Full steam ahead for China-Myanmar high-speed railway

Once stalled plans to build a high-speed railroad connecting China’s southern city of Kunming and Myanmar’s Kyaukphyu port on the Bay of Bengal are firmly back on track.

If completed, the 1,400-kilometer railroad will be a crucial link in a strategic economic corridor through which China’s imports and exports would bypass the congested Malacca Strait and contested South China Sea, both potential chokepoints in any conflict scenario.

There are already gas and oil pipelines in place running from Myanmar’s western coast and China’s southern Yunnan province which strategically bypass maritime bottlenecks and potential trouble spots.

Combined with a special economic zone (SEZ) that is being developed around Kyaukphyu, and plans for a new expressway linking the Chinese border to Myanmar’s coast, it is plain to see how economically and strategically important the China-Myanmar Economic Corridor, or CMEC, is to China’s long-term vision for the region and beyond.

The CMEC forms a crucial part of Chinese president Xi Jinping’s US$1 trillion Belt and Road Initiative (BRI), a China-centered network of trade-promoting roads, railroads and shipping lanes spanning more than 60 countries in Asia, Africa and Europe.

But concerns of Chinese domination have been aired among Myanmar lawmakers, who have asked for more transparency regarding mega-projects that are at least in part being financed by loans from China.

In December, several lawmakers spoke in the parliament in Naypyitaw about the slow pace in which current loans are being repaid because of a lack of financial resources. They urged the government to renegotiate the terms to avoid falling into a sovereignty-eroding debt-trap situation.

That concern is growing, as the current government led by State Counselor Aung San Suu Kyi and her National League for Democracy (NLD) has become more welcoming to the BRI because of Western condemnation of the country’s human rights record.

The condemnation has focused on military operations that have forced the flight of some 700,000 Muslim Rohingya into neighboring Bangladesh, similar abuses in other conflict-ridden ethnic minority areas, and a severe clampdown on the media.

China is clearly taking full advantage of Myanmar’s new isolation to advance its own interests. In 2011, the then government led by president Thein Sein famously suspended a China-backed US$3.6 billion hydroelectric power project in the country’s north as the country moved away from China and towards the West.

In 2014, Thein Sein let a Memorandum of Understanding with China for the construction of a high-speed railroad from Yunnan to the coast expire. The project was to be completed at a total cost of US$20 billion, but never materialized amid concerns over the cost and fears of greater dependence on China.

In September last year, the ruling NLD-led government signed what was termed the China-Myanmar Economic Corridor agreement. Suu Kyi now heads a 25-member steering committee that has been appointed to oversee the implementation of joint venture projects with China.

She and her colleagues plan to attend the China-initiated 2nd BRI Forum for International Cooperation to be held in Beijing in April this year. The first such forum, held in May 2017 in Beijing saw the attendance of heads and representatives from more than 130 countries and 70 international organizations, according to an official statement.

There is no doubt that the revived China-Myanmar railroad project will also figure prominently in bilateral talks between Beijing and Naypyitaw. So far, few details have been made public about the project, including in regard to cost.

It was first publicly revealed that the project had been revived when in June last year a Myanmar minister, Thaung Tun, said in an interview with the South China Morning Post newspaper that the construction of a railroad connecting Ruili in Yunnan with the central city of Mandalay “would start quite soon.”

The first 328-kilometer stretch of the railroad, connecting the southern Chinese cities of Kunming and Dali, went into operation in July last year, cutting travelling time from six to two hours. Construction of the remaining 336 kilometers from Dali to the border town of Ruili began in 2011. It was scheduled to take six years but for reasons that are not entirely clear the completion date has been pushed back to 2022.

On the Myanmar side, the China Railway Erguan Engineering Corporation, a state-owned holding company, has started a partial survey for a 431-kilometer railroad connection from Muse across the border from Ruili to Mandalay. But the line would not likely be commercially viable if it does not extend to the port at Kyaukphyu, situated nearly 400 kilometers from Mandalay.

Ye Tun, a former Myanmar member of parliament from Thibaw, one of the towns along the proposed Muse-Mandalay railroad, told the Myanmar Times on February 1 that the route had to be complete in order for the Myanmar government to earn substantial revenues from the Kyaukphyu port and its proposed special economic zone.

A railroad that originates in China and ends at Mandalay would not be of much use for trade. If the railroad is not extended to Kyaukphyu, “I worry that the port will be like one in Sri Lanka that China took over,” Ye Tun said in reference to the Sri Lankan port at Hambantota, which was funded mainly by loans from the Exim Bank of China. When those loans could not be repaid, Sri Lanka was forced to lease the port to China Port Holdings for 99 years.

China has proposed 24 projects under the CMEC-BRI scheme and Myanmar has so far agreed to accelerate work on nine of them, including the Kyaukphyu Special Economic Zone, border trade zones in Kachin and Shan states opposite Yunnan, and an ambitious project for a “new city” adjacent to the old capital of Yangon that would cover an area twice the size of Singapore.

The Myanmar news website Irrawaddy reported on February 19 that an estimated $2 billion will be spent on the initial stages of the projects, which notably do not include the China-Myanmar railroad. The report said that “experts are questioning how the infrastructural projects across Myanmar will be financed and have raised concerns about a debt trap. Despite these concerns, the government has yet to make public details of the CMEC.”

Suu Kyi stated on February 19 that the BRI “could bring opportunities to Myanmar and the region.” The question, however, is at what price. China may get the Indian Ocean access it desires, but Myanmar, which is already struggling to repay existing loans owed to China, may be left with billions of dollars in debt that some fear could undermine its ability to conduct an independent foreign policy.

When under direct military rule and shunned by the West, from 1988 to 2011, Myanmar became what some cynics called “the 24th province of China.” That’s why Myanmar’s previous military regime went to extraordinary lengths to lessen that dependence and open up to the West. 

But now Myanmar appears to have moved back to square one from its short dalliance with diplomatic diversification: isolated vis-à-vis the West and reliant on China as its main patron and ally.