Cars, railways and cattle: China’s economic interests in Myanmar

Chinese businesspeople see significant potential in Myanmar, particularly in the auto market after Nay Pyi Taw banned imports of right-hand drive cars, and Beijing is also pushing for a Muse-Kyaukphyu railway and cattle farms.

By SITHU AUNG MYINT | FRONTIER

THE ANNUAL China-Myanmar border trade and trade fair was held late last month in Ruili, the bustling border town in Yunnan Province opposite Myanmar’s Muse. The fair, which took place from December 26 to 30, is hosted alternately by China and Myanmar. Deputy Minister for Commerce U Aung Htoo headed a delegation from Myanmar at the event, where met with Chinese officials. Aung Htoo later spoke to the media about what was discussed at the meeting, which highlighted China’s broad-ranging interests in its economic relationship with Myanmar.

The matters raised with Aung Htoo included a request to allow Chinese-made cars to be imported by land. Myanmar policy allows agricultural machinery, heavy machinery and motorbikes to be imported through border trade but passenger vehicles must be delivered by sea.

China’s request follows Myanmar’s decision to restrict automotive import licences to left-hand drive vehicles with effect from January 1. Previously, right-hand and left-hand drive vehicles could be imported. Most of the hundreds of thousands of vehicles brought into the country since imports were liberalised in 2011 have been Japanese-made, right-hand drive vehicles, despite traffic in Myanmar driving on the right. The import of used right-hand drive vehicles from Japan seems to have dried up since January 1.

However, the market for left-hand drive cars, assembled locally and imported, is small. Only about 5,000 to 6,000 are sold each year, compared with annual sales of more than 130,000 second-hand vehicles from Japan, worth between US$600 million to $1 billion. The change in import rules has had the effect of banning imports of Japanese cars, affecting a market worth up to $1 billion a year.

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The January 1 rule change gives automakers in China an advantage in the market because they mainly produce left-hand drive cars. Many leading Japanese and European automakers also have operations in China. Popular vehicles in China cost about $10,000 (about K13.5 million), a competitive price on the Myanmar market. As a result, Chinese vehicles could come to dominate the Myanmar market.

Aung Htoo suggested that Chinese vehicle makers could be allowed to open show rooms in Myanmar. If the market accepted Chinese-made cars, the ministry may consider granting permission to import them through border trade.

Another big issue that China reportedly raised at the meeting was its plan for a Muse-Mandalay-Kyaukphyu railway. It wants to build the railway as part of the Myanmar-China Economic Corridor proposed by China’s Foreign Minister Mr Wang Yi at talks with State Counsellor Daw Aung San Suu Kyi in Nay Pyi Taw last November.

The issue was raised as China nears completion on a multi-purpose transport project, with an expressway, railway and oil and gas pipelines, linking the Yunnan capital, Kunming, with Ruili.

The oil and gas pipelines link Kunming with Kyaukphyu in Rakhine State and went into operation last April after being completed in 2014. The oil pipeline allows China to achieve a long-held energy security objective of importing crude from the Middle East and Africa without having to ship it through the Strait of Malacca. China is also negotiating with Myanmar to build a deep-sea port and industrial zone at Kyaukphyu. A railway between Kyaukphyu and Kunming would be part of Chinese President Xi Jinping’s ambitious Belt and Road initiative to build trade and transport connections linking China and Asia with the Middle East, Africa and Europe.

Aung Htoo said Myanmar would probably respond favourably to China’s proposal to build the railway, adding that it could be achieved through loans and grants from China.

Beijing has also proposed developing farms in Myanmar to raise cattle for live exports to China. The proposal follows Myanmar’s decision last October to lift a ban on live cattle exports.

However, one thing that is strange about the meeting between Myanmar and Chinese officials is that it is not clear what requests Myanmar made.

Rather than relying on what China wants, Myanmar should develop its own major projects to boost the economy, which would in turn strengthen economic relations with China.

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