China’s ambitious plan to create a vital trade route through Myanmar has faced severe setbacks due to the ongoing civil war. What was once envisioned as a seamless corridor connecting China’s landlocked Yunnan province to the Indian Ocean has now become a battleground, with Beijing struggling to protect its investments and maintain control over the volatile region.
China had spent millions of dollars on the China-Myanmar Economic Corridor, an ambitious 1,700km route designed to facilitate trade from Kunming to the Indian Ocean via Myanmar’s deep-sea port at Kyaukphyu. This corridor was expected to provide China with access to global markets and enhance its infrastructure, energy, and mining investments. However, these plans are now under threat as Myanmar’s internal conflict, sparked by the military coup of 2021, has severely destabilized the region.
The civil war has significantly impacted the border between China and Myanmar, particularly in areas like Shan State, where rebel forces and the military regime are engaged in fierce fighting. China had previously brokered a ceasefire in January 2024, but it quickly collapsed, leading to intensified battles between Myanmar’s military and ethnic rebel groups. China, which shares a nearly 2,000-kilometer border with Myanmar, now finds itself caught in a precarious situation, with its economic investments hanging in the balance.
One of the most significant areas of contention is the town of Lashio, located in Shan State. Once under military control, Lashio fell to rebel forces in recent months, marking a major victory for opposition groups. The fall of Lashio has been described as one of the most humiliating defeats in the Myanmar military’s history. Rebel forces have also encircled other key towns like Muse, a crucial hub along the trade route. The fighting in these areas threatens China’s prized investments, particularly the railway line that would connect Kunming to Kyaukphyu.
China has responded by conducting military exercises along the border and issuing stern warnings to Myanmar’s ruling junta. However, Beijing finds itself in a difficult position. While it has refused to condemn the military coup and continues to sell weapons to the junta, it has also not officially recognized the regime or invited its leader, Min Aung Hlaing, to China. This dual approach reflects China’s delicate balancing act of maintaining influence while avoiding full support for either side.
The conflict has also disrupted the flow of labor and trade between the two countries. Many Myanmar workers, like 31-year-old Zin Aung, have sought refuge in China, working in industrial parks in Ruili, Yunnan. These workers are recruited by Chinese firms seeking cheap labor but earn significantly less than their Chinese counterparts. For many, the economic hardship and compulsory military conscription in Myanmar have left them with no choice but to flee.
The civil war has created an uncertain future for China’s trade ambitions. While Beijing had hoped to restart investments and economic activity along the border, the ongoing conflict threatens to derail these plans indefinitely. The fall of key towns like Lashio and the increasing control of rebel forces over northern Shan State pose a direct challenge to China’s ability to secure its trade corridor.
As China grapples with these challenges, it faces a difficult decision. Prolonged conflict in Myanmar would lead to further instability and jeopardize Beijing’s investments, but a complete collapse of the military regime could introduce even more chaos. For now, China remains at an impasse, unsure of what steps to take next as the civil war continues to reshape the geopolitical landscape along its southwestern border.
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