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Despite New Pipeline, China Missing Out on Burma's Boom

After billions of dollars in investment and years of construction, the Burma-China gas pipeline is finally open. The pipeline connects Kunming in southwestern China to the Burmese port of Kyaukphyu on the Indian Ocean. It will soon be transporting 12 billion cubic meters of gas (about 6 percent of China’s consumption)—all without going anywhere near the congested Straits of Malacca. But the pipeline won’t do much good for Burma, Quartz reports, and it is exactly the kind of industrial project Beijing wants to avoid in future in order to revamp relations with its former client state.

When Burmese President Thein Sein suspended construction at the Myitsone Dam, he took many in China by surprise. Burma, a military dictatorship, had relied on China for years for diplomatic, economic, and military support, and Chinese companies gleefully used this as an opportunity to grab valuable resources from Burma. But ever since Burma’s opening and the gradual lifting of international sanctions, Chinese business has taken a back seat to companies from Japan, Europe, and the United States. This has led Beijing to re-think its relations with Myanmar, says China’s Caijing magazine.

The Kyaukphyu-Kunming pipeline is anything but a transformational project. The billions of dollars in fees China will pay to Burma for the gas will no doubt flow into mysterious bank accounts, reinforcing a culture of corruption in the Burmese government that is already one of the worst in the world. Also, “countries like China and Thailand, which imports about 15% of Myanmar’s gas supply, are extracting a resource Myanmar desperately needs at home. As a result, China and Thailand are able to keep their lights on, whereas Myanmar is not.” The pipeline also runs through two very sensitive areas: Rakhine state, on the coast, has been the scene of terrible riots and massacres of Muslim immigrants by Buddhist Burmese in the past year. And in the east, near the Chinese border, the United Wa State Army, with support from China, continues an off-and-on battle for regional autonomy.

China is already falling far behind companies from Japan and the West in taking advantage of Burma’s newly open economy, and the new pipeline isn’t likely to win new friends for Beijing. Locals fret about spills and wonder why they haven’t seen any benefits from a pipeline that now runs through their fields. A lot depends on whether China can figure out how to become benefactor-in-chief again: dozens of oil and gas exploration licenses will soon be up for grabs, not to mention all kinds of opportunities in real estate, manufacturing, and telecommunications.

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