China's Long Game in Myanmar

Since the military coup of 2021, Myanmar has largely abandoned the world stage. News from Naypyidaw is often scarce, incoherent, and filtered by regime authorities. Yet, one thing is increasingly clear: the country has become a playing field for the world's great powers. Today, we will try to provide a better understanding of Myanmar’s domestic political situation, while also paying close attention to China’s role in the present crisis.

The Domestic Situation

According to a 2024 report by the World Bank, three years of civil war and international isolation have brought Myanmar’s economy to the brink of collapse. Its GDP has contracted by 9% and its local currency has depreciated by 80% of its original value. The country’s economic woes have made Myanmar into one of the poorest places on the planet. In 2017, 24.8% of Burmese citizens could be classified as poor. In 2023, that number had risen to nearly half of the population, 49.7%. Including those living “dangerously close” to the poverty line would mean raising the bar even higher, to 76%. Over half of Myanmar’s children live in poverty, often without enough food or a school to attend.

In the years preceding the military coup, Aung San Suu Kyi’s government had invested greatly in the tourism industry. Under the National League for Democracy, this business had become a driver for Myanmar’s fragile economy and a ray of hope for the common Burmese citizen. The coup, the civil war, and the ensuing international isolation have made the country not just unattractive, but also dangerous for foreign nationals. The fading dream of international tourism, sustaining countless lower and middle-class families in the country’s major cities, has contributed to Myanmar’s skyrocketing poverty rate. According to the Ministry of Hotels, Tourism, and Culture’s own data, international arrivals have dropped from over 4.3 million in 2019 to barely 1 million today, marking a drop of 75%. 

Politically, the regime appears aware of its citizens' distress. To prevent discontent from erupting into protests and violence, the military has since established a rigid policing system. Yangon, Naypyidaw, Mandalay, and all other major urban centers have been subject to a nightly curfew from 1 to 3am, which can be extended to the early morning. Although this measure was only recently lifted, international reporters and tourists claim that both civilians and authorities act as if the curfew was still in effect. Concurrently, the military has adopted a “forced draft” policy for fighting-age males under arrest, hoping to contain dissent and fill up the ranks against ethnic militias. 

The most recent parliamentary elections, held between December 2025 and January 2026, were aimed at legitimizing the military government, both at home and abroad. The electoral process fell predictably short of democratic standards. Aung San Suu Kyi’s party, the National League for Democracy, was banned and its leader put under house arrest in the immediate aftermath of the coup. Despite obtaining nearly 70% of popular consensus in 2020, the NLD obtained no representation in Myanmar’s new parliament. 

To further the legitimization cause, some opposition parties were allowed to contest under close scrutiny. Among them are:

• the People’s Pioneer Party, officially split from the National League for Democracy and led by female entrepreneur Thet Thet Khine. A collaborationist, she was appointed Minister for Social Welfare, Relief, and Resettlement in 2021 and again Minister for Tourism, Hotels, and Culture in 2023 by the regime. With its one seat and its moderate platform, the PPP effectively functions as a “token opposition” to the military. Although willing to collaborate, she was deemed ineligible by the regime-controlled Central Electoral Commission due to “unresolved fiscal issues”.

• the People’s Party, led by democratic activist Ko Ko Gyi. A veteran of the 8888 Uprising, Gyi has long been a symbol of anti-authoritarianism in Myanmar. His participation in the 2025-2026 election will likely further regime legitimization more than any other politician. His decision to contest derives from a recent “realist” turn. Gyi understands that, despite the war, the military’s control over the central valley remains uncontested and, with recent measures, strengthened. Additionally, as expressed in a recent interview, Ko Ko Gyi believes that the military is best equipped to forge close ties with China, a country whose development model he seeks to replicate.

• the federalist and social democratic National Unity Party, under U Han Shwe. Although historically a stronghold of the pro-democracy movement (see the 2010 election protests), it now seems largely neutral towards the USDP-led regime. It is now the second largest party in Parliament with its 16 seats.

The regime’s attempts to create an uneven playing field didn’t stop here. In accordance with the new early voting regulations, soldiers, public employees, and teachers filled out their ballots at work, under the supervision of their regime-connected higher-ups. Furthermore, the in-person voting and the counting process were conducted through MEVM, Myanmar’s brand new electronic voting machines. The new parliament was elected via a mixed system: 50% of the seats through proportional representation and 50% through first-past-the-post constituencies. Unsurprisingly, the USDP won a supermajority of the latter, 63 out of 84 (de facto 73, as 11 remain under rebel control). Including the 56 MPs appointed by the army, the regime can now count on over 150 seats, out 224 total. 

USDP Party Flag

China’s Role

Since the military coup of 2021, China has been a close partner of the regime. From economic to political support, Beijing has drawn Naypyidaw closer than ever before. On the world stage, China is an anomaly: while most countries severed diplomatic ties with the USDP-led government, China strengthened cooperation. To observers in Beijing, this fragile, isolated, ideologically-aligned regime represents a unique opportunity to protect national security interests.

Most of China’s oil crosses two main chokepoints before reaching its destination, the Strait of Hormuz and the Strait of Malacca. Recent developments demonstrate the unreliable nature of these passageways. Were Iran to succeed in establishing a tolling system for ships transiting the Strait, it would upend the conventional understanding of maritime law. Thanks to its extensive reserve capabilities, Beijing was able to mitigate the shockwaves sent by war in the Middle East. Yet, that cannot become a long-term solution. 

While freedom of navigation may soon return to the Strait of Hormuz, the Islamic Republic of Iran has already set a dangerous precedent for the rest of the world. According to the USCC, “the Strait of Malacca is China’s most critical maritime chokepoint, and approximately 80 percent of China’s oil imports transit the strait”. The establishment of a tollbooth along Indonesian and Malaysian coasts or worse, a full blockade, would cause long-term damage to Beijing’s economy. Even though, currently, Jakarta has no intention to replicate the actions of the Islamic Republic, the volatility of global affairs spells caution. 

In the 1990s and early 2000s, during the golden age of piracy in Southeast Asia, Indonesia proposed that international ships hoping to transit the strait rely on local captains. This service would have come with a fee, effectively enforcing a tollbooth system for the Strait of Malacca. Recently and without much success, some Indonesian politicians have again proposed imposing a fee on vessels as part of a strategy to nationalize the Strait. Like then, these proposals were met with strong disapproval from neighboring countries. For the reasons mentioned above, however, the value of these condemnations is no longer the same.

From a military perspective, the Strait could also play a pivotal role in a potential conflict with the United States. Some experts argue that the US Navy could utilize its bases in Singapore and Diego Garcia to blockade Chinese crude imports transiting the Strait of Malacca. In this context, Myanmar holds a unique strategic position. A Burmese government solidly under Chinese influence would allow oil deliveries to circumvent the Strait of Malacca and to reduce both volatility and length of transit. 

Crude Oil Imports to China in 2019

War fiction aside, recent investments in dual-use infrastructure demonstrate significant Chinese interest in Myanmar’s strategic location. An example is the Belt and Road Initiative-sponsored Kyaukphyu Special Economic Zone, located on the western coast. The construction of a deep-sea port and advanced railway lines is designed to give China direct access to the Indian Ocean. The project is inscribed within a broader infrastructural network connecting Myanmar to China, called the China-Myanmar Economic Corridor.

The realization of this long-term project is a strategic priority for China. Yet, Myanmar lacks the basic conditions for its completion. Without stability, these investments cannot succeed. Rakhine State, where the future deep-sea port city is located, and the Yunnan-Myanmar border projects, necessary for the transportation of oil and minerals, are both under the control of ethnic militias. The unprecedented political fragmentation dramatically increases the risks of business in the country. That is why, in the past few years, Chinese strategy has focused on promoting stability in Myanmar. They have done so in two ways: 

China as a power broker

According to Amara Thiha of Foreign Affairs, China no longer wishes to end Myanmar’s fragmentation. As of today, military victory appears unlikely for either side, with both the regime and the opposition unable to break the stalemate. Chinese officials thus believe that the chaos will persist and that the remaining best course of action is to manage the conflict. Over the last few years, Beijing has repeatedly engaged with ethnic militias opposite to the Tatmadaw, sometimes even arming them, with the goal of securing its influence and investments in Myanmar.

Officially, China conducts business exclusively with the military regime. Naypyidaw and Beijing exchange diplomats, sign deals, and release joint statements. Just last month, on June 15, President U Min Aung Hlaing of Myanmar visited China and met with President Xi Jinping. Behind closed doors, however, Beijing has become a power broker between the regime and its opponents.

China’s intentions become clearer as we observe the diplomatic personnel in charge of Myanmar. One in particular, Deng Xijun, says much about how far Beijing is willing to go to secure its interests in the region. Previously ambassador to Afghanistan and ASEAN, in 2021, Deng was tasked with handling the consequences of the Taliban uprising. As special envoy for Asian Affairs, he was then dispatched to Southeast Asia as a mediator between Thailand and Cambodia. Deng is, by nature, a manager, specialized in difficult geopolitical situations. His new dossier appears to be Myanmar.

“Only if you have stability, then you can have development, you can do anything. Without that, you cannot do anything.”

Deng Xijun

Over the past few years, starting in February 2023, Deng has met with the leaders of the Arakan Army, apparently to discuss the construction of the Kyaukphyu port, as well as the commanders of the Wa State Army and the Kachin Independence Army, who sit right at the border with China. Concurrently, Beijing has allowed the Yunnan police, experienced in dealing with ethnic groups, to contact rebel forces across the border. This move comes as a result of yet another national security issue, access to rare earth minerals. The Wa State Army and the Kachin Independence Army control the biggest share of the country’s rare earth minerals, critical for Chinese dual-use technology. In 2024, Myanmar accounted for about 57% of China’s rare earth imports, down to 52% in the first ten months of 2025 due to disruptions caused by fighting in Myanmar.

Still, rebels cannot export these minerals legally and have no autonomous access to international banking systems. With border checkpoints under military control, only with the consent of Naypyidaw could they transport and sell rare earths to China. Here, China is utilizing its leverage to convince the USDP-led government to allow the exchange, indirectly supporting rebel economy, in exchange for the royalties. Under figures like Deng Xijun, Beijing is carefully crafting a system of mutual interdependence between the regime and the country’s ethnic militias, while expanding Chinese influence across the board. 

Beijing is now behaving as a power broker. China understands that a divided Myanmar is convenient if no single faction can survive without them. In this way, they hope to not just enforce peace, but also ensure long-term dominance in the region.

Influencing the Regime 

Despite everything, the Tatmadaw junta remains the only entity in the country capable of administering the functions of the Burmese state. Although China is increasingly willing, for national security reasons, to negotiate and (indirectly) support rebel groups, it understands that a strong Naypyidaw is the best conduit to stability in the region. 

As previously mentioned, the 2025-2026 elections were instrumental to legitimizing the 2021 coup. If the USDP holds any hope of gaining international recognition and attracting foreign investments, a restructuring of its government is in order. No matter the validity of the process, the election of a new National Assembly makes the enthronement of the Tatmadaw at least superficially legal. China was a major proponent of these elections, as this quote by MFA Spokesman Guo Jiakun suggests:

“China supports all parties in Myanmar in securing broader, more solid, and lasting peace and reconciliation through general elections, and in de-escalating the situation at an early date”

Beijing did not support the electoral process out of genuine democratic sentiment, but rather to protect its investments and secure its influence within Myanmar. As long as the military rules as a temporary occupier of government, rather than as the government itself, any promises on their part are fragile. China cannot trust Naypyidaw’s decrees because they are not law. Another coup or a sudden triumph of the opposition can overturn billions of Chinese investments and permanently damage Beijing’s position in the country. The decisions of an elected parliament, however, regardless of the validity of the process by which it was seated, hold a much greater value. In this way, China hopes to dramatically reduce the risks of investing in the country and to make Myanmar permanently dependent on its neighbor. Any future government will be bound by these economic obligations not just because of the country’s poor economic situation, but also because of the penalties and liabilities included in these contracts. 

As part of this strategy of permanent dependence, China has also recently restarted talks about the Myitsone Dam, a monumental hydraulic project to be situated at the northern end of the Irawaddy River. Led by the China Power Investment Corporation (CPIC), a state-run conglomerate, the effort could soon become a long-term commitment for Myanmar. To build it, however, would mean handing a foreign country the keys to Myanmar’s biggest water source. The project has attracted significant outrage from opposition exiles, leading Burmese activist James Shwe to call the election “a poison pill” bound to forever chain Myanmar.

Chinese-backed infrastructure projects in Myanmar, The Economist

China is also making itself indispensable for regime survival. To prevent another 8888, the large-scaled rebellion that almost struck down the old military junta, the Tatmadaw is acquiring modern technology from Beijing to police society and identify dangerous individuals. The overreliance on China in this key area is bound to tie the regime close to its neighbor in the long run.

Let’s be clear: Naypyidaw understands China’s intentions. It is not willingly helping Beijing fund its rivals, nor is it happily handing its large neighbor the keys to the country’s economy. Nonetheless, the regime finds itself with very few options. Isolated by the West after the 2021 coup and with no hope of re-establishing ties, the military has turned to Russia. Since the takeover, Burmese generals have visited Moscow more often than Beijing, in the hope of reducing China’s influence. Despite his sympathies for an ideologically-aligned government, Putin wasn’t of much help. Bogged down in Ukraine and with a struggling economy, Russia is too busy dealing with the consequences of its failed blitzkrieg to help the Tatmadaw gain autonomy from China. While the situation can rapidly change, Myanmar appears to be on a set course to become a satellite of its larger neighbor.

Sources and methodology: This article draws on official government statistics, World Bank data, Chinese-language sources, and reporting from international policy organizations. Analytical judgments and forecasts are the author's own.

Alessandro B. Carelli - 王硕

The Beijing Notebook - 北京笔记