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Why the China-Burma Break-up Matters

It all started with the Myitsone Dam in northern Burma. The dam’s Chinese builders, confident that they had the support of the decision-makers who mattered (Burmese politicians), ignored or were unaware of local resistance to the dam. But the Chinese soon found out just how important local resistance can be. The locals protested, and Thein Sein, Burma’s president, canceled the dam project.

China and Burma have been growing apart since that watershed moment. What does it mean for the region and China’s sense of its place in the world? Firstly, when it comes to Burma, China’s loss is a win for America and its Asian allies, as the Economist reports:

For many Chinese foreign-policy experts the other worrying aspect of China’s stumble in Myanmar is that Beijing’s loss has been Washington’s gain.

In an era of renewed tension between America and China in the region, Myanmar’s recent opening up is thus usually interpreted by these experts as a tilt towards the West, all part of America’s “pivot” towards Asia. [...]

The Burmese also complained that for all the roads and bridges constructed, the Chinese were unable, or unwilling, to provide other, more sophisticated, services such as banking or advice on issues such as government administration, the sort of soft-power issues at which Western countries excel.

Burma’s “opening” is an opportunity for Washington and its allies to pull Burma away from China’s embrace, and so far it looks like that’s the case.

China’s business and political operators abroad are also growing more sensitive to local sentiment and taking note of resistance to Chinese-run projects:

The Chinese government is now telling businesses—especially SOEs—operating overseas to be more respectful of local customs and people, and to invest more in what Westerners would call corporate social responsibility. Thus, for instance, the China National Petroleum Corporation, which is building a controversial oil pipeline across Myanmar from the west coast to the border at Ruili (and then on into China), is now building lots of schools in villages near the pipeline.

Welcome to the club, China. The U.S. and Europe have been learning this lesson for years (and countries like Brazil have been exposed to it in recent years, too). When you meddle in affairs beyond your borders, you must take local politics and sensitivities into account; you can’t just make deals with dictators and hope for the best. The latter strategy may work some of the time, with the more tight-fisted dictators, but Burma provides an example of what happens when dictators relax their grip: business opportunities evaporate or change dramatically.

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