The army coup of February 2021 has opened up new avenues of collaboration between Myanmar and China.
Nearly 15 months after the army coup in Myanmar, the junta’s relationship with China is warming up, with a latest resumption in diplomatic exchanges, although either side are retaining a low profile. The China Myanmar Economic Coordinator (CMEC), the umbrella for a bunch of infrastructure initiatives designed to hyperlink China’s Yunnan province to Myanmar’s western coast, continues to be a high precedence for either side, together with border safety.
Given the unsure political and safety dynamics in Myanmar because the February 2021 coup, and the related excessive dangers for venture financing, the event of latest infrastructure initiatives just isn’t a viable possibility for the foreseeable future, even when the general implementation of CMEC is anticipated to proceed. Nonetheless, Naypyidaw and Beijing are venturing past the standard paradigm of infrastructure-oriented engagement. In notably, there are the three strategic areas of cooperation that can affect the reorienting of the CMEC and China-Myanmar relations within the months to return.
First, though it’s nonetheless in its early levels, the Chinese digital renminbi has already stolen a lead within the Central Bank Digital Currency (CBDC) recreation. This is a expertise that may very well be of nice use for Myanmar. Along with the latest settlement establishing renminbi because the official settlement forex for commerce with China, the Chinese digital forex may assist Myanmar in its makes an attempt to scale back its reliance on the U.S. greenback in commerce and mitigate in opposition to potential restrictions of its entry to the SWIFT worldwide cost messaging system.
In addition, a direct settlement between the Digital RMB and the upcoming CBDC Myanmar kyat is a strategic projection for Naypyidaw, in addition to being advantageous for Beijing when it comes to commerce effectivity and potential financing for upcoming initiatives. Of course, the digital Myanmar kyat nonetheless requires infrastructure to be rolled out on the retail degree, which may take a while.
Second, Myanmar’s retail sector is now a strategic entrance of the Chinese non-public sector. The Chinese Alibaba-owned eCommerce platform store.com.mm has already captured the lion’s share of the market in Myanmar, notably by permitting digital funds through the 2021 money disaster. Although eCommerce remains to be in its early levels in Myanmar, it would attain its full potential with the institution of direct renminbi-kyat alternate and an expanded logistics community. Indeed, the race to say the virgin retail market by creating a dominant “super app” remains to be in its early levels, however progress would require Chinese expertise and expertise no matter who develops it. No doubt, on this political panorama, this can be a race reserved for Chinese tech companies, because the political price for western retail companies is simply too excessive to compete in Myanmar.
Third, alongside its profitable vaccine diplomacy, Beijing has transferred to Myanmar the expertise to provide a Chinese COVID-19 vaccine below the model identify Myancopharm. Without many rivals, Beijing’s COVID-19 diplomacy in Myanmar has been a relative success. And it opens the way in which for newly established Chinese pharmaceutical firms to spend money on Myanmar’s generic medication market, which remains to be dominated by imports from India. Although it might take a while to realize market share, entrepreneurs in Myanmar are already on the lookout for an alternate supply of generic medication and manufacturing as a result of nation’s excessive market demand and the steep U.S. dollar-kyat alternate price, which has made imports dearer. Of course, with Beijing’s political help, fierce competitors within the native market is barely a matter of time.
The implementation of infrastructure initiatives below CMEC remains to be on the bilateral agenda, however the brand new political dynamic within the nation and the altering strategic wants of each Naypyidaw and Beijing are altering the trajectory of the connection. Nevertheless, it’s time to look past CMEC and the Belt and Road Initiative as solely infrastructure-oriented and take into account the frontier sectors during which China is competing globally.