By engaging with both the Junta and EAOs, Beijing seeks to protect its interests while maintaining stability in the region
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Operation 1027 has brought about a lot of change in the power dynamics within Myanmar. Not only has the balance of power tilted towards the ethnic armed organisations (EAOs) which have secured more land territories and are currently ruling most significant parts of Myanmar, controlling important trade towns and significant ongoing connectivity projects within those stretches. The most recent development has been the Arakan Army (AA) taking control of all the border points with Bangladesh.
While this has created much upheaval and demoralisation amongst the military soldiers fighting in these regions and losing constant battles, this situation has also rattled one of the most influential neighbours, China—a key regional power with substantial investments in Myanmar.
The most recent development has been the Arakan Army (AA) taking control of all the border points with Bangladesh.
The China-Myanmar Economic Corridor (CMEC) represents Beijing’s key strategic interest in Myanmar. This initiative, along with two parallel oil and gas pipelines spanning from Rakhine State in the southwest to Shan State in the northeast, serves as China’s strategy to address its Malacca Dilemma—a critical vulnerability stemming from the fact that around 80 percent of its imported oil passes through the Strait of Malacca, exposing it to potential naval blockades by adversaries.
Public criticism of Chinese-led projects over environmental and social concerns has long hindered Beijing's investments in Myanmar. The suspension of the Myitsone dam in 2011 exemplified rising resistance due to transparency issues and adverse community impacts. Under the NLD government following 2015, scepticism over Chinese loans and debt traps grew, prompting renegotiations of projects like the Kyaukphyu SEZ, which secured more favourable terms.
While this improved public confidence in the CMEC, ongoing armed conflicts in regions like Rakhine and Kokang posed risks to infrastructure projects. China sought to mitigate these by mediating with EAOs to protect its investments.
After the 2021 coup, while the environment within Myanmar was disrupted due to political instability, the Junta's State Administrative Council (SAC) approved several CMEC projects, signalling continuity despite growing political unrest. Anti-China sentiment, however, rose due to its perceived support for the SAC, leading to attacks on Chinese interests. The National Unity Government's (NUG) declaration of a “People’s Defensive War” further escalated security risks for CMEC projects. China sought alternatives like the Chongqing-Lincang-Mandalay and Guangxi-Yangon routes but faced disruptions from ongoing conflicts.
Under the NLD government following 2015, scepticism over Chinese loans and debt traps grew, prompting renegotiations of projects like the Kyaukphyu SEZ, which secured more favourable terms.
Rising cybercrime in SAC-controlled border areas prompted Beijing to engage with EAOs, notably the Myanmar National Democratic Alliance Army (MNDAA), a key actor in Operation 1027, as the Junta remained nonchalant about handling it. The Operation's major goal in October 2023 has been to target online scams, criminal networks, and Junta-linked militias while challenging SAC control.
Although China's role in Operation 1027 remains unclear, analysts suggest implicit support in exchange for the return of scam suspects. However, support for EAOs shifted following the collapse of Kyar Phyant (online scam) operations in the Kokang region. After a brief period of ceasefire mediated by China, in the second phase following June, the Three Brotherhood Alliance captured critical SAC-controlled areas, including the North Eastern Command in Lashio and key towns in northern Shan State, significantly weakening the Junta’s control over these strategic regions.
Amidst this, the military continued to court China since April, actively seeking its intervention to reclaim lost territories. Efforts include offering to restart the long-stalled Myitsone Dam project, declaring Chinese New Year a public holiday, and sending former President Thein Sein to Beijing for the 70th Anniversary of the Five Principles of Peaceful Co-existence, earning favourable coverage in Chinese media. These gestures and its own geopolitical priorities prompted China to adjust its approach, leading to intensified diplomatic engagement between the SAC and Beijing. The visit of Min Aung Hlaing to Yunnan in November 2024 to attend a two-day summit of the Greater Mekong Subregion (GMS) has been significant in this regard. Reports indicate that during this visit, the Junta agreed to resume the New Yangon City project and begin work on the Muse-Mandalay railway line as proposed by Beijing.
In contrast to Western formal sanctions, China opts for discreet measures to maintain an image of steady development while exerting economic pressure to protect its interests. These sanctions are often in the form of “Five Cuts”—i.e., cutting off electricity, water, internet, supply chains, and personnel. Restriction on trade and movement aims to influence target nations or groups to align with China's strategic objectives, particularly when its sovereignty is perceived as threatened.
China has enforced border closures and economic sanctions, mainly targeting the Kokang forces in Lashio and other EAOs like the Kachin Independence Army (KIA). These measures are primarily driven by concerns over the expanding military influence of these groups following Operation 1027. As a result of their growing control over key Myanmar-China border trade routes, these groups have enhanced their geopolitical leverage. This control grants them strategic territories, which not only provide long-term military benefits but also open up avenues for economic advantages and greater regional geopolitical influence.
Restriction on trade and movement aims to influence target nations or groups to align with China's strategic objectives, particularly when its sovereignty is perceived as threatened.
For instance, in northern Shan State and central Myanmar, 10 Chinese investment projects, both ongoing and planned, are now under the control of EAOs and the People’s Defence Forces (PDFs). The KIA has also seized important border towns, including Chipwi, Pang War, and Phimaw, which house vital rare earth and have disrupted the supply chain for materials critical to China’s electronics and electric vehicle industries. As mining and transportation have been hampered, rare earth prices have surged, further straining China’s supply chains.
Viewing these developments as threats to its infrastructural needs, economic gains and regional stability, China employs a carrot-and-stick approach, simultaneously pressuring EAOs while supporting SAC through diplomatic and military backing, including endorsing its election plans. Beijing also warned and put pressure on the Ta'ang National Liberation Army (TNLA), MNDAA, and KIA by inviting them for dialogue and simultaneously using the Five Cuts policy to ensure compliance. It has also threatened the Wa leaders with potential sanctions if they failed to cooperate. These measures reflect China's intent to curb EAO power and shape Myanmar's political landscape to safeguard its strategic interests.
EAOs have shown mixed reactions to China's sanctions and diplomatic manoeuvres. Initially cautious, the MNDAA and the TNLA expressed willingness for dialogue under Chinese mediation through statements released in late November and early December 2024. Reports suggest the MNDAA leader is currently in China, supposedly for medical treatment, a move interpreted as Beijing leveraging its influence. In September, the MNDAA declared a neutral stance, distancing itself from the National Unity Government (NUG) and international bodies and aligning more closely with China's interests. Nevertheless, the MNDAA and TNLA steadfastly retain their captured territories.
In September, the MNDAA declared a neutral stance, distancing itself from the National Unity Government (NUG) and international bodies and aligning more closely with China's interests.
Similarly, after months of ignoring Chinese calls for a ceasefire, the KIA engaged in talks in Kunming. This meeting resulted in the reopening of border gates on 13 December, which had been closed since October this year amid tensions between the KIA and China. However, details of the agreement remain undisclosed. Meanwhile, the AA has maintained its aggressive military campaigns, raising significant concerns for China due to the strategic importance of the Kyaukphyu port in Rakhine State.
China's role in Myanmar's security dynamics highlights the need for resistance groups to unite, as their reliance on Beijing risks undermining their autonomy in key decisions.
China's assertive role in Myanmar's internal conflict reflects its dual-track approach to safeguarding its interests. By engaging with both the Junta and EAOs, Beijing seeks to protect its interests while maintaining stability in the region. However, as the situation evolves, the complexity of China's involvement grows, with the potential for shifting alliances and the continued challenge of balancing its strategic priorities. As long as Myanmar remains in a state of internal strife, China's relationship with the country will remain a “marriage of convenience”.
Sreeparna Banerjee is an Associate Fellow at the Observer Research Foundation
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
Sreeparna Banerjee is an Associate Fellow in the Strategic Studies Programme. Her work focuses on the geopolitical and strategic affairs concerning two Southeast Asian countries, namely ...
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