China and Myanmar have been steady allies for over six decades. Myanmar, only just independent in 1948 after decades under British colonial administration, was amongst the earliest non-Communist Asian countries to recognise the People's Republic of China when it was established in 1949. Despite tensions over the ensuing years, with the anti-Chinese riots in the country during the Cultural Revolution from 1966, Myanmar and China remained relatively close.
This only intensified as China reformed and opened up, and it's economic and energy needs increased. Myanmar, sharing a border with south western China and in particular Yunnan province, is a major source of energy, in particular oil and gas. This alone makes it of strategic importance to China. In addition, it is supplies wood and rubber products. Chinese investment started to appear in significant amounts from the late 1990s, and it reached volumes that merited lengthy treatment in Joseph Kurlantzick's book, from 2008, `Charm Offensive', about the negative and positive impacts of early waves of Chinese investment abroad.
At this time, Kurlantzick claimed that Chinese involvement its neighbouring country was overwhelming, creating pockets of the economy, particularly along the border, almost wholly dominated by Chinese business people. A lot was non state, and some illegal. Chinese entrepreneurs, many from Yunnan were, he claimed, involved in smuggling and contraband, gambling and other illegal activities. The simple fact was that they brought much needed money to a country which, under military rule since 1962, had become internationally isolated and was largely dependent on links with China and a few other countries.
Since 2011 and the dissolution of the military junta that year, Myanmar has changed quickly and undergone its own version of reform and opening up. In the space of only a few years, an American president, a British Prime Minister, and many other leaders have visited, something unimaginable before. On top of this, the country under U Thein Sein has held partial elections in which many of the figures like opposition leader Aung Sang Suu Kyi have been voted into parliament. It has become a place where western aid agencies have become very active. This has made China's role there more complex than it was once before. But as Premier Li Keqiang's visit this month shows, the country still has a major strategic importance to China, and merits high level diplomatic attention.
China aspires to have a `comprehensive strategic partnership' with Myanmar, but it is clear that at the heart of this remains the very significant energy resources that the country has. This is something that China now needs to compete with a number of other potential customers for, including India, whose Prime Minister Modi will also be attending the East Asian Economic Summit at the same time as Premier Li and other leaders from the region in Rangoon.
The key players for China are its energy companies, and they have had mixed success so far. Petrochina has signed up for the Sino Burmese pipeline, and the China Power Investment Corporation did commit 3.6 billion USD to a hydropower project in 2011, which was then stopped over environmental concerns despite Chinese assurances. It is easy however to see why, despite the new more complex situation in Myanmar and the increased number of players there China would still find the country immensely important. It is one of the few alternative routes by which China can bypass the Malacca Straits in getting significant energy into the country by land. Many often compare the Malacca straits at present to China's windpipe, an area of great vulnerability where US and other vessels police the waters, but one along which so much of China's oil comes from the Middle East, where it now gets 10 per cent of its energy needs from. Seeking a land route to put through some of this is crucial.
This ties Myanmar into the narrative that President Xi Jinping has been talking about recently of a new Silk Road, a northern route through Central Asia and into Europe and Russia which diversifies its resource and energy supply routes. Li's visit to Myanmar therefore is to build the diplomatic goodwill by which to carry forward this diversification of supply routes. Maintaining good political links into the Myanmar leadership is a sound investment. The Chinese government itself has said that their main interest is in supporting the development of an economic corridor linking Bangladesh, China, India and Myanmar. This forms part of the architecture of an East Asian Economic Community which might exist by 2020. At this time, China will hope to have achieved middle income status, and its market will be even more important for neighbouring countries. In that sense, China will have created a benign buffer zone around its borders, particularly to the North and West, where there is a common understanding of mutual benefit driven by economic self-interest. This will outweigh political differences amongst the various countries here with their different systems and cultures and give China one of the things it most desires - a stable, secure geopolitical environment for it to continue to develop its own internal strengths.
There is also a multi-lateral context in which to see the Premier's visit to Myanmar. The Chinese government has said that the following decade will be the Association of South East Asian Nations (ASEAN) Diamond decade, where they will be able, amongst their ten members, to forge a stronger sense of unity and a more robust framework for cooperation. China does not belong to ASEAN but it interacts with them through the ASEAN plus one and the ASEAN plus three mechanisms. It takes ASEAN seriously and part of the discussion at APEC in Beijing from the 10th to 11th November was to create a free trade zone within this region. ASEAN as a source of growth and partnership is clearly becoming more important, and for China these local markets are ones it can see great potential in, despite their complexity and different levels of development.
For Myanmar, China is a partner is cannot ignore, even though it too is seeking diversification through making links into the EU, US and elsewhere in the region. There may be reservations, as there were in 2011, about so much Chinese investment happening so quickly and the impact of this on the Myanmar environment, but this is really a question now for the Myanmar government to try to control. They have to find ways where they feel their interests are being respected but they are engaging fully with the opportunities China provides. This is not easy for a country as inexperienced in international trade and affairs as Myanmar now is, but nor is it a task they can easily run from. Premier Li's visit gives them the chance to start hammering out a better framework to engage with each other.
Professor Kerry Brown
Kerry Brown is Professor of Chinese Politics and Director of the China Studies Centre, University of Sydney and Team Leader of the Europe China Research and Advice Network (ECRAN) funded by the European Union. He is an Associate Fellow of Chatham House, London and author of `Struggling Giant: China in the 21st Century' (2007), `The Rise of the Dragon: Chinese Inward and Outward Investment in the Reform Era' (2008), `Friends and Enemies: The Past, Present and Future of the Communist Party of China' (2009), `Ballot Box China' (2011), `China 2020' (2011), `Hu Jintao: China's Silent Leader'(forthcoming).