Myanmar civil war threatens China’s key trade routes

“One village, two countries” was once the slogan of Yinjing, on the southwestern edge of China.

An old tourist sign boasts that the border with Myanmar consists only of “bamboo fences, ditches and ridges” – a sign of Beijing’s quest to build easy economic ties with its neighbor.

The border visited by the BBC is now marked by a tall metal fence running through Ruili County in Yunnan Province. Topped in places with barbed wire and surveillance cameras, it cuts through rice fields and demarcates once-adjoining streets.

China’s harsh pandemic lockdown initially forced the two sides to separate. But since then, Myanmar’s intractable civil war, triggered by a bloody coup in 2021, has further cemented the situation. its greatest loss.

The crisis on its doorstep – nearly 2,000 kilometers (1,240 miles) along the border – is becoming costly for China, which has invested millions of dollars in Myanmar to build a vital trade corridor.

The ambitious plan aims to connect China’s southwestern interior to the Indian Ocean through Myanmar. But the corridor has become a battleground between Myanmar’s rebels and the country’s military.

Beijing has influence on both sides, but a ceasefire it brokered collapsed in January. Now it is turning to border military drills and harsh rhetoric. Foreign Minister Wang Yi is the latest diplomat to visit Myanmar’s capital, Naypyidaw, and is believed to have issued a warning to the country’s ruler Min Aung Hlaing.

Conflict is not new to impoverished Shan state. Myanmar, the largest country, is the world’s main source of opium and methamphetamine and is home to ethnic armies that have long fought against centralized rule.

But the vibrant economic zone created by Chinese investment continued to thrive—until the civil war broke out.

Now, a loudspeaker in Ruili is warning people not to get too close to the fence, but that didn’t stop one Chinese tourist from sticking his arm between the fences to take a selfie.

Two girls in Disney T-shirts shouted at the bar: “Hey grandpa, look over here!” – as they licked pink ice cream. The old man shuffling barefoot on the other side barely raised his head before turning and leaving.

“Burmese people live like dogs,” Li Mianzhen said. Her corner stall sells food and drinks from Myanmar (such as milk tea) in a small market just steps from the Ruili city border checkpoint.

Ms. Li, who appears to be in her 60s, used to sell Chinese clothing across the border in Muse, a major source of trade with China. But she said almost no one in her town has enough money anymore.

Myanmar’s military junta still controls the town, one of its last remaining strongholds in Shan state. But the rebels have captured other border crossings and a key trading area on the road to Muse.

Li said the situation feels hopeless. She knows people who cross the border for as little as 10 yuan (about a pound, less than a dollar) so they can return to Myanmar to “support their families”.

The war has severely restricted travel in and out of Myanmar, and most accounts now come from people like Lee who have fled or found ways to move across the border.

Li’s family has been unable to obtain work passes into China and is stuck in Mandalay as rebels close in on Myanmar’s second-largest city.

“I felt like I was dying of anxiety,” Lee said. “This war has brought us so much misfortune. When will it end?

Zin Aung (pseudonym), 31, was one of those who managed to escape. He works in an industrial park on the outskirts of Ruili that produces clothing, electronics and auto parts that are sold around the world.

Workers like him are recruited en masse from Myanmar and flown here by Chinese government-backed companies hungry for cheap labor. It is estimated that they earn around 2,400 yuan ($450; £340) a month, less than their Chinese colleagues.

“We have nothing to do in Myanmar because of the war,” Zin Aung said. “Everything is expensive. Rice, cooking oil. There is fierce fighting everywhere. Everyone has to run.

His parents were too old to run away, so he ran away. Whenever possible, he would send money home.

These people live and work in a compound of several square kilometers run by the Ruili municipal government. Zin Aung said it was a refuge compared to what they left behind: “The situation in Myanmar was not good, so we took refuge here.”

He also escaped mandatory conscription, which Myanmar’s military has been imposing to compensate for defections and battlefield losses.

One night, as the sky turned scarlet, Zinang ran barefoot through the tiresome mud onto the monsoon-soaked pitch, bracing himself for a different kind of battle – a fierce game of football.

Burmese, Chinese and the local Yunnan dialect were mixed together, and the crowd had a different reaction to every pass, kick and shot. The pain of missing a goal is palpable. This is a daily routine in their new temporary home, posted after a 12-hour shift on the assembly line.

Many of the workers come from Lashio, Shan state’s largest town and home to junta-backed crime families – it was captured by rebels in January and Lashio was surrounded in a battle that changed the course of the war in which China has a stake .

Both towns lie along China’s prized trade corridor, where a Beijing-brokered ceasefire left Lashio in the hands of the military junta. But in recent weeks, the rebels have advanced into the town, their biggest victory yet. The military responded with bombing and drone attacks and restricted internet and mobile phone access.

“The fall of Lashio was one of the most humiliating defeats in military history,” said Richard Horsey, Myanmar adviser at the International Crisis Group.

“The only reason the rebel groups have not advanced on Muse is that they may fear it would anger China,” Mr Horsey said. “Fighting there will affect investments that China has been hoping to restart for months. The regime has lost control of almost all of northern Shan State – except for the Muse region adjacent to Ruili.

Ruili and Muse are both designated trade zones and are crucial to the 1,700-kilometer trade route funded by Beijing, known as the China-Myanmar Economic Corridor. The route also supports Chinese investment in energy, infrastructure and rare earth mining, areas critical to electric vehicle manufacturing.

But at its core is a railway line that will connect Kunming, the capital of Yunnan province, to Kyaukpyu, a deep-sea port China is building on Myanmar’s west coast.

Located on the coast of the Bay of Bengal, the port will provide industries in and outside Ruili with access to the Indian Ocean and global markets. The port is also the starting point for oil and gas pipelines that will carry energy through Myanmar to Yunnan.

But those plans are now in jeopardy.

When the country’s elected leader Aung San Suu Kyi was forced from power, President Xi Jinping spent years cultivating relations with his resource-rich neighbor.

Xi Jinping has refused to condemn the coup and continues to sell military weapons. But he also did not recognize Min Aung Hlaing as the head of state and did not invite him to visit China.

Three years on, the war has killed thousands and displaced millions, with no end in sight.

The army was forced to fight on new fronts, and Myanmar has since lost between half and two-thirds of its territory to the fragmented opposition.

Beijing is in stalemate. Horsey said it “did not like this situation” and considered Myanmar’s military ruler Min Aung Hlaing “incompetent”. “They push for elections not because they necessarily want a return to democratic rule, but more because they think it’s a step back.”

The Myanmar regime suspects Beijing of playing both sides – maintaining an outward appearance of support for the military junta while continuing to maintain relations with ethnic minority armies in Shan state.

Analysts point out that many rebel groups are using Chinese weapons. The latest fighting is also a resurgence of a campaign launched last year by three groups calling themselves the Brotherhood Alliance. It is thought the alliance will not take action without Beijing’s tacit approval.

Its victory on the battlefield spelled the end for notorious mafia families whose racketeering centers had trapped thousands of Chinese workers. Beijing has long been frustrated by growing lawlessness along the border but welcomed their collapse and the tens of thousands of suspects handed over by the rebels.

The worst-case scenario for Beijing is a civil war lasting for many years. But it also worries about the collapse of the military regime, which could herald further chaos.

It’s unclear how China would respond to either scenario — and it’s also unclear what Beijing can do beyond pressuring both sides to agree to peace talks.

The dilemma is evident in Ruili, where miles of stores have closed. The city that once benefited from its border location is now suffering from its proximity to Myanmar.

Businesses here have been hit again by the failure of cross-border traffic and trade to recover, hit by some of China’s strictest lockdowns.

According to several intermediaries who help Myanmar workers find jobs, they still rely on each other’s labor, but this labor has now stopped. They say China has tightened restrictions on hiring workers across its borders and deported hundreds of people it said were working illegally.

A small factory owner, who asked not to be named, told the BBC that the expulsion means “his business will not go anywhere… and I can’t change anything”.

The square next to the checkpoint was crowded with young workers, including mothers with babies, waiting under the shade of trees. They laid out the paperwork to make sure they had everything they needed to get a job. Those who succeed are given a pass that allows them to work for up to a week or, like Li, travel between the two countries.

“I hope some good people will tell all parties to stop fighting,” Lee said. “It would be tragic if no one in the world spoke up for us.”

She said people around her often assured her that fighting would not break out too close to China. But she doesn’t believe it: “No one can predict the future.”

For now, Ruili is a safer choice for her and Jin Ang. They understand that their future is in the hands of the Chinese, and so are the Chinese.

“Your country is at war,” a Chinese tourist told a Burmese jade seller haggling with him at the market. “You just have to accept what I give you.”