From Beijing, Myanmar and North Korea Could Not Be Further Apart

Panel contrasts China's engagement with two pariah neighbors

Drew Thompson, Director of China Studies and Starr Senior Fellow at the Nixon Center, speaking in Washington on Mar. 15, 2011. (ASDC)

WASHINGTON DC, March 15, 2011 - North Korea and Myanmar have little in common with each other aside from sharing a border with China, being cut off from commercial links to Western countries, and being increasingly dependent on trade and investment from China, according to Drew Thompson, Jae Ku, Yun Sun, and David Steinberg.

The four panelists spoke at an Asia Society Washington panel discussion, moderated by Executive Director Jack Garrity, about China's trade and investment with North Korea and Myanmar, and the implications of these relationships.

Drew Thompson, Director of China Studies and Starr Senior Fellow at the Nixon Center, reasoned that China's engagement with Myanmar and North Korea was "worth comparing" because it showed how different these relations are from each other. "If you compare the Chinese experience in Myanmar, North Korea, and Mongolia, the only thing that is special is China."

In examining Chinese companies that invest in North Korea, Thompson listed smaller firms from northeastern China as being the most active. Only two of China's top 100 companies have a presence in North Korea, and he added that the general consensus of companies is "North Korea's investment environment is brutal." When interviewing a Chinese entrepreneur in North Korea, Thompson asked why big conglomerates from Shanghai don't operate in North Korea. In response, the entrepreneur told him, "Do you think if there was real money to be made here the conglomerates would let me continue this business? They would buy me out!"

Thompson reported that there aren't as many Chinese companies operating in Myanmar as in North Korea. Geography and a lack of developed infrastructure, he said, have prevented serious border trade between Yunnan province in China and Myanmar. Thompson concluded his opening remarks, however, by saying that Myanmar has a much more open environment than North Korea.

Jae Ku, Director at the US-KI, summarized the concerns that South Korea has about Chinese investment in North Korea. Despite its small scale, "South Koreans see this investment as being far more influential and having far greater weight," and there is a general feeling among South Koreans that Chinese investment in North Korea contributes to the durability of the regime. This is even more troubling considering that South Korea has very little leverage over Beijing, despite the large amount of trade that is conducted between the two countries.

Yun Sun, Senior Program Officer at NDI, commented that China is mostly investing in energy reserves in Myanmar. Citing Myanmar's rich hydropower potential, Sun explained that the energy produced there could be sold back to Yunnan province in China. She also mentioned that there a lot of infrastructure loans that are provided by China's state banks to fund large projects by Chinese companies in Myanmar.

David Steinberg delved further into China's relationship with Myanmar, saying that "Yunnan and the Chinese have a very serious interest" in the country. He listed elections, revolutions, and minority insurrections as among the chief concerns of the Chinese because "the Chinese projects are for a large part in minority areas."

Steinberg added that some state legislatures may now have the ability to question certain Chinese projects, such as building hydropower plants that sell electricity back to China that "have no immediate benefit." Sun and Steinberg agreed that no one should be surprised by an increase in trade between China and Myanmar.

In the question and answer session that followed, the panel turned its attention to nuclear weapons, the global financial crisis, and labor relations.

Reported by Adrian Stover, Asia Society Washington Center