOs have noted ominous markings across
villages that indicate where the project will transect.
Additionally, of major concern to local communities is the increasing presence of private
security forces in connection with investments projects. The Chinese government
recently hired the Frontier Services Group (FSG), the former Blackwater security rm
infamous for working alongside the American military in Iraq, to provide security for
these investments. The relationship between the Chinese government and FSG is intri-
cate: the chairman of CITIC Capital Holdings, which holds the majority share in the
Kyaukphyu port, is also the chair of FSG and both companies created USD 50 million
funds to invest in BRI projects.32 To the distress of local people, the presence of private
security forces has become highly noticeable in a project involving Border Guard Forces
in Shwe Koko in Myawaddy, not ocially recognised as a BRI project, but nevertheless
touted as one by its private investors. A military analyst said the following:
They are trying to monopolize the security landscape in the future. Frontier was established
for supporting the BRI rollout. They can be for hire by Chinese projects. Local communities
Table 3. Breakdown of VFV Land Across Seven Ethnic States in Myanmar.
Total land in acres Total VFV land in acres % of state land
Chin 8,900,458 4,235,832 48
Kachin 22,002,702 9,427,649 43
Rakhine 9,088,053 3,814,687 42
Kayin 7,507,743 3,101,374 41
Shan 38,499,345 15,975,819 41
Kayah 2,898,920 453,827 16
Mon 3,038,565 226,811 7
Ethnic States subtotal 91,935,786 37,235,999
Union total 167,186,334 49,391,474 30
Source: GRET (2017) Government data as summarised by the non- governmental organisation GRET.
Note: VFV: Vacant, Fallow and Virgin.
Mark et al. 395
are not familiar with these foreign security forces. The public thinks it is a strange arrange-
ment and they feel China is penetrating into their land.33
Reecting the dierent political realities of CMEC implementation in each region,
the former head of a Kachin CSO believes that China will be more careful in how it
approaches communities in Kachin State. He believes that China’s behaviour changed
after the cancellation of the Myitsone Dam:
As long as China can do their projects, they would be willing to make a deal with
dierent groups. Before, they would only meet with community through the township
administrators. Now, they are more direct in dealing with communities and CSOs. For
example, CPI [a Chinese SOE] invited KDNG [a Kachin CSO] to present their report
However, given that most BRI projects cross through conict- aected areas, it is
likely that this factors into the NLD government’s risk calculation for BRI projects and
is a reason for its slow progress on the implementation of CMEC. The former manager
of a BRI project said that:
NLD needs China more than before, but can’t grant whatever China wants, in order to main-
tain political support […] The government cares more about political legitimacy than being
business driven. They will consider whether projects impact the peace process. Since most
are in conict- aected areas, they are much more risky for Myanmar. For Kyaukphyu, they
can’t say ‘no’ now, but they can scale it down. For the railroad, nothing has been signed, so
they can drag it out.35
In this section, we have outlined the impact of BRI projects on local communities.
More research is needed to better understand the scope of the impact. However, beyond
the tactic of delaying the projects, the government’s failure to put in place stronger reg-
ulatory institutions and to eectively capture taxes to nance public goods for those
areas most aected by the BRI could increase challenges for the implementation of the
BRI. This is because an outow of the region’s natural resources, without sucient
returns to host communities and to armed groups that have been left out of the deals, will
likely fuel resentment and perpetuate armed struggles. In fact, a common argument made
by ethnic leaders is that
political federalism would enable ethnic minority populations to have a greater say in their
state’s development, be more resonant with local cultural traditions and local communities’
development aspirations, and accrue more material benets to the regional state and local
populations. (Woods, 2018: 24)
The next section summarises and discusses the main ndings of the study.
Journal of Current Southeast Asian Affairs 39(3)396
This article has analysed how BRI projects can transform the structure of national econ-
omies and reallocate economic benets and losses among dierent actors and industries.
As shown in Table 4, BRI projects are most likely to benet larger economic actors that
are ethnically Chinese or have Chinese partners, and have extensive networks with the
Chinese government and investors, close relations to Myanmar’s political elites, and
sizeable capital and know- how. These investors have already demonstrated that they are
early movers under the BRI. Projects negotiated at the state level, which are lower prior-
ity for Myanmar at the union level, are more likely to benet economic actors with
established operations in those states.
Compared to the pre- BRI era, it appears that the Chinese authorities at dierent levels
and investors have become more proactive with regard to securing deals with EAOs not
only in the north but also in other regions of the country. Several EAOs have also indi-
cated their interest in concretising these partnerships, but only those with sucient
autonomy vis-à-vis the Myanmar government will be able to realise these ambitions.
Despite the current terms of trade not yet being favourable for small and medium
economic actors to realise gains, the expectations of many of these actors interviewed in
the north regarding the BRI are positive. They believe that the BRI has the potential to
bring benets from increased agricultural trade, and investments in agriculture and infra-
structure, especially in the northern states. However, if the trade terms do not improve
from their current stalemate, smaller farmers will continue their downward spiral of
growing debt to traders acting as lenders. This means that many crop producers could
At the local level, unless civil society can mobilise sucient pressure to hold the
Myanmar government accountable, local communities will bear the brunt of the BRI’s
social and environmental externalities. In turn, the BRI will contribute to worsening
economic and social inequality, even if it contributes to a steady rate of national eco-
nomic growth. Additionally, if the Myanmar government is not able to manage the risks
of BRI’s expansion into areas of high conict volatility and low levels of trust, more
areas may descend into cycles of violence.
In recent years, it has become increasingly apparent that the public has an explicit
bias against Chinese investments, as conrmed in a survey of nearly 3000 respon-
dents from across Myanmar (Yao and Zhang, 2018). In fact, public support for invest-
ments is dependent on the rm’s choice of local partners and community engagement
strategies. The survey’s ndings imply that Chinese SOEs that work with non-
military- aliated companies and engage with communities garner more public
In addition, the Chinese government risks further weakening its international reputa-
tion if it does not establish stronger governance infrastructure to oversee, regulate, and
co- ordinate BRI projects. The Chinese government’s initiative to create a BRI co-
ordination body (Transnational Institute [TNI], 2019a) could translate into a stronger
governance body that rewards or holds back projects based on whether they adhere to a
set of corporate guidelines. As a former BRI project manager noted in one of our
Table 4. Summary of the Winners and Losers From BRI Projects.
Type of actors Prospective beneﬁciaries Prospective losers
National conglomerates Ethnic Chinese Myanmar nationals or those with
Chinese partners, who have strong networks
within elites in China and Myanmar, high net worth
(e.g. Asia World, Shwe Taung, Serge Pun companies,
New Starlight Group).
Large companies that do not have these networks.
Companies operating at
subnational levels in
Companies that are owned by ethnic minority states,
have established bases in the states and tend to have
strong ties to the state government and
Companies that are not favoured by ethnic state political
EAOs Larger EAOs that already have signiﬁcant autonomy in
relation to the Myanmar government to make deals
directly with Chinese authorities (e.g. the Wa).
Smaller EAOs that do not have sufﬁcient leverage with
either the Chinese or Myanmar government.
SMEs If trade terms improve, SMEs that tend to be ethnically
Chinese or have strong ties, larger traders dealing
in Myanmar’s top export crops (e.g. corn, rice).
If trade terms do not improve, smaller farmers who have
incurred debt to traders that is to be repaid in the
form of tradeable goods.
Areas where communities have mounted successful
challenges to Chinese investments (e.g. Kachin State)
might see a higher willingness by investors
In sum, local communities are likely to lose out from BRI
projects unless civil society is mobilised to challenge
unchecked land grabbing.
Areas where communities have mounted successful
challenges to Chinese investments (e.g. Kachin
State) might see a higher willingness by investors to
Communities in areas where the rule of law is weak and
private security forces are deployed are likely to face
greater rights abuses and more restrictions in access
to land and natural resources.
Note: BRI: Belt and Road Initiative; EAOs: ethnic armed organisations; SMEs: small- and medium- sized enterprises.
Journal of Current Southeast Asian Affairs 39(3)398
interviews, “[i]f China really wants BRI to succeed, they need a grand strategy to change
perceptions towards China.”36
Indeed, the Myanmar government’s eorts to rationalise its approach to the BRI by
using the MSDP to vet projects and promote greater competitiveness among foreign and
domestic investors are a step in the right direction. However, information on most deals
remains hidden from public view and there has been little substantial discussion with
local communities, in violation of the Free, Prior and Informed Consent (FPIC) princi-
ples outlined in Myanmar’s investments laws. Given that major BRI projects cross
conict- aected areas, the Myanmar government is walking a ne line in seeking to
encourage economic development while not inaming an already unstable situation. In
this situation, adherence to high social and environmental standards is needed more than
We found that BRI projects have already brought notable changes in resource realloca-
tion and varying degrees of impact on local economic actors and communities. We also
found that we have captured only a part of the impact, and there are still many uncertain-
ties regarding how the BRI will transform Myanmar’s economy at dierent levels and
that requires further research.
Based on our ndings, we suggest three main recommendations to minimise the neg-
ative impact on local actors. First, as part of the BRI steering committee, the Myanmar
and Chinese governments could prioritise regular risk assessments for economic actors
and vulnerable communities who are likely to bear the brunt of negative project exter-
nalities. This is particularly important in the conict zones, where potential resource
reallocations can exacerbate tensions.
Second, in cooperation with civil society, international donors could assist with fea-
sibility and impact assessment of started and planned BRI projects and provide the
Myanmar government with recommendations to prevent and mitigate harm to local
communities or to accommodate the needs of those who lose livelihoods or access to
natural resources and suer from increased conict due to BRI projects.
Third, it is critical that both the Myanmar and Chinese governments enhance the
transparency of BRI projects by (1) conducting inclusive and dialogue- based consulta-
tions with local actors, (2) carrying out regular impact reviews of ongoing projects, (3)
conducting regular detailed information campaigns in Burmese and local languages on
the status of ongoing and planned projects, and (4) strengthening the regulation of BRI-
related business activities (e.g. trade, tenders, and rules on the use of local content,
including the recruitment of local labour).
Moving forward, how well BRI projects will be governed in Myanmar depends on
the combination of national, regional, and local policies regarding these projects.
Myanmar showed early on in its transition that when suciently strong policies are in
place, the Chinese government and its SOEs eventually had to adapt and be more respon-
sive to community needs (Mark and Zhang, 2017). However, the results were not
Mark et al. 399
consistent across the country. Under pressure to recover from the economic onslaught of
the current COVID-19 crisis, it is unlikely that the Myanmar or Chinese governments
will prioritise the protection of local communities from the inevitable social and envi-
ronmental disruption that BRI projects will cause. In this sobering context, civil society
is likely to continue to bear the burden of defending society against the excesses of
extractive and infrastructure investments.
Declaration of Conﬂicting Interests
The author(s) declared no potential conicts of interest with respect to the research, authorship,
and/or publication of this article.
The author(s) disclosed receipt of the following nancial support for the research, authorship,
and/or publication of this article: Research Capacity and Cooperation in Myanmar (RECCOM)
project, funded by the Ministry of Foreign Aairs of Norway.
1. Interview, 5 February 2020.
2. Interview, 11 February 2020.
3. Interview, 29 January 2020; interview, 4 February 2020; interview, 5 February 2020.
4. Interview, 15 February 2020.
5. Interview, 5 February 2020.
6. The case of the Hambantota Port in Sri Lanka set an example for many countries engaging
with China’s BRI. In December 2017, Sri Lanka formally handed over the strategic port and
15,000 acres of land around it to China on a ninety-nine-year lease after struggling to make
payments on a loan of USD 1 billion.
7. Interview, 8 February 2020.
8. For an annual breakdown of approved FDI, see https://www. dica. gov. mm/ sites/ dica. gov. mm/
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10. The Arakan Army (AA), the Kachin Independence Army (KIA), the Myanmar National
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12. Interview, 4 February 2020.
13. Interview, 11 February 2020.
14. For a description of the project, see https://www. nydc. com. mm/ the- nydc- challenge/
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SiuSue Mark is a political economist and policy practitioner, with specialisation in Myanmar and
comparative experience in a number of other countries, including Colombia, Aceh- Indonesia, and
Liberia. She is broadly interested in how state- building and state- society transformation occurs
through land politics in transition regimes, and is nalising an academic book manuscript on this
topic. She was recently the Land and Natural Resources Advisor to the Joint Peace Fund, a multi-
donor fund set up to support the peace process in Myanmar, and a technical advisor to numerous
international development agencies. She received her PhD from the International Institute of
Social Studies in The Hague.
E-mail: sm1169@ caa. columbia. edu
Journal of Current Southeast Asian Affairs 39(3)404
Indra Overland is a research professor at the Norwegian Institute of International Aairs (NUPI),
Oslo. He started working on Southeast Asia in 1992 and has since worked as a long- term observer
in Cambodia for the Joint International Observer Group (JIOG), done eld- based research in
Indonesia and Myanmar, and been a Visiting Fellow at the ASEAN Centre for Energy. He did his
PhD at the University of Cambridge and his publications include the reports An International
Comparative Perspective on Energy Subsidy Reform in Myanmar, Impact of Climate Change on
ASEAN International Affairs, and an article A Match Made in Heaven? Strategic Convergence
between China and Russia.
E-mail: ino@ nupi. no
Roman Vakulchuk is a senior research fellow at the Norwegian Institute of International Aairs
(NUPI), Oslo, and holds a PhD from Jacobs University Bremen in Germany. He has led research
projects, including with the Asian Development Bank and the World Bank. He specialises in the
countries of Central Asia and Southeast Asia. Since 2015, Vakulchuk has been part of and has also
led several research and capacity- building projects focused on Myanmar. In 2013, Vakulchuk was
awarded the Gabriel Al- Salem International Award for Excellence in Consulting. His publications
include China’s Belt and Road Initiative through the lens of Central Asia and Myanmar: A Political
E-mail: rva@ nupi. no