China’s strategic and business interests in Myanmar had led it to side passively with the military junta after the February 1 coup. However, the anti-China sentiments prevailing among the military brass and civilians alike could spell trouble for Beijing.
Western sanctions against the military junta have hit its economic projects. Chinese energy companies such as the Hong Kong-based VPower, which have exclusive economic dealings with military-controlled conglomerates, had initially not been deterred by the coup.
But the western sanctions have made China rethink its strategy. The US had imposed restrictions on military-controlled conglomerates — Myanma Economic Holdings Limited (MEHL) and Myanmar Economic Corporation (MEC) — that leased their land to VPower.
The latter is working with them on gas terminals and regasification facilities.
Justice For Myanmar, an investigative portal, accused VPower of misleading its shareholders. Its spokeswoman had said, “We call on HKEX [Hong Kong Stock Exchange] to take regulatory action against VPower to urgently clarify VPower’s material support for the Myanmar military through MEHL, a sanctioned entity that is in violation of international human rights and humanitarian law.”
With the military’s attention shifting to more pressing concerns, investors worry whether the government will be able to honor power purchase agreements (PPAs). Political instability has also increased investment-related risks.
The legal and regulatory framework for the energy sector was already difficult before the coup and now, Myanmar will have to pay a significant risk premium to convince foreign investors, Romain Caillaud of Tokyo-based advisory firm SIPA Partners said.
"Myanmar’s pro-democracy activists have called for the anti-Chinese “Milk Tea Alliance” in Thailand, Hong Kong, India, Taiwan and Indonesia to support a second general strike against Myanmar’s military regime on Sunday." https://t.co/XJc3mFhn98 pic.twitter.com/wys5duw5bX
— Kenneth Roth (@KenRoth) February 27, 2021
The COVID-19 pandemic and anti-junta strikes have lessened energy demand in the short run. The civil disobedience also meant a shortage of labor for Chinese financed projects. In the face of such losses, many companies are hoping to renegotiate or even scarp their projects.
China’s reluctance to openly condemn the military coup made it seem like the communist nation was siding with the junta. The ongoing anti-coup protests also singled out China.
Chinese products have been boycotted and Chinese factories burned. The property damage has cast a shadow on Chinese businesses in Myanmar.
Anti-China sentiments have been simmering for a while now and Beijing’s refusal to condemn the coup provided the spark. China’s involvement in the region through its Belt and Road Initiative (BRI) has been viewed as self-seeking by the Myanmarese public. Its projects have a history of ill-treating workers.
Social media sites were filled with comments on how “China is talking about its own interests rather than the loss of precious lives on the streets of Myanmar. China stands for its own benefit, not the expectation of millions of Myanmar people. They will get what they deserve.”
China does not have a good rapport with the other party in the current crisis either. Like the previous government led by National League for Democracy, the military generals are also wary of the China Myanmar Economic Corridor (CMEC), drawing lessons from the debt traps Sri Lanka and Pakistan fell victim to
India’s Strategic Interests
The junta’s head Snr. Gen. Min Aung Hlaing is known for his anti-China stance because of China’s tacit support to Rohingya militants active in Myanmar’s Rakhine state.
This has boosted India’s position with Myanmar’s military regime, as pointed out by Jayanta Kalita in a piece for The Irrawaddy. Thus, like China, India also initially maintained its silence on the coup, but later condemned the violence.
But unlike China, India did not face any serious backlash from the public as its involvement in the region is not viewed as coercive as China’s.
India has modified its approach under seemingly American pressure but still doesn’t directly implicate the junta. It has just condemned the violence. But India’s delicate balancing act might give it an upper hand whichever way the wind blows.
If the junta stays in power, India maintains its favored position. If the democratic government comes to power, India would still fare better than China.