China’s Dai-Ruili railway in Yunnan province is a 336-kilometer line under construction on the border with Myanmar. This is China’s most important gateway to reach the Indian Ocean region for overland shipments.

However, the growing concerns over China’s debt trap diplomacy is threatening the progress of the China-Myanmar Economic Corridor (CMEC.)

China uses Myanmar projects heading toward the Indian Ocean

To build a railway connection between China and Myanmar, China Railway Group and Myanmar’s state railway signed a memorandum in 2018 estimated to cost $9 billion to develop the Muse-Mandalay Railway project.

According to BRI Monitor, as of 2021, the Muse-Mandalay Railway project remains in the planning stages. However, it can be expected that the military joint would approve the construction without due consideration, mainly because of the political legitimacy and diplomatic protection the Chinese can offer at the international forum.

In the same year, China signed another deal to extend rail service to a special economic zone on the Indian Ocean, Kyaukphyu, which links with Burma’s key oil and gas port.

These projects connect China’s landlocked western regions to the Indian Ocean, making the CMEC a more critical piece of the Belt and Road Initiative. Meanwhile, Myanmar can increase exports to China and become an international logistics hub.

Little visible progress 

The projects’ soaring price and growing funding issues have raised concerns along with the nation’s complex history of farmland expropriation.

Given scaling concerns that China is trapping emerging nations in debt so deeply, they are forced to make political and economic concessions to Beijing. 

Another piece of the Belt and Road Initiative, the China-Pakistan Economic Corridor, has sparked local opposition and put the Pakistani government in debt.

According to the World Bank, Myanmar has relatively little foreign debt. Its external debt stock equaled 17% of gross national income as of 2020, compared with 95% for Laos and 71% for Cambodia, while China accounted for 25% of its borrowing.

After switching to a civilian administration in 2011, Myanmar lessened its reliance on China by pausing work on the Chinese-backed Myitsone dam. The military government of Myanmar is anticipated to rely on relations with Beijing and Moscow, nevertheless, as it experiences growing international isolation.

A researcher at Institute for Strategy and Policy—Myanmar told Nikkei Asia that China has become increasingly alert to political trends and anti-Chinese sentiment in Myanmar.

According to an expert survey by the think tank, 83% of participants felt China would gain more from the economic corridor than Myanmar, while 12% said both countries would benefit.

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