10/11/2014

China and India Vie for Myanmars Strategic Resources

CHINA AND INDIA VIE FOR MYANMARS STRATEGIC

RESOURCES
Source: Asia Briefing
The competitive relationship between China and India has become a defining feature of the
strategic environment across emerging Asia. While both nations are currently not in direct
conflict, there are several areas that hold strategic interest which could potentially act as the
stage for a clash between the two nations. Their current rivalry in Myanmar is one such
area.
It is China and Indias incessant need for alternative sources of energy that is the main focal
point of their rivalry within Myanmar. As China and India are increasingly forced to rely on
the global oil market to meet their energy demands, they are more susceptible to supply
disruptions and price fluctuations. Rapid growth rates in both countries have grown in
tandem with increased demand for energy. By 2020, it is estimated that China and India
combined will account for roughly one-third of the worlds GDP and, as such, will require
vast amounts of energy to fuel their economies.
Myanmar holds vast strategic importance for both China and India due to its location and
abundance of natural resources. It has vast reserves of natural gas and oil, so for both
China and India it is presented as a source of energy free from the geopolitical risks of the
Middle East. There has thus been major competition between China and India for access to
Myanmars market.
Thus far, India has signed a US$40 billion deal with Myanmar for the transfer of natural gas,
and has also had frequent discussions about building a pipeline from Myanmar to India.
Only last year, India extended a US$500 million line of credit to Myanmar. In addition to this,
India also signed accords on air services, the development of border regions, and
investment in agricultural research. Perhaps most importantly, India has also acquired a
77.5 percent interest in an onshore oil block in Myanmar.
China has increasingly gained the most from Myanmars available resources, however, with
Chinas state-run Global Times even commenting that India has been edged out of
Myanmar. In 2005, for example, Myanmar reneged on a deal with India, and instead signed
a 30-year contract with China for the sale of 6.5 trillion cubic litres of natural gas.
Indeed, a gas pipeline connecting China and Myanmar is expected to begin pumping by the
end of this month. The 1,100 kilometre pipeline stretches from Kyaukpyu Port on Myanmars
central west coast, crosses the country from west to east and terminates at Ruili, near
Kunming, in Chinas Yunnan Province. Some 22 million tons of oil and 12 billion cubic
meters of gas are expected to transit via the pipeline each year. The entire project cost
US$2.5 billion and was financed by China.
While military confrontation between China and India remains unlikely, perhaps best
highlighted most recently during their recent border stand-off in the Himalayas which
resolved peacefully, their economic rivalry in Myanmar will likely persist for some time. As
such, it is critical for there to be ongoing diplomatic engagement between China and India to
avoid unnecessary or accidental escalation. If so, as commentators have most recently
been highlighting, Myanmar will better be able to evolve into a regional trade hub of
Southeast Asia.
http://www.phantomreport.com/china-and-india-vie-for-myanmars-strategic-resources

1/2