China Development Brief, No. 53 (Spring 2012)
This article highlights a growing interest among China’s NGOs in the regional and global impact of China’s economic expansion overseas, and in engaging with other actors and issues outside of China.
From June 23-30, 2011, the environmental NGO, Green Watershed, conducted a study of Chinese investment projects in Myanmar. The group traveled to Yangon, Mandalay, Rakhine and other places, meeting with local NGOs, community representatives, representatives of ethnic minorities, representatives of industry associations, the news media, and staff from Chinese companies with investment projects under construction. During the visit, the armed conflict broke out in the Kachin areas, so the Myitsone hydropower project inspection tour had to be canceled.
The group visited Chinese hydropower, oil and gas projects in Myanmar, looking at the influence of the projects on local residents, and listened and exchanged views with stakeholders in the projects. The final report suggested that Chinese investment in Burma should pay attention to environmental and social impact assessments, conflict risk assessment, and focus on the interests of the people of Myanmar, and the proper handling of relations between the Myanmar government and its citizens. The report also calls for strengthening exchanges and cooperation between Chinese and Myanmar NGOs to jointly promote the sustainable development of China’s overseas investment.
Chinese oil and natural gas projects in Myanmar
Data shows that China is currently involved in at least 20 oil and gas projects in Myanmar, mostly on the west coast of Myanmar and the Bay of Bengal in the Indian Ocean. This includes the investment of about seven Chinese companies, including PetroChina, Sinopec, and CNOOC. The investment structure of these projects is extremely complex. In addition to domestic companies, many foreign companies are also involved, including shareholders from Myanmar, Singapore, India, and South Korea. China is using Myanmar as the starting point for construction of the 2380 km-long oil and gas pipeline project (over 700 km of the pipeline will pass through Myanmar) with Kyaukpyu Island as a starting point. The project includes the deep-water port terminals, rail, airports, logistics, steel, petrochemical, highway and other industrial clusters and infrastructure. To complement these projects, CITIC Group has started the Kyaukpyu Island Economic and Technological Development project. The three major oil companies, Sinopec, PetroChina, CNOOC also have offshore oil and gas fields in Rakhine State, the right to develop oil and gas projects in Sagaing Province, and other places.
Currently, the China oil and gas terminal project is under heavy construction, and the impact on the local environment has been highlighted. The 700-km pipeline project has not yet started on a major scale, but once it does, the impact will also be enormous.
On Kyaukpyu Island, the group visited the Chinese natural gas project site constructed by Korean companies, and China Petroleum’s deepwater port site, and contacted several local and international public interest organizations. The group learned that the islanders do not quite understand the project, and local and international organizations are not very well informed. As these are poor areas, foreign companies provide some social services to improve public relations, but local residents stated that the Korean company carried out a number of public service projects, while Chinese companies did not and basically do not hire local workers. According to the Chinese project staff, funds from the company provided to the Government of Myanmar went to build a health clinic that is now idle. Providing funding directly to the government is China’s established practice, and the company is aware of the drawbacks; but this approach has not changed in order to keep good relations with the Myanmar government.
As oil and gas pipeline projects affect a large area of Myanmar territory and its stakeholders, their environmental and social impacts cannot be overlooked. Myanmar NGOs have emphasized paying attention to reducing the environmental and social impacts of the projects, and encouraging China to establish relations with local residents through public service projects.
Chinese mineral development in Myanmar
The group’s visit did not focus on mineral development, but they did receive some information from interviews.
China’s Ministry of Land and Resources and Myanmar’s mining sector signed a memorandum of understanding on the development of Myanmar’s mining industry and mineral resources. China’s mineral development projects in Myanmar are on a smaller scale than its investment in hydropower, oil and gas projects. Local Kachin and Lahu organizations report that the Chinese companies, Beijixing, Hairixing, and Changwei are conducting mining activities in the states of Kachin and Shan.
Currently, the Chinese companies involved in the mining industry in Myanmar are mining and processing nonferrous metals. Rare metals and coal mining will develop rapidly, with the increased capacity of electricity supply in Myanmar. This trend has increased the concerns of NGOs in Myanmar. During the visit, the group found that Myanmar NGOs are very worried that the construction of hydropower stations by Chinese in Myanmar will further stimulate mining activity, and exacerbate environmental destruction and the disappearance of forest vegetation.
Chinese hydropower projects in Myanmar
The capacity of the hydropower resources in Myanmar can be developed to about 50 million kilowatts, and the economy can be developed to about 40 million kilowatts mainly in the northern Kachin State and eastern Shan State, focused on the Irrawaddy and Salween tributaries of these rivers that originate in the Qinghai-Tibet Plateau in China.
The Irrawaddy, Burma’s largest river, is the mother river of the people of Myanmar. There are upstream points east and west of the source. The eastern source is Meikai En Jiang, China’s domestic segment called Dulong River, and the western source from Myanmar, the Mai Li Jiang. After the confluence of the two rivers in northern Myitkyina, the Irrawaddy flows through the north and south of Myanmar, and empties in the southern alluvial plain into the Andaman Sea in the Indian Ocean. The river has a total length of 2,327 km, and drainage area of 431,000 square kilometers, accounting for 60 percent of the land area of Myanmar. The annual average flow of 455 billion cubic meters is 40% of Myanmar’s total river runoff.
There is no watershed planning along the Irrawaddy, nor a plan for hydropower development. According to statistics, the China Power Investment Corporation is already developing hydropower in the tributaries of the Irrawaddy, on the Mali and N’Mai Rivers. The company is also planning a Myitsone power plant with a capacity of 4.1 million kilowatts for a total installed capacity of 16.5 million kilowatts. In addition, Chinese companies are also developing hydropower dams on the upper reaches of the Irrawaddy, on the Shweli and the Taiping Rivers.
The Salween River is Myanmar’s second largest river. It empties into the Andaman Sea in southern Myanmar. China’s Nujiang River, originating in the Qinghai-Tibet Plateau, is on its upper reach. The Nujiang and Salween have a total length of 3,673 km, of which 2,020 km are in China. According to initial research, there are six hydropower dams planned for the Salween River, with a total installed capacity of 15.81 million kilowatts.
Currently, China Southern Power Grid, Huaneng Group, China Power Investment Group, Datang Group, and the Water Resources and Hydropower Construction Group are investing in the development of hydropower in Myanmar.
Tai Ping River Power Station (Datang Holdings)
In August 2010 the power plant began generating power, and was completely finished in January 2011. However, in early May 2011, the Taiping River Power Plant was the site of an armed conflict between the Kachin Independence Army and the Myanmar government forces. The “low-level” fighting between government troops and the Kachin Independence Army (KIA) has continued on intermittently for a year. It is reported that China has evacuated more than 100 people from the region.
Myitsone Hydropower Station
The Myitsone hydropower station in Kachin, constructed by the China Power Investment Corporation, has been met with strong opposition. The location of the power plant on the upstream stretches of the Irrawaddy River in northern Myanmar is sacred to the Kachin people. The Myitsone dam site will flood important historical and cultural heritage sites in Kachin, and also cause irreversible ecological change for the Kachin people living in the basin. The Kachin State capital is located 50 kilometers downstream of the dam. Thus the dam has become a security risk for the local residents. Further downstream on the vast plain and delta region of Myanmar, there are ethnic enclaves, where a series of dams will control the most important rivers in Myanmar, leading to changes to agriculture, transport, fishing and breeding patterns that have been in place for centuries. As a result, since the beginning of construction, Kachin organizations, environmental protection experts, social activists and people in the basin opposed and strongly criticized the dam.
There are now different coalitions forming in Myanmar to oppose the dam, including Myanmar Rivers Network, the Kachin Development Network, the National League for Democracy (NLD) and environmental protection, democracy and media groups. These organizations continue to express their views and concerns.
Reflections on the Study Trip
(1) On Chinese investment in Myanmar
For Chinese investment in Myanmar to smoothly reach its goals, there should be a clearer understanding of Myanmar’s national conditions, attention to environmental and social impact assessments, carrying out sustainable development concepts in investment activities, actively fulfilling social responsibilities, and establishing a positive national and corporate image. The group believes that the following points are worth noting:
(a) Regarding environmental and social impact assessments, the groups we met all mentioned the environmental problems related to investments. . Although Myanmar has yet to develop the notion of environmental assessment and mature legal mechanisms, people still uphold environmental standards in their hearts, and Chinese companies should not ignore this standard. They should at least adhere to standards of international best practices and principles to limit and control their investment behavior. It is understood that the Chinese side has conducted an environmental assessment on the Myitsone Dam project, and the preliminary conclusion is that the project caused a huge threat to the environment. Although there has been no formal announcement, the environmental assessment report has still been widely circulated among social groups and NGOs. However, China does not agree with the recommendation of the environmental assessment to suspend the project, but rather continues to push it forward. Such an approach, even in China, is in violation of relevant laws. Within Myanmar, there were strong reactions to the disregard the Chinese company showed for the environmental assessment process.
(b) On whether to conduct a conflict risk assessment: This investment should first consider the problem of minority-controlled areas in Myanmar. As Myanmar’s ethnic tensions increase, these become very sensitive areas for investment, due to the unstable political situation. The investment risk in Libya serves as a lesson. Improper investment practices in Myanmar could intensify the conflict. Among the relevant principles that the international community has already established, many are related to avoiding investment in areas of conflict. For example, the World Bank and the World Commission on Dams recommends that investors withdraw from risk areas to avoid potentially escalating the conflict. In Myanmar, the governments in ethnic regions maintain close relations with China, and the Chinese state owned key companies maintain good trade and political relations with the Myanmar government, and invest in areas of conflict. This makes it easy to introduce misunderstandings among the parties in Myanmar. For example, there is now much mistrust and suspicion from the Myanmar government and Kachin organizations towards the positions of Chinese enterprises and government. In such circumstances, China’s investment in Myanmar should be guided by a conflict risk assessment.
(c) On paying attention to the core interests of the people of Myanmar. In the course of our visit, the Burmese people from all walks of life mentioned how the Irrawaddy River is the mother river and one of the country’s core interests, just as the Yangtze River has been regarded as the mother river of China and Chinese people. The information we got is that almost all of them are opposed to the Myitsone dam construction, as the project has not been understood, accepted, or endorsed by the majority of the people of Myanmar. For the people of Myanmar to fully enjoy the right to know and participate in the discussion on the Myitsone dam project, it is very important that the Myanmar government avoids actions contrary to the interests of the people of Myanmar when deciding on the future of the river and destiny of the people who live near it.
(d) On appropriately handling relations with the Myanmar government and people of Myanmar. On the one hand, there are challenges facing Chinese companies investing in Myanmar, such as corruption in the Myanmar government. On the other hand, Myanmar’s rich resources are very tempting, while local citizens are becoming increasingly aware of their human rights and right to participate. Chinese companies and corrupt officials in Myanmar made a number of development decisions without the knowledge of the public, which has stirred up public discontent towards Chinese companies. In some areas, even if the Chinese company provides aid or donations, because these activities are carried out through an unpopular government, the public has no knowledge of or access to the correct information; and the projects do not really benefit the ordinary people. During interviews, we learned that the Korean companies and the Government of India have extensive contacts with the people in Myanmar, to obtain public understanding and goodwill. Meanwhile the Chinese and the Chinese government’s image in the minds of the people is just the opposite. Chinese companies (especially those companies whose investments have a significant impact on the local community and environment) fail to gain the understanding of the local population and thereby establish a healthy relationship.
(2). On the exchange and cooperation between Chinese and Myanmar NGOs
The real situation in Myanmar could be communicated to Chinese officials by Chinese NGOs to disclose the truth and promote better overseas investment behavior. However, communication between the two countries’ NGOs is limited, especially compared to official exchanges. During interviews, we felt the strong desire of local NGOs to communicate with their Chinese counterparts. In fact, such exchanges are beneficial to both countries’ NGOs. On the one hand, Myanmar NGOs need to understand the world (especially the real issues facing similar third world countries). Foreign exchange is a good channel, and they can learn from Chinese NGOs’ experience. Myanmar today has many similarities with China before the reform and opening up period. Chinese NGOs’ knowledge of that period can be useful for Myanmar NGOs to play a better role in the current situation. Also, due to information technology, some NGOs in Myanmar have been exposed to international NGO activities and ideas, and have applied them locally. This experience could also be useful for Chinese NGOs. Thus, communication between the two can be mutually beneficial. We sincerely hope that such exchanges can be further expanded. This will require the joint efforts of both Chinese and Myanmar NGOs.
(Based on a June 2011 Myanmar Visit Report Summary. For more information you may contact: Yu Chen, email@example.com . )