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Myanmar Coup

Silent Chinese companies weigh costs of Myanmar's growing chaos

Targeted violence intensifies as top investors consider future of business operations

Demonstrators outside the Chinese Embassy protest Beijing's response to the military coup in Yangon on Feb. 19. Chinese products have become key targets of boycott movements.   © Reuters

YANGON/BANGKOK -- While many multinational companies have begun to publicly express their opposition to the military coup and subsequent violence in Myanmar, Chinese companies -- Myanmar's largest investors -- have stayed silent even as Beijing reportedly ordered its state enterprises to evacuate nonessential staff.

A Yangon-based rights group has called for companies to sign a joint statement of concern about the coup, but Chinese companies are conspicuously absent. This is in contrast to Japanese companies, which are the third-largest investors in the Southeast Asian country and have begun to show their views by signing the document and collectively urging the regime to halt the violence.

Several Chinese companies were among the targets of arson attacks and, according to Chinese state media, 32 factories with Chinese investment suffered damage over the weekend.

It is not clear who was responsible, but the attacks have increased public scrutiny over the stance of Chinese companies on the coup and the subsequent confrontation between the military and the protesters, which has already resulted in more than 200 civilian deaths by Tuesday, according to the Assistance Association for Political Prisoners.

A leaked Chinese government notice cited by the South China Morning Post on March 16 instructs state-owned enterprises in Myanmar to evacuate employees involved in projects that have been suspended, among others.

Following the arson attacks, Chinese state media CGTN argued that "China won't allow its interests to be exposed to further aggression" and added, "If the authorities cannot deliver and the chaos continues to spread, China might be forced into taking more drastic action to protect its interests."

The Assistance Association for Political Prisoners reported more than 200 crackdown-linked deaths through Tuesday as confrontations between the police and protesters intensified.   © Reuters

China's tough stance has inevitably fueled a backlash from the protest movement, judging by the public's reaction on social media. "So this is no longer an 'internal affairs'. China is now using strong words when their interests are threatened," one Myanmar businessman tweeted.

China had already taken flak for its implied support of the Feb. 1 military takeover and the military regime. Products of Chinese companies -- particularly Huawei Technologies and ZTE, which have provided technology to the military -- are key targets of boycott movements, and protests have been held outside the Chinese Embassy in Yangon.

Despite efforts to diversify its economy since 2011 and attract international partners, Myanmar still relies heavily on Chinese investment. In the fiscal year ended September, China including Hong Kong was Myanmar's biggest source of foreign direct investment, with nearly $2 billion approved by the now-ousted National League for Democracy government.

Under the administration led by State Counselor Aung San Suu Kyi, Chinese companies and their partners dominated more than 90% of the two major energy tenders last two years. Border trade with China also forms a core part of Myanmar's vast informal economy.

Major Chinese state enterprises active in the Myanmar market include conglomerate Citic Group, China National Petroleum Corp. and Power Construction Corp. of China (PowerChina).

Beijing is pushing an ambitious infrastructure program in Myanmar as part of its Belt and Road Initiative, seeking to connect China's southern province of Yunnan to the Indian Ocean by linking it with railways and highways across northern Myanmar, as well as by building a deep-sea port in Rakhine. The infrastructure blueprint, called the China-Myanmar Economic Corridor, had been expected to draw in billions of dollars of Chinese investment into Myanmar before the coup.

China-led infrastructure projects appear to have continued since the regime change, as international financial institutions and Japan put their engagement and investments on hold. Weeks after the coup, a 135-megawatt gas-fired power plant at Kyaukphyu in Rakhine State, financed by PowerChina, started construction.

The most powerful foreign business group in Myanmar, the China Enterprise Chamber of Commerce, based in Yangon, has closed ranks to protect China's image. In February it swiftly issued a statement denying allegations that China was providing technicians to build an internet "great firewall" for the junta.

It has declined to speak since then and pointedly did not join other chambers of commerce to collectively object to a punitive cybersecurity draft law.

Chinese companies have also been absent from the growing chorus of international companies expressing concern over the coup as the civilian death toll mounts.

A Myanmar analyst well connected in Yangon's Chinese diplomatic and business circles said Chinese companies are staying below the radar because of their corporate and political culture.

"Chinese companies really think it (the Myanmar coup and crisis) is an internal affair. And they've been advised and reminded by the people around them to stay away from it," the analyst told Nikkei Asia. Businesspeople from China aren't interested in human rights, he added. "They're only interested in economic developments."

Among the 216 companies signing a joint statement organized by the Myanmar Centre for Responsible Business -- a group that advocates for human rights and respect for the rule of law in business -- were more than 60 international companies, including Coca-Cola, Total, H&M, Heineken, Maersk, Metro, Unilever and Telenor.

The MCRB recently released a Chinese-language translation of the joint statement to encourage Chinese and Taiwanese companies to sign, but so far in vain.

In recent days, the signatories have featured a growing number of Asian and Myanmar companies, including those led by Sino-Burmese tycoon Serge Pun and Myanmar's largest private bank, KBZ Bank, plus Japanese machinery maker Kubota, Japanese drugmaker Otsuka Pharmaceutical and Singapore private equity fund Ascent Capital -- but no Chinese companies.

"As investors, we inhabit a 'shared space' with the people of Myanmar, including civil society organizations, in which we all benefit from respect for human rights, democracy and fundamental freedoms -- including freedom of expression and association -- and the rule of law," the joint statement said. The signatories called for "a swift resolution of the current situation based on dialogue and reconciliation in accordance with the will and interests of the people of Myanmar."

In another display of corporate opposition to the coup, chambers of commerce in Yangon representing American and European businesses released a joint statement saying they would not meet with the junta despite an invitation from military officials. Among others, it is understood that the Japan Chamber of Commerce and Industry also did not accept the invite. The Chinese chamber did not respond to a request for comment.

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