The Shwe pipeline shaves an angry bald strip across the red clay hills and disappears into the morning mist. A sign hanging above an area cordoned off by bamboo fencing warns in English, “Severe punishment on pipeline destruction”.
“Families were forced to move,” says Omar, a 31-year-old Palaung village chief based just outside Hsipaw town in northern Myanmar on the road to China. “They were given some money but left with nowhere to grow crops.” No one has attempted to sabotage the pipeline here, he says, but further north fighting between Burmese troops deployed to protect the energy project and various armed ethnic groups have forced thousands of people to flee their villages. In Arakan State to the south, 17 locals working on the pipeline were arrested for setting fire to a warehouse.
The US$5 billion Shwe pipeline is a Sino-Burmese project intended to bring imported oil and gas from the Indian ocean across Myanmar to China’s south-west. It is strategically important for China, which aims to reduce the country’s dependence on energy transported by ship through the pirate-infested Strait of Malacca. But there has been fierce opposition in Myanmar – over land expropriation, soil erosion and pollution, enflaming longstanding conflicts between ethnic groups and the Burmese military.
The Shwe scheme is one of a slew of controversial Chinese investment projects in Myanmar that have run into trouble in recent years. Since the civilian government came to power in 2011, rolling up the red carpet previously laid out for China and opening the way for a newly assertive civil society, the country has become a more difficult place for Chinese companies to operate. A flood of cheap Chinese goods and people across the border has meanwhile fomented broader anti-Chinese sentiment across the country.
In spite of these challenges – and the level of investment at stake – Chinese companies have taken little meaningful action to address concerns. Instead, their failures to appease local communities have made them a focus of protest for Myanmar’s conflicted and ethnically diverse population to rally around.
“The move away from reliance on China is growing,” says Vicky Bowman, director of the Myanmar Centre for Responsible Business in Yangon and former British ambassador to the country. “The government is welcoming western companies as a deliberate policy to diversify.”
President Thein Sein’s liberalisation in 2011 was in part fuelled by elite concerns that Myanmar had become too dependent on China, and his government reform programme sought to rebalance Chinese influence with Western investment and political relations. As a result, there has been a sharp drop in Chinese investment in Myanmar since 2011, though China remains an important presence in hydropower, oil and gas, and mining.
At a popular level, anti-Chinese resentment abounds. Travelling around Myanmar, I spoke to many who said they felt the Chinese had trampled over local interests, propped up the unpopular military regime and pillaged the country’s natural resources.
The Chinese-backed Myitsone dam on the Irrawaddy River – suspended in 2011 amid widespread popular unrest – has been one of the few issues to unite the ethnically diverse country, argues Bowman, who has lived in Yangon for a total of eight years over the last three decades. “Although environmental damage is the concern most prominently voiced by opponents to the dam, it is not the only reason they fight it. It is also the cultural significance of the area.”
That significance cannot be overstated. The 6,000-megawatt dam was planned for the source of the Irrawaddy – a sacred place for local Kachin and also considered the founding place of Burmese civilisation. Pictures of the iconic Myitsone hang in tea houses and small eateries across the country. The dam, which rekindled fighting between Burmese and ethnic Kachin armies after a 17-year-long ceasefire, has been suspended until after the next elections in 2015, but many people believe it will never go ahead.
Attempts by the company building the dam, China Power Investment Corporation (CPI), to woo local communities with piecemeal promises failed. It’s well known that almost all the hydropower will be exported to China’s Yunnan province and local people will see little benefit.
In a recent interview with the Irrawaddy, Jiang Lizhe, CPI’s director of public affairs, spoke of his determination to resume the dam project. “Local people are, in fact, not against this project. They just misunderstand it because they don’t know the reality, and because of rumours and wrong information,” he said.
But the company is still not listening to public opinion. “CPI just don’t seem to get that people don’t want the dam, or why,” says Bowman.
Burmese NGOs are now coordinating action against unpopular projects, including Myitsone. One coalition is working to identify gaps in the existing environmental impact assessment for the dam, with support from more experienced Chinese NGOs in Yunnan province.
The Letpadaung copper mine in central Myanmar offers another example of increased citizen action against Chinese projects. A joint venture between Wanbao Mining (a subsidary of the Chinese arms manufacturer Norinco) and a company controlled by the Burmese military, the project went into lockdown at the end of 2012 after farmers complained of the environmental and health problems caused by acid waste.
A protest camp – mainly of monks – was violently suppressed by Burmese security forces using phosphorous grenades, transforming a local dispute into a national cause. The project restarted months later only after the company was forced to renegotiate the contract giving 2% of revenue to the local community.
But this wasn’t enough. “The company hoped to satisfy the community with schools and tree-planting, but that won’t address their concerns,” says Bowman. Tensions erupted again in March this year as people rallied against Wanbao’s removal of an important religious building to make way for further mine expansion. The company has now invested in a new environmental and social impact assessment, conducted for them by an Australian consultancy, and available on their website – a first for any Chinese company in Myanmar.
Chinese companies also appear to have a poor track record compared to international competitors. China National Petroleum Company (CNPC) has employed far fewer local workers along the upper section of the Shwe pipeline than the Indian company, Punj Lloyd, who built the lower section.
A recent investigation by Chinese NGO Green Watershed revealed similar discrepancies. Although Korean companies provide some schools or health services, the Chinese companies do not. Even where Chinese companies do provide services, they do not get the credit because they do so through the unpopular government, or do not really benefit local people, according to Green Watershed.
“Almost all the controversial projects are Chinese projects,” says Bowman.
Immigration and cheap goods
Resentment is not new – Chinese were targeted in riots in Yangon in 1967 and faced severe discrimination during the 1970s. Ethnic Chinese have, in fact, had a presence in Myanmar for centuries, with waves of immigration under British rule, and the end of the Chinese Civil War in 1949. Some are also members of the ethnically Chinese Kokang group who straddle the border.
But Chinese immigration and economic dominance have grown exponentially in recent decades, and current anti-Chinese feeling has to be understood against that backdrop.
The two countries are linked by the famous Burma Road – built in the 1930s to supply vital provisions for Chinese Nationalist forces battling the Japanese imperialist army. It has been the lifeline for an otherwise isolated Burmese regime since western sanctions were imposed in the 1980s. Trucks loaded with Burmese gems, jade, teak and food pour across the border into China – often illegally – and rumble back with cheap consumer goods.
These goods have flooded the market in a country whose manufacturing industry has yet to take off, causing inevitable resentment. As the local saying goes, “When China spits, Burma drowns”.
A common complaint among the residents of Mandalay – the ancient religious capital in the north of the country – is that the influx of Chinese money, goods and people has inflated the prices of real estate and living, forcing locals out of the city centre. Almost half of the city’s million or so inhabitants are now Chinese. It has also grown with the massive influx of drug money from wealthy ethnic Chinese Kokang heroin traffickers. These concerns have become a political issue ahead of national elections in 2015.
Ethnic Chinese have preferred to keep their heads down and make money, rather than get involved in politics, as an eminent Chinese historian Qin Hui noted after a trip to Myanmar in 2012. The growth in trade between Myanmar and China has provided plenty of opportunities to get wealthy.
When it comes to Chinese companies operating in Myanmar today, optimists believe they just need a little public relations boost. Gao Mingbo, former head of the political section at the Chinese Embassy in Yangon, has been spearheading efforts to repair the image of Chinese companies working in Myanmar. “The companies must retain the support of the local communities. That has been the consistent message of the embassy: to be open, to be engaged,” he said. He created the embassy’s Facebook page; although Facebook is blocked in China, Chinese officials in Yangon are using this to reach Burmese citizens.
But these messages are yet to permeate corporate culture. The Chinese-owned North Mining Investment Company, which is developing a US$480 million nickel mine in western Myanmar’s Chin state, appears to be repeating past mistakes. The company has no office in Myanmar, website or public face and relies exclusively on government contacts. Unrest is now brewing as the company carries out surveys for the open-top mine and refinery without giving any information to local people.
For villagers in northern Myanmar, China’s image is a complicated one. Omar’s ethnic Palaung village – some 15 kilometres uphill from Hsipaw town – got electricity for the first time last year, after Chinese-made solar panels were installed on top of straw roofs. “We can’t live without the Chinese, but we don’t like it,” he says.