Assessing Myanmar’s trade dependence on China during the reform period of the 2010s: a sectoral value chain approach

Abstract

Myanmar’s external economic relations during the 2010s can be broadly characterized as processes of re-integration with the outside world, thus paying the way for diversification away from dependence on its preeminent neighbor, China. A close examination, however, reveals a complex set of dynamics in Myanmar–China economic relations, particularly in the trade sector. A sectoral value chain analysis shows that Myanmar’s trade dependence on China rose rather rapidly during the early part of the decade, which was later halted by the lifting of Western sanctions. However, it was also found that the same process that helped Myanmar diversify away from China in the export sector simultaneously increased the country’s dependence on Chinese imports because of newly established global value chains. Overall trends can be explained by considering geographic scale and country positions specific to the value chains of the key export sectors of natural gas, vegetables, and garments. The findings suggest that although the lifting of sanctions was pivotal, the improvement in Myanmar’s diplomatic relations with the West during the 2010s did not linearly reduce the country’s economic dependence on China.

Keywords:

• China
• economic dependence
• Myanmar
• sanctions
• sectoral value chains
• trade

Acknowledgements

This research was supported by the project ‘Laying the Groundwork for Peace and Unification’ funded by the Institute for Peace and Unification Studies (IPUS) at Seoul National University. The author would like to thank Woo Hyun Chang for insights and encouragement throughout the research and writing process. The author would also like to thank the participants for their valuable comments on the earlier versions of this article at the 2021 Conference of the Institute of ASEAN Studies at Dong-A University, Busan, South Korea, on November 26, 2021, and the 9th Global Prominence Seminar organized by the Institute of International Affairs at Seoul National University on June 15, 2022. The author also wishes to thank the editor of The Pacific Review and two anonymous reviewers for thoughtful insights and suggestions. Alice Jiye Lee provided excellent research assistance. All errors and omissions are the author’s own.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 Data on Myanmar’s bilateral trade are drawn from UNComtrade.

2 Data on trade (% GDP) are drawn from the World Development Indicators.

3 All the subsequent discussion of sectoral composition of Myanmar’s trade used data from WITS.

4 “Fuels” indicates products in the Harmonized System (HS) 1988–92 Chapter 27, “Vegetables” Chapters 06 to 15, and “Garment” Chapters 50-63. WITS uses “Textile and Clothing” for the last product group, but I use garment for presentation purposes in this article.

5 “Vegetable” in WITS based on HS 1988–1992 indicates products in the Harmonized System (HS) 1988–92 Chapters 06 to 15. They include almost all plant-based, non-animal, and unprocessed foods, thus including cereals, beans and pulses, and fruits and vegetables.

6 In 2019, China’s gas imports from Myanmar accounted for 3.3% of China’s 132.5 billion cubic meters of natural gas imports (British Petroleum, 2020). Myanmar’s share was rather small, and its gas exports are smallest among the countries that use pipelines to supply natural gas to China. Other source countries include Russia, Kazakhstan, Turkmenistan, and Uzbekistan. However, Myanmar can supply close to 10% of China’s natural gas needs if the pipeline is run at full capacity (Topcu, 2020).

7 A parallel oil pipeline was built and completed in 2017. This was also financed and majority controlled by the CNPC.

8 Bilateral natural gas trade can be vulnerable to international pressure as seen in the cases of sanctions on energy exports from Iran or Russia, but it is still the case that natural gas is less vulnerable compared to sectors such as garments whose value chains are characterized by globally distributed multi-location production networks with the West as its key export markets.

9 Data are from ASEANstat.

10 As with almost all economic indicators of Myanmar, it is difficult to parse out the real increase in trade from the result of better reporting that probably happened after the launch of reforms in the early 2010s. Data collection at border crossings is no less problematic (Pritchard, 2021). Thus, these numbers should be taken as illustrating broad-based changes.

11 See the supplemental online material.

12 Natural gas extracted in the Yadana field is transported near Htee Khee in Tanintharyi Region (Kyaw, 2019).

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Notes on contributors

Yoon Ah Oh

Yoon Ah Oh is an Assistant Professor in the Graduate School of International Studies at Seoul National University (SNU). Her research is focused on the political economy of Southeast Asian development with international considerations. For the last few years, she has been examining the geopolitical aspect of Southeast Asia’s economic relations with China. Prior to joining SNU, she was a fellow at the Korea Institute for International Economic Policy, where she conducted research on Southeast Asian economies and Korea-ASEAN economic relations.