China, Myanmar, WTO: Dependence, Low-End Exports, and Friendly Consultations

The government has suspended work on the controversial Myitsone dam as a result of widespread public protest over its likely environmental and social impact,

reports the Myanmar Times.

Myitsone Dam under Construction, Wikimedia Commons (click on photo for source)

Myitsone Dam under Construction, Wikimedia Commons (click on photo for source)

China News Service (中国新闻网) reported on Sunday (October 2, 2011, 00:41 GMT) that

Foreign Ministry spokesman Hong Lei (洪磊) told a press conference today that the Myitsone electric plant project is a joint Sino-Chinese project which went through scientific demonstration and strict examination. The matters concerned should be properly handled through friendly consultations between the two sides.

中国外交部发言人洪磊今天回答记者问时说,密松电站是中缅两国的合资项目,经过了双方的科学论证和严格审查。对项目实施过程中的有关事宜,应由双方通过友好协商妥善处理。

Q: According to reports, Myanmar’s parliament announced on September 30 that during president Thein Sein’s tenure, the Sino-Myanmarnese cooperative  Myitsone electric plant  project will remain shelved. What is the Chinese side’s comment on this?

据报道,9月30日,缅甸联邦议会宣布吴登盛总统在其任期内搁置中缅两国密松电站合作项目。中方对此有何评论?

A: The Chinese government has always supported Chinese companies in developing cooperation with companies abroad, based on the principles of mutual respect, equality and mutual benefit, and demanded that Chinese companies should perform in strict accordance with those countries’ law and regulations, to fulfill their responsibilities and obligations, and urges governments in pertaining countries to guarantee the Chinese companies’ legal legitimate rights and interests. The Myitsone power plant is a project jointly invested by China and Myanmar, and went  through the scientific demonstration and strict examination of both sides. The matters concerned should be properly handled through friendly consultations between the two sides.

中国政府一贯支持中国企业本着相互尊重、平等互利原则同其他国家企业开展合作,并要求中国企业严格按照所在国法律法规履行责任和义务,敦促有关国家政府保障中国企业的合法和正当权益。密松电站是中缅两国的合资项目,经过了双方的科学论证和严格审查。对项目实施过程中的有关事宜,应由双方通过友好协商妥善处理。

Also on Sunday (Saturday, 18:07 GMT), People’s Daily‘s Bangkok correspondent Ji Peiyuan (暨佩娟) quoted Myanmar media:

According to Myanmar media reports, Burmese parliament announced on September 30 that during president Thein Sein’s tenure, the Sino-Myanmarnese cooperative  Myitsone electric plant  project will remain shelved. Thein Sein said: “Myanmar’s government is elected by the people, therefore, we have to pay attention to the will of the people. We are obliged to focus on settling the people’s worries and misgivings.”

Thein Sein said that the Myitsone electric plant  project could harm [or destroy, 破坏] the natural landscape, the livelihoods of the local people, the private capital in the cultivation of rubber plantations and crops, and collapsing dams, caused by climate change, could also damage the livelihoods of the people near the Myitsone plant, and further down the river. He also said that the Myanmar government would consult with the Chinese government to avoid harming Sino-Myanmar bilateral relations and friendship.

Myanmar Myitsone hydropower plant is worth 3.6 billion US dollars, and is about 200 kilometers away from Tengchong County in Yunnan Province. and is a major hydropower by the China Power Investment Corporation, in the region of Myanmar’s Irrawaddy River. It’s located in the Kachin mountainous region and to be developed at the 干流河段 section of the Irrawaddy River, with a capacity of six million kilowatts.

The rest of People’s Daily’s report reflects the statement made by Chinese foreign ministry Hong Lei (see this post’s initial paras).

The BBC reported that a letter by president Thein Sein had been read out in parliament, announcing the decision to suspend the project. The project had fuelled fighting between the army and ethnic Kachin rebels. The BBC quotes its South East Asia correspondent Rachel Harvey as saying that the decision appears to be further evidence of the new leadership’s desire to seek legitimacy by being more open to public opinion.

Both continuing the project in the long run (completion was originally scheduled for 2019), and its abandonment, would pose many problems. Continuation would reportedly have a negative impact on biodiversity, as frequently reflected by organizations like the Burma Rivers Network, it may come with side effects as many other mega dams from the Aswan Dam in Egypt to the Three-Gorges dam in China have, and rebel movements in the region could make the Myitsone project vulnerable to sabotage. Besides the mythological weight the river carries, forced relocations, and the loss of means of livelihood also seem to have driven opposition.

But Mynamar may have good reasons to keep consultations with Beijing as friendly as possible. Even if Yangon (or Naypyidaw) flatly refused to pay damages (if legally obliged to do so), business with its powerful neighbor would suffer. China sees itself a s a victim of trade protectionism, and this case, if it becomes a high-profile bone of contention, would add to that.

On the other hand, the further process may also make it clear to Beijing that mere deals with third-world countries’ regimes may not be sustainable. If China’s rulers understand that is a different question. Protectionism and resource nationalism had been on the rise and hampered Chinese business, official Xinhua news agency reported in September, citing an Ernest & Young report. Obviously, China was a “victim” of trade protectionism (贸易保护主义最大受害者).

There is grumbling among China’s academia, too. On the tenth anniversary of China’s accession to the WTO, People’s University (aka Renmin University) professor Gu Genliang (贾根良) questioned China’s foreign trade approach of importing high-end products and exporting low-end products (进口高端产品并出口低端产品).

By exporting hydropower to China, Myanmar would follow a path similar to the one Gu Genliang deems harmful. China, Gu Genliang (and many other Chinese people, academics or not) feel that they are being exploited, especially by America, of course.

[Update, April 11, 2012: the linked website, Utopia, is currently offline.  Apparently, Wu Genliang’s article can also be found here.]

Gu also fears foreign blackmail:

We are mired in heavy dependence on foreign resources and on on our own cheap exports. Large-scale low-end exports consume a lot of energy and natural resources, which led to our country’s dependence on foreign energy and resources which not only made the prices for these sources explode, which transferred the fruits of our people’s hard work into the hands of energy-exporting countries, but also has the potential of making us suffer from foreign countries’ embargos, thus carrying a huge security risk. At the same time, while our country is so reliant on foreign resources, it is ridiculous that we are exporting large quantities of rare earths and minerals coal, etc. at low prices.

第五,深陷对外部资源的严重依赖和本国资源廉价出口的陷阱。低端产品的大量出口是以大量消耗能源和自然资源为基础的,这导致了我国对外能源和资源的高度依赖,这种高度依赖不仅导致了能源和资源的价格暴涨把我国人民辛苦劳动的成果转移到资源出口国手中,而且潜伏着遭遇外国对我国实施资源禁运的巨大经济安全风险。同时,令人感到荒谬的是,在我国深陷对外部资源的严重依赖的同时,我国的大量资源如稀土、煤炭等却被大量地廉价出口。

The WTO ruled in July that Chinese export restrictions on certain raw minerals violated global rules

Gu spells out the conditions under which China’s WTO membership could still be useful – or those under which it should consider leaving the organization.

Myanmar is still a long way from even joining.

But maybe, at least, it will stop exploiting China’s dependence on energy, and pull the plug on the Myitsone project for good.

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Related

» The Government had little Choice, Asia Times, Oct 4, 2011
» Vietnam: Under Threat of Invasion, April 29, 2009

Updates / Related

» Aung San Suu Kyi Cautious, BBC, Oct 3, 2011

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4 Responses to “China, Myanmar, WTO: Dependence, Low-End Exports, and Friendly Consultations”

  1. Good coverage JR. I have a populist, gut level response. Good to see one of the PRC’s poor neighbours tell Beijing to get stuffed for once, and forget about all the contractual niceties. Hopefully Laos will follow suit.

    China as a victim of trade protectionism. Even some of the dumbest citizens in tubbyland die laughing at that proposition.

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  2. Potentially, Myanmar would have a choice between quite a number of neighboring trade partners – India not least (the latter may also be more willing than Western governments to ignore the de-facto military rule over Myanmar which is still in place after all). That said, none of them would be nearly as energy-hungry as China, and given the location of this (possibly) white elephant in Kachin state, near Yunnan, who should be interested in buying the Chinese out? So, if the project should be dead for good, it’s either paying damages, trying to negotiate an amiable solution with Beijing (mostly at Beijing’s expense, I guess), or ignoring Chinese complaints. But I do agree with your populist, gut level response for my own impression that business deals with regimes which are completely out of touch with their people won’t cut it for Beijing. Just wondering if that will sink in there.

    Either way, Myanmar also needs to consider the impression it may leave on other potential trading partners, if they basically shrug at Chinese complaints. That may be a solution to the problem, but not the one of first choice.

    The most catchy aspect about this issue, and about many others (see resource nationalism) seems to be that China can’t simply blame “the West” for these calamities. Convincing people, rather than foreign autocrats or co-opted business elites is a skill CCP mandarins may never master, and the absence of “soft power” will make that task still more difficult.

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