Aung San Suu Kyi and her NLD government faced a tough situation with China at the time of their inauguration in March. But, as she visits Beijing this week, hopes are high again in China that a redirection of Myanmar's foreign policy could be underway and the pendulum of Myanmar's balancing diplomacy is swinging back to the east. But many challenges lie ahead. These include resolution of the Myitsone dam impasse, repositioning political relations between the two countries, and peaceful settlement of ethnic conflicts in the Myanmar borderlands. The stakes are very high. The outcome of Aung San Suu Kyi's meetings could well come to define Myanmar-China relations for many years to come.

Protesters in Kuala Lumpur, Malaysia, march against the Myitsone dam project in Kachin State in 2011 - The dam is a sensitive issue between China and Myanmar and China has been eagerly pushing for a resolution of the suspended project. / Photo credit AK Rockefeller @Flickr

On 17 August, Daw Aung San Suu Kyi will begin her first trip to China as Myanmar’s state counselor after her party won the 2015 general election and subsequently assumed office in March. Her first trip to Beijing was in June 2015, and was widely perceived as successfully normalizing her relationship with China, an ardent supporter of earlier military governments that had detained her for more than a decade. Aung San Suu Kyi is also expected to visit the United States in the coming September. The sequence seems to suggest a prioritization of Beijing over Washington in Myanmar’s current foreign strategy. That sequence, along with a series of events leading up to her China visit, raises great enthusiasm in China that a redirection of Myanmar’s foreign policy could be underway and the pendulum of Myanmar’s balancing diplomacy is finally swinging back to the east.

Different from the U Thein Sein government, which was seen as turning “pro-West” in Beijing, Aung San Suu Kyi and her NLD government are believed to be more “neutral” in their foreign policy. The destination of her first official foreign visit since assuming office was none of the great powers, but Laos, a neighboring country chairing the ASEAN this year. While China might have been disappointed that she did not visit China first, the fact that she did not pick a Western country, especially the United States, for her first foreign visit is nevertheless regarded as comforting. The sense of reassurance for Beijing is strengthened by the perception that Suu Kyi’s relationship with the United States may not be as smooth and trouble-free as people had previously perceived. The combination of these factors reignites the hope in China that Suu Kyi’s ascension to power could actually bring opportunities to rebuild the damaged bilateral relations and re-strengthen China’s waning influence in the country.

Aung San Suu Kyi and her NLD government faced a tough situation on China at the time of their inauguration in March. The deterioration of Sino-Myanmar relations since 2011 is widely acknowledged. Former President Thein Sein suspended the Chinese-invested Myitsone mega-dam in September 2011. While the project has never been popular in Myanmar, the Chinese nevertheless saw themselves as the victim of a pseudo-democratic government’s attempt to gain legitimacy, popularity and support by both the Myanmar people and the West. China’s antagonism was exacerbated by Thein Sein government’s lukewarm attitude toward Chinese economic ambition in the country, as manifested by the suspension of the Letpadaung copper mine, the abandonment of the Sino-Myanmar railway and the difficulties it encountered in the bidding for the Kyaukpyu special economic zone. The sense of agony peaked in 2015, when officials in Myanmar appeared to accuse China of supporting ethnic armed organizations in northern Myanmar and undermining the government’s peace process by blocking the participation of several groups in the October Nationwide Ceasefire Agreement (NCA), an accusation that China vehemently denies.

Such a difficult context puts Aung San Suu Kyi’s China policy at a critical juncture in history. The NLD government could continue to cater to anti-China sentiment inside Myanmar and run the risk of losing China’s support for the peace process and for Myanmar’s domestic economic agenda. Or, it could try to improve relations with China and enlist Beijing’s help for Myanmar’s national priorities on ethnic reconciliation and economic development.

The record of the past four months seems to suggest that Aung San Suu Kyi identifies with the second option and has recalibrated the country’s policy toward its large neighbor in the north. Ample evidence on key fronts suggests that she has strived to improve relations with China, with her upcoming China visit being the latest one. On the state-to-state level, ministerial level visits by key government officials have increased. Chinese Foreign Minister Wang Yi was the first foreign guest Suu Kyi invited and received in April after the inauguration of the NLD government. They met again in Vientiane three months later during the ASEAN Foreign Minister meetings. At that meeting, very much to China’s satisfaction, Myanmar maintained its traditional detached position on the controversial South China Sea disputes. Also in July, China’s Minister of State Security, Geng Huichang paid a highly unusual visit to Myanmar, where he met with Suu Kyi. Given the Ministry of State Security’s unique status and special mandate, the meeting is widely interpreted as having focused on the issue of northern Myanmar, including Sino-Myanmar cooperation on the peace process. Last but not least, the Chief of the International Department of the Central Committee of the Chinese Communist Party, Song Tao, visited Myanmar one week before Suu Kyi’s scheduled visit to Beijing. He held meetings with a wide range of political leaders in Myanmar besides Suu Kyi, including the Commander-in-Chief Snr-Gen. Min Aung Hlaing, ex-President Thein Sein, former head of the military government Than Shwe and former speaker of the Lower House Shwe Mann. Having learned the importance of building diverse relations with different political forces in the country, China is keen on tying any loose ends and preempting any sour feelings with the military and former ruling party that might arise from a rapprochement between Suu Kyi and China.

To China’s great pleasure, Aung San Suu Kyi and her NLD government finally took an apparent step toward the resolution of the Myitsone dam project. The announcement of the establishment of a new commission to examine the hydropower projects on the Irrawaddy river has come days before her trip to China. The decision will greatly mitigate the pressure on Suu Kyi to provide a definitive answer on the fate of the problem during her visit. Former President Thein Sein’s decision to suspend the Myitsone dam during his term of office has effectively been dissolved by the inauguration of the NLD government, and China has been eagerly pushing for a resolution of the suspended project. Indeed, China has been so eager to move on that its bottom line has been lowered from the project’s resumption to an agreement over the disbursed investment under its cancellation.

The newly-established commission may or may not resume the Myitsone dam project. On the one hand, Myanmar’s power shortage has become so critical that it not only affects the nation’s economic functioning, but it also raises questions about the future effectiveness of the NLD government. Earlier in August, Htein Lwin, permanent secretary at the Ministry of Electric Power, openly acknowledged the necessity of hydropower projects, citing an increase in power demand. In fact, given Myanmar’s rich natural endowment in water resources, many analysts believe that well-regulated hydropower projects could indeed be the most realistic way to solve the country’s energy problem. While such hydropower projects do not have to include the Myitsone dam, the general attitude toward hydropower is changing, and Myitsone’s specific strengths and weaknesses are up for investigation and debate. A transparent and thorough examination of the project by the commission is indeed the best way to answer questions and dispel criticisms on both sides.

Foreseeably, given the emotional baggage and public sentiment associated with the Myitsone dam in Myanmar society, if the NLD government decides to resume the project based on perceived merits, it would encounter major political and public objections. While sufficient scientific evidence and thorough policy deliberations should form the foundation for any such decision, Aung San Suu Kyi will be the only one in the country with the authority to pull this through. Such a political maneuver, however, will be costly, as attested by the criticisms against her after she chaired a commission that decided to resume the Letpadaung copper mine in 2013. And people should bear in mind that the Myitsone dam and the Letpadaung copper mine are not on the same level in terms of their scale, complexity and public objections.

The peace process will also be a key issue for Aung San Suu Kyi during her China trip. It remains unknown to what extent, and on what issues, she and her team have specifically requested China’s support for the peace process. Nevertheless, according to private sources, such solicitation has been conveyed and well responded to. In order to build good will with Suu Kyi and the NLD government early on, China has demonstrated an unprecedented level of support and cooperative attitude toward the nationwide peace process and the 21st Century Panglong Conference to be held on the last day of August.

Chinese financial contributions to, and political support for, the Myanmar peace process have increased substantially since March. Earlier this year, China donated three million USD to the peace process, a scenario that was not considered possible during the former Thein Sein government. The Chinese special envoy for Asian Affairs, Sun Guoxiang, attended the Maijayang summit among ethnic nationality groups hosted by the Kachin Independence Organization in late July and publicly committed China’s continued support to the peace process administered by the NLD government. He and other Chinese officials have also lobbied non-signatory groups to the NCA, including the United Wa State Army and the National Democratic Alliance Army in the eastern Shan state, to join the 21st Century Panglong Conference. They have been so enthusiastic and persistent that some ethnic leaders complained that the Chinese were lobbying for them to surrender to serve China’s bigger cause.

Besides politics, one other issue that will be high on Aung San Suu Kyi’s agenda in China is economic cooperation. There is indeed much common ground, such as on power supply. China’s Yunnan province suffers major overcapacity in power generation and could potentially turn into a supplier of electricity to Myanmar. Technical difficulties, such as Myanmar’s lack of power grid, will be good issues to discuss since the Chinese are more than willing to invest in such infrastructure to boost political affinity and economic interdependence. The Chinese have conveyed their willingness to be flexible on the price of such electric power and infrastructure as long as Myanmar remains friendly and cooperative. Anything that can pull Myanmar closer to China and enmesh it in China’s national/regional economic network will be seen as good political investment with profound payoffs in the future.

For her part, Aung San Suu Kyi is apparently recalibrating Myanmar’s policy toward China. Does this signify a redirection of Myanmar’s neutralism and non-alignment foreign policy? So far the answer is negative, although her decision to improve relations with China is increasingly clear. Many people are waiting to see how Suu Kyi navigates the great power politics and balances Myanmar’s relations with all countries, China included. Yet the task might be more difficult than it appears. China has a lot to offer to boost Suu Kyi’s domestic agenda, especially in its peace process and economic development. It is practical for her and her government to seek China’s support and contribution. However, they should also understand that China’s support always comes at a price. Issues such as the Myitsone dam project and Myanmar’s embrace of China’s strategic agenda will be at the back of the mind of Chinese officials when they sit at the negotiation table. Aung San Suu Kyi will have much work to do, and much caution to take, to anticipate the potential consequences of China’s demands on both her domestic constituencies and her foreign partners in order to best promote and protect Myanmar’s long-term national interests.

Written by Yun Sun, a Senior Associate with the East Asia Program at the Stimson Center. Her expertise is in Chinese foreign policy, U.S.-China relations, Sino-Myanmar relations and China's relations with neighboring countries and authoritarian regimes.

These commentaries are part of a TNI project funded by Sweden.