A closed Burma keeps China trade open

Scott Tong Oct 12, 2007

A closed Burma keeps China trade open

Scott Tong Oct 12, 2007


KAI RYSSDAL: The military junta that rules Myanmar shut the door on the United Nations today. On Thursday, the Security Council called for negotations with the pro-democracy oppostion. The army’s been running Burma for decades so no one’s surprised it’s not interested in talking now.

What is new is that at the U.N., China chose sides with the West against Myanmar for the first time. The change in approach comes despite close economic ties. From the China-Burma border, Marketplace’s Scott Tong reports business is booming.

SCOTT TONG: This is the wake-up call in the Chinese town of Ruili: The sound of freight trucks heading in and out of Burma. The trucks are covered, you can’t see what’s inside. But a quick tour of this border town makes it obvious what’s being traded.

Stop one: Ruili’s woodworking street. Day laborers chisel and buff giant cross-sections of teak and other Burmese wood, for coffee tables and home decorations. Timber is a key raw material that Burma has, and China wants. Thing is, much of Burma’s logging trade is illegal. At least technically it is, says taxi driver and smuggler Mr. Li.

MR. LI: If you have stuff you need to get into China, I can get everything done. I arrange the trucks, the workers, the boats. And I notify the customs officials.

I.e. he bribes them. Just up the street is Ruili’s jade market. All the gemstones are sourced from Burmese mines. But this shopkeeper complains business is slow; political instability in Burma means fewer traders on each side of the border.

Eventually, though, he expects the traders back. China has an insatiable appetite for Burmese resources, and often it turns those resources into finished goods that go back to Burma. This economic co-dependency is obvious at this border town.

JADE SELLER: Burma? It’s basically a province of China! China’s the big brother, they’re the little brother. We all say China’s the elephant and Burma’s the ant. And the elephant can squish the ant if it wants.

Hang around Ruili’s outdoor mahjong tables, and the chatter indicates even more Burma trade is coming. An eight-lane highway that links all the way to Shanghai is on the way — as are energy pipelines.

Ian Holliday of the University of Hong Kong says China gets most of its oil from the Middle East, which gets shipped through the Straits of Malacca, a geographically vulnerable choke point.

IAN HOLLIDAY: China is looking to diversity its supply routes for the natural resources on which all the economic growth depends. It’s currently planning to build both a gas pipeline and an oil pipeline across Burma, which would enable supply to come up through the Indian Ocean.

Often the action in this border town is at this motorcycle shop. Scores of Burmese men jostle to buy Chinese-made bikes for $350 each. This buyer says they can resell them in Burma for a $13 markup:

MOTORCYCLE BUYER: These motorcycles sell really quickly — the stock that comes in today will be out the door by tomorrow. This store sells hundreds every day.

The motorbikes enter Burma tax free, because they’re smuggled. The guys ride them to this narrow river crossing, where a boat ferries them across for less than a dollar. I cross, too — unofficially.

Burma looks much poorer than China… What’s striking are the beggars, potholes and dilapidated cars. In the stores, virtually all the household goods are Chinese imports: sandals, rice cookers, bootleg DVDs, even toilet paper. Perhaps the Chinese processed it from the Burmese wood going the other way.

HOLLIDAY: Burma doesn’t have a major manufacturing capacity itself.

Again, Ian Holliday.

HOLLIDAY: Just like the rest of the world, they are looking for the best quality of goods at the best price they can find — and getting them from China is often the best way.

At this Buddhist temple on the Burma side, all the tours are in Chinese, as are the economic transactions. I negotiate for a Burmese trinket in Chinese, and pay with Chinese currency.

Despite the vast cross-border trade, that doesn’t make Burma a vassal state of China. The ruling generals, first and foremost, focus on political survival. Still, if any outside country has leverage, at the U.N. and behind the scenes, it may be the Burmese junta’s closest trading ally.

On the China-Burma border, I’m Scott Tong for Marketplace.

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