China Entices Myanmar as India Struggles to ‘Look East’

By Shruti Pandalai

The Chinese National Petroleum Corporation has offered aid worth $6 million to Myanmar for building hospitals. This is no philanthropy, but an exercise aimed at pushing Myanmar to speed up laying the planned 878 km-long crude pipeline. In other words, a move to secure China’s access to Myanmar’s oil reserves.1 Simultaneously, a 2,389 km pipeline from Kyakphu in Myanmar to China’s Yunnan province is also being pursued. In 2010, the Asian giant pumped the largest investment into the junta’s coffers, estimated at $8.17 billion.2 China’s strides will, expectedly, fuel competition with India, which is energy hungry as well as concerned about encirclement by the red dragon. Indian initiatives in developing infrastructure, education facilities and aggressive bids for stakes in oil and gas in Myanmar with a focus on the North East have been obvious. However, is all of this too little, too late?

New Delhi’s interest in the North East Region has often been critiqued as security-obsessed and not oriented towards “genuine economic development and trade promotion.”3 Trade through the main border points mutually identified as Moreh (in Manipur) and Champhai (in Mizoram) have not lived up to the hype.4 The Myanmar Government has asked for strengthening the existing Moreh post so as to reap its full potential, before proposed trade points at Lungwa/Ledo, Pongru and Pokhungri in Nagaland and Nampong, Vijayanagar and Khimiyang in Arunachal Pradesh are agreed upon.5

Moreh’s official trade is only a fraction of its expanding grey market, reflecting that border trade is in total disarray with no clarity as to who is in-charge.6 Obstacles in legal transactions, lack of regulation by Myanmar on transiting third country goods especially from China and threat of non-state actors hassling traders in strong turf wars, have all left no incentive to develop commerce. Instead, trade has shifted to Tamu’s Namphalong market in Myanmar, disappointing local entrepreneurs in Manipur. This is just one case in point.

It is not just the numbers that seem bleak. Experts at an IDSA workshop “Imperative of Infrastructure Development for developing Indo-Myanmar Relations” stressed that de-hyphenating economic development in the North East from the goal of constructive presence in Myanmar would be a zero-sum exercise. The logic being that unless the Indian side of the border sees development, trying to improve connectivity and energy access on the other side would meet logistical failure.. In any event, India’s current commitments in Myanmar seem to have been already outpaced by China.

According to reports, PetroChina “is constructing a four billion cubic meter gas depot at Hutubi in the border province of Xinjiang to make the most of gas piped from Myanmar.”7 In contrast, as former Foreign Secretary Shyam Saran notes, “The problem with India’s energy interests in Myanmar is that even if it develops A1 to A7 energy blocks or any other offshore Bay of Bengal blocks, how will be it be transported back to India? [...] At present, we only hold a 30 per cent stake in A1 and A3 blocks, and that too we are forced to sell to China because of the absence of a proper pipeline between India and Myanmar.”8

Infrastructure bottlenecks remain in all of the India-initiated rail, road, power and energy related projects. The IDSA workshop suggested that New Delhi must focus “on infrastructure up to Tripura” and deal with logistic loopholes if execution of plans in Myanmar is desired. The detailed project report on the 2000 MW Tamanthi river project in Chindwin signed in 2008 is still being updated to get the requisite approvals.9 This is where China takes the game away from India. China acts, India deliberates.

Coming to specifics, in the field of power-generation, the dilemma seems to be between power requirement and the potential harnessed. While the North East grapples with a severe power shortage, there has not been any effort to better utilise the Arunachal Basin, which, moreover, delivers below capacity because of the narrow nature of its corridor. An alternative, in the view of experts, is to first ensure power surplus from the Arunachal Basin over and above the demands of the north east, which, they ambitiously claim, is possible. Second, it is important to sell the concept of dedicated power plants in Nagaland, Manipur and Arunachal. These must be insulated projects that focus on providing output to markets in Myanmar and Bangladesh with specific tariff regulations. This could work as an incentive for authorities on both sides of the border.

The immense potential of inland waterway arrangements as an efficient means of transport also remains largely unexploited. Currently, the emphasis seems to be solely on the Kaladan Multimodal Transit Project, which envisages connectivity between Indian ports on the east and the Sittwe Port in Myanmar coupled with riverine transport and road connectivity to Mizoram. This provides an alternate route for transporting goods to North East India, and will thus boost trade ties.10

This is an important project, considering the pressure on the Siliguri Corridor and Bangladesh’s continued refusal to allow transit rights through its territory to the North-East. While project completion is expected by 2013, logistical issues of river engineering like dredging, removal of rock outcrops, rapids, lack of navigation aids, etc., combined with environmental concerns, may delay its dividends.11 In such a scenario, experts note that India must better use its current MoU with Bangladesh on Inland Water Transport, which has so far only been semi-operational, neglected and subject to the whims of the Bangladeshi authorities.

India is already watching nervously as China pushes ahead with the re-building of the historic “Stillwell Road”12. 61 kms of the stretch lies in India, 1,033km falls in Myanmar and 632 km in China. Naturally, relentless Chinese efforts resulted in the contract being awarded to a Chinese construction company, which has already begun work on the 194 mile stretch from Myitkyina in Myanmar to the Pangsau Pass in Arunachal Pradesh, close to the Indian border.13

India has not begun to build its side of the road. Opinion stands divided. Indian businessmen strongly feel that this road, which is now almost unusable and prone to interdiction by insurgents, could be the key for the economic success of the North East. Rebuilding it will help re-establish the region’s trade ties with western China and South East Asia. The government, in contrast, sees this as a risky investment, given security concerns about China’s territorial claims to Arunachal Pradesh as well as the challenge of battling insurgent groups currently operating in the region.14

Many cross-border highways planned to connect India with Myanmar and beyond are still works in progress. The ambitious Rhi-Tidim and Rhi-Falam road projects, the Moiwa-Chindwin-Thailand trilateral highway project as well as trans-rail networks are still being refined.15 So far, only the Tamu-Kalaywa-Kalemyo Road connecting Moreh to Myanmar has been completed. Complaints of neglect have, however, surfaced about the road from Imphal that feeds into Moreh, which is symptomatic of the general approach.
Experts from the Border Road Organisation have flagged real concerns. Logistically, not only is the North East region remote, it is also short on resources, and the soil, moreover, does not support the type of stones required for tar roads. More often than not, project costs do not include budgets for transporting heavy machines and equipment to these areas, which then translates into delays. Local quarrying affects the geographical balance of the region, which often destabilises the foundations of the roads laid. Overall, unlike China, India lacks in skilled manpower, which is a glaring shortcoming. Both in quality and quantity China seems to be at an advantage. This perhaps explains BRO’s establishment of a China Study Group with the specific mandate of assessing rapid infrastructure build up near Tibet and the north east.

China’s strides in Myanmar have been well planned and executed. Beijing backed the military-led Junta when it was internationally isolated and doled out infrastructure support and soft loans long before India decided to look east. India’s image as a vibrant democracy and the strategic and economic need to counter Chinese influence in Myanmar will make policy options a lot tougher. Yet, what can be done now is to fully implement and leverage the existing framework and ensure that it delivers.

1. 1. Saibal Dasgupta, “China’s sweetener to speed up pipeline through Myanmar,” Times of India, April 7, 2011.
2. 2. “Chinese investment in Myanmar tops $8bn this year,” Reuters, August 16, 2010,
   reuters.com/article/2010/08/16/idINIndia-50868920100816.
3. 3. L. S. Singh, “Indo-Myanmar Relations in the greater perspective of India’s Look East Policy,” in Thingnam Kishan Singh, ed., Look East Policy and India's North: East Polemics and Perspectives (2009).
4. 4. Ibid.
5. 5. Ministry of Development of North East Region, http://mdoner.gov.in/index2.asp?sid=127.
6. 6. L. S. Singh, op. cit.
7. 7. Saibal Dasgupta, op. cit.
8. 8. “India’s strategic interests in Myanmar: An interview with Shyam Saran,” by M. Chaturvedi http://www.ipcs.org/pdf_file/issue/SR98-ShyamSaranInterview.pdf.
9. 9. www.mea.gov.in.
10. 10. Ministry of Development of North East Region, http://mdoner.gov.in/writereaddata/sublink2images/KaladanMultiModal2172726384.htm.
11. 11. Executive Summary of DPR for Port & IWT, http://iwai.nic.in/misc/portiwt.pdf.
12. 12. Stillwell Road was a route from India used by the British and American troops to supply Chinese troops against Japan during WW II. See, http://www.telegraph.co.uk/news/worldnews/asia/china/8243834/China-plans-to-rebuild-Burmas-World-War-Two-Stilwell-Road.html.
13. 13. Subir Bhaumik, “Will the famous Indian WWII Stilwell Road reopen?,” February 8, 2011, www.bbc.co.uk http://www.bbc.co.uk/news/world-south-asia-12269095.
14. 14. Ibid.
15. 15. “India’s strategic interests in Myanmar: An interview with Shyam Saran,” op.cit.