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Two Southeast Asian leaders arrived in Beijing Monday on the first stop of a six-day, two-nation visit by China’s president amid growing tension with Washington over trade, and amid the tense situation in the disputed South China Sea.
Chinese President Xi Jinping said China did not seek “hegemony” or dominance, during his annual state visit to Myanmar, Thailand and Malaysia.
Xi also said China would remain “open” and “friendly” to other countries, but urged those who opposed free trade to “stop complaining,” according to his office.
Myanmar was the site of a controversial Chinese-funded dam that was torn down after protests over its environmental and social impact, and Xi promised $30 billion in aid to its neighbors to help them weather the global downturn.
Myanmar’s president, Aung San Suu Kyi, said Myanmar and China would cooperate more closely on economic issues and expand cooperation on infrastructure and agriculture.
Myanmar, a close U.S. ally during years of army rule, has dramatically transformed since 2009, when Suu Kyi was released from house arrest and swept to power in elections.
Myanmar still offers an insight into the challenges China will face as it makes a transition to the type of open economy that the U.S. is now trying to push throughout the region. In fact, the less open the region, the better it is for China.
Myanmar’s export sector will face a significant challenge if America maintains its commitment to reducing tariffs on many of its imports from China.
“Access to low-cost products and services can be, and is, positive for the economy,” said research fellow Mary Kramer of the Lowy Institute in Sydney.
“But it has consequences that could jeopardize political stability if growing political confrontation between the two countries increases the costs to exporters.”
As a country with many poor rural areas, Myanmar does not have many manufacturing industries.
“To be part of the multibillion-dollar infrastructure projects on the cards in Myanmar may have a very good economic impact but could increase the risk of political instability in the long term if local people are not adequately protected from risks associated with the projects,” Kramer said.
Myanmar’s recent economic reforms have also not bridged the gap between Chinese influence in the country and control by the military.
“Myanmar has indeed completely transformed, but on the other hand it is not the same as before,” said Aung Min, an economist at the Shwe University, who wrote a blog about the country’s economic transformation and the difficulties it faces.
“The military continues to influence the economy because it is the biggest creditor. The military is controlling key economic activity. They are dominating local businesses and disbursing money out to other industries,” he said.
Since Myanmar’s reforms have not completely ended Chinese influence, Yangon’s investment climate also remains largely influenced by this past.
China’s investments so far include the $1.5 billion Myitsone dam being built on the lower reaches of the Irrawaddy River. This is the first dam China has built in Myanmar and it will directly impact about 20 percent of the country’s people, estimated to number about 16 million.
Despite protests that turned violent, Myanmar’s government in 2011 decided to cancel the dam. However, China’s Foreign Ministry said the Chinese government was ready to help Myanmar rebuild the dam and hoped both countries would address their differences in a peaceful way.
Thailand is one of the countries China wants to expand its influence in Southeast Asia, but Thailand too has become deeply dependent on China.
China supports Thailand’s opposition leader, ex-Prime Minister Thaksin Shinawatra, and wants to build rail and road links with Thailand.
Thailand is also the largest trading partner for China in Southeast Asia, after Malaysia, according to Chinese statistics.
The $14 billion China-Thailand-Pakistan economic corridor project was launched in 2015. The corridor aims to provide more than 100 billion Thai baht ($3.57 billion) in investment and infrastructure assistance to Pakistan, Thailand and Bangladesh to create seven industrial parks with joint ventures between Chinese and Thai companies, China Daily reported.
However, the relationship has been strained by Thaksin’s populist reforms and China’s vocal opposition to Thailand’s reputation for human rights abuses during the “People Power” uprising that overthrew the military government in 2014.
Washington has been increasingly critical of China’s activities in the South China Sea, where the U.S. Pacific Command says it conducted 28 freedom of navigation patrols in 2017.