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BEIJING (Reuters) - The lifting of decades of broad Western sanctions
on Myanmar will prove to be both a boon and a test for China, for
years the former Burma's top investor and trading partner, bringing
both risk and opportunity for long-established Chinese firms.
The United States, European Union, Japan, Canada and Australia have
all moved in recent weeks to ease or suspend sanctions on Myanmar, as
the once pariah nation embarks on landmark democratic reforms and
seeks engagement with the world.
While sanctions have blocked many Western investments, China has
become Myanmar's biggest ally, investing in infrastructure, hydropower
dams and twin oil-and-gas pipelines to help feed southern China's
growing energy needs.
But with European, U.S. and Japanese firms all chomping at the bit to
get in, Chinese firms long present in Myanmar with little competition
could be in for a shock.
"Being based in Yunnan, which shares a long border with Myanmar, and
not having to worry about sanctions, has been great for Chinese
companies in the past," said Wei Jijian, a manager at a Chinese mining
company which operates in Myanmar.
"But now American and British companies are sniffing around, and once
they go in a big way, it's going to create difficulties for Chinese
companies," he told Reuters by telephone from the Yunnan provincial
capital, Kunming.
"So Chinese firms should get in now and grab the first-mover advantage."
Moves to ease or suspend sanctions have been accompanied by a degree
of hand-wringing in Chinese media, especially in publications from
southwestern Yunnan province and those linked to Chinese industry, the
energy sector in particular.
China's energy industry has more reason than others to be nervous.
Last year, Myanmar's new civilian President Thein Sein suspended the
$3.6 billion Myitsone dam being built and financed by Chinese
companies in northern Myanmar after weeks of public criticism of the
project.
But a more crucial project - twin oil and gas pipelines being built at
huge expense across Myanmar and into China - appears safe despite
unhappiness among some residents who live along its route and conflict
with ethnic minority rebels close to the Chinese border.
CNPC, parent of PetroChina, is in charge of that project. China's top
three oil firms - CNPC, Sinopec Group and CNOOC Ltd - all operate in
Myanmar.
Energy, a magazine published under the auspices of China's state-owned
Assets Supervision and Administration Commission, said in a recent
blog on its website that Myanmar's democratization would pose a big
challenge to energy cooperation, noting Myanmar was "drifting away"
from China.
"In the eyes of some of Myanmar's top leadership, the country relies
excessively on China, from daily necessities to strategic resources,
and that is bad for the country's international image and political
and economic security," the magazine said.
"The appropriate way to deal with this then is to put some distance
between Myanmar and China and draw closer to other large powers."
MORE TRANSPARENT ENVIRONMENT
China has counted on Myanmar as a bulwark against what China sees as
U.S. attempts to surround it. That reliance could be threatened now
the United States has renewed contacts with Myanmar as it embarks on
political liberalization.
China's pledged investment in Myanmar was more than $14 billion in the
2010/11 (April-March) fiscal year, as total foreign direct investment
promises soared to $20 billion from just $300 million a year earlier,
official data show.
The Chinese government has called on all sanctions on Myanmar to be
lifted, after pro-democracy leader and Nobel Peace Prize laureate Aung
San Suu Kyi and more than 40 members of her party won April 1
by-elections.
Still, China has expressed concern its influence in the country could
be affected, especially by U.S. moves to re-engage with Myanmar. Vice
Foreign Minister Cui Tiankai said on Wednesday he hoped better U.S.
ties with Myanmar were not aimed at excluding China.
Chinese executives will also be hoping that Myanmar's reforms lead to
less corruption and bureaucracy and a better, fairer regulatory and
governance environment.
"China has over the years monopolized the market, but that actually
was not necessarily a good thing. Some of the investments there turned
out to be bad bets," one Chinese oil executive told Reuters.
"If we now get a more transparent environment, Chinese companies would
be obliged to take a more objective look at potential opportunities,"
said the executive, who declined to be identified as he is not
authorized to speak to the media.
STILL MANY PROBLEMS
Not everyone in China is so sanguine about the prospects for Southeast
Asia's poorest country, sanctions or not.
The state-run Yunnan Information Daily this month outlined the case of
a Yunnan firm which has invested millions in Myanmar, yet had an
unspecified new project called off by a city mayor because of a
dispute between the central and regional governments.
"This kind of thing just adds to the risks for Chinese companies.
National reconciliation may be happening, but the old problems are
still there and are just as prominent," the newspaper said.
While some Chinese companies fret about competition from Western
firms, it may actually in the nearer term be Japanese or South Korean
companies that prove quicker on their toes.
Japanese companies have long conducted business in Myanmar, but
interest has grown since the reform-minded government took office,
particularly in planned industrial zones.
Japan will help draw up a blueprint for the Thilawa Special Economic
Zone, potentially giving Japanese firms a leg-up over rivals in
winning infrastructure projects for the area.
"Japan has started providing assistance again, including loan
resumption and debt forgiveness, and has been sending numerous
business delegations to look at deepening investment ties," said
Stephanie Kleine-Ahlbrandt, Northeast Asia director for the
International Crisis Group.
"Competition at the regional level is likely to deepen, and Japanese -
and probably also Korean - investment will move much faster than that
from the West," she said.
(Additional reporting by Chen Aizhu and Sabrina Mao; Editing by Robert Birsel) |
