11-11-2023 (YANGON) In a startling turn of events, Myanmar’s ethnic armed groups have executed a surprise offensive, strategically blocking two vital roads connecting the nation to its largest trading partner, China. This move has not only disrupted cross-border commerce but has also deprived the financially strained junta of crucial taxes and foreign exchange.
Over the past two weeks, fierce clashes have engulfed northern Shan state, resulting in the displacement of nearly 50,000 people, marking the most significant military challenge to the ruling generals since their seizure of power in 2021.
The blockade of these key transportation routes is already causing market prices to surge and impeding the junta’s ability to dispatch reinforcements to counter the ongoing offensive.
Residents of Muse town on the China border reported a complete halt in the influx of goods trucks since the conflict erupted on Oct 27. The town, typically buzzing with trade activity, now experiences the ominous sounds of artillery and gunfire.
The blockage is particularly impactful as hundreds of trucks daily transport goods, including fruit, vegetables, electronics, medicine, and consumer products, between Muse and China. The disruption has severe economic repercussions, affecting both sides of the border.
In Lashio, located approximately 160 km away, residents have witnessed a tangible impact on daily life. The cost of essential items, such as a bag of rice, has surged from 160,000 kyat (US$76) to 190,000 kyat, reflecting the strain on the region’s economy.
The offensive launched on Oct 27 by the Arakan Army (AA), Myanmar National Democratic Alliance Army (MNDAA), and Ta’ang National Liberation Army (TNLA) has virtually halted goods traffic from Muse. Chinshwehaw, another vital hub on the China border, is also currently closed for business.
Last week, the MNDAA posted footage of its fighters claiming control of the border gate at Chinshwehaw. The junta reluctantly admitted losing control of the town.
The Muse and Chinshwehaw crossings accounted for over a third of the $5.32 billion in border trade with Myanmar’s neighbors from April to November this year, according to commerce ministry figures. Analysts estimate that around $1 billion of this trade involves natural gas exports to China via Muse.
While the Chinese foreign ministry assured that infrastructure had not suffered due to the clashes, the shutdown of these crucial trade routes is a significant setback for the military junta. China, a key ally and arms supplier, now faces an “embarrassing affront.”
Since the coup in 2021, the junta has sought to reorient the economy away from Western countries that imposed sanctions. The closure of these trade routes represents a challenge to the military’s efforts to deepen economic ties with China.
The military’s loss of control over these key roads not only impacts revenues but also hampers its ability to deploy troops. With the military resorting to helicopters for reinforcements, regaining control of the border infrastructure lost in the past weeks poses a considerable challenge. Analysts suggest that launching airstrikes to reclaim positions risks further straining relations with China, given the potential destruction of critical infrastructure.
