Civilians feel the pinch as conflict hits Myanmar’s border trade with China

The fall of two more critical trade hubs near Myanmar’s border with China over the past week has further severed economic corridors propping up the country’s military regime—and imposed new hardships on its people. The Ta’ang National Liberation Army, a member of the ethnic alliance that has been waging an offensive against the junta since the end of October, said it captured Namhsan, a town located just 108km from the Chinese border, on Friday, seizing an arsenal of weapons including anti-aircraft guns, artillery rounds, and hundreds of firearms. Days later, the group stormed the last remaining junta outpost in Namkham, located on the China-Myanmar border. Now it appears to be turning its sights on Muse, a town that handles nearly 90% of all cross-border trade with China. The Brotherhood Alliance has made seizing these key trade assets a central prong of its strategy to unseat the junta. Since the launch of its Operation 1027 offensive on October 27, it has blocked or seized several of the main border trade towns in northeastern Shan State, effectively cutting Myanmar’s military council off from its chief source of both weapons and money, Beijing. The impacts are being felt far and wide—and not only by the generals in Naypyitaw. According to the World Bank’s latest report on Myanmar—released the same day the TNLA reportedly captured Namhsan—the shock waves of Operation 1027 have “darkened” the country’s economic outlook, fuelling displacement, labour shortages, and logistics costs. Key to the rising volatility in Myanmar’s economy, the report noted, is the way in which armed clashes have disrupted vital trade routes, leading to shortages of food and other basic items in local markets. For consumers and business owners alike, this has meant a rise in prices that is becoming increasingly difficult to bear. “All prices have gone up,” said Thet Shin, who runs a large commercial trade company. “The main thing is that most of the raw materials of our country are imported from China.” According to Thet Shin (who did not want to be identified by his real name for security reasons), most goods that once came directly from China are now being routed through Thailand. Initially these imports were redirected via Myawaddy in Karen State, the main corridor linking Myanmar with Thailand, its second biggest trading partner. Then the conflict disrupted that channel too. Now his trading company is planning to get its imports through Tachilek, a small town in Shan State opposite Mae Sai, the northernmost town in Thailand. It’s far from direct, and far from cheap, said Thet Shin. “It is a situation where we have to pay taxes to Thailand and then import them back to our country,” he explained. “Of course, we spend more than we should.” A group of women push a cart in Rikhawdar, a town on Myanmar’s border with India that was captured by Chin resistance forces on November 13 (Myanmar Now) Myanmar’s international trade across land borders accounted for 40% of its exports and 21% of its imports in the six months to September 2023. Agriculture, one of the most important sectors of the nation’s economy, is particularly vulnerable to conflict-related border trade disruptions, with more than a third of agricultural exports going overland to China, India, and Thailand, and large quantities of farming resources like pesticides and fertilisers coming back into Myanmar the same way. It’s believed that by blocking and seizing trade routes on the Chinese border, the Brotherhood Alliance aims to cut off the junta’s economic lifelines, throttling its access to key resources, including fuel. But many businesses in Myanmar also rely on trade over the Chinese border, with 60-70% of imported goods coming in through the border gates, according to Thet Shin. “The damage is huge,” he said. “I think that the foreign currency flows to the military council have been cut off at the borders… [But] I would like to ask the ethnic armed groups that control the current trade to reopen trade routes as soon as possible. Otherwise, it will be very difficult for the people.” David Mathieson, an independent analyst specialising in conflict and humanitarian issues in Myanmar, said that the current conflict, which has been labelled the sharpest escalation of fighting inside the country since the February 2021 coup, has “dramatically” disrupted trade. “Bilateral trade’s taken an absolute pummelling,” Mathieson told Myanmar Now. “If it was just the trade routes to China that [the junta] were losing, that would be devastating. But the other thing to factor in is that their main trade link from Thailand is also being seized. And that’s seriously affected the economy.” “Basically all the arterial trade routes around the country are being squeezed by multiple resistance forces.” The stated goal of those resistance forces is to undermine and uproot the military dictatorship—and they may well succeed. Mathieson speculates that in the long run, Myanmar’s spiralling economy, and the social discontent that comes from it, could deal a death blow to the junta’s reign. “People will just not be able to survive,” he said. “And I think widespread resentment will be one of the factors that helps bring the system down.” Speaking to friends and acquaintances in Yangon, he said he’s noticed how the impact of Operation 1027 has already become a source of resentment—and not just towards the regime. “You’re hearing more and more about this—people saying, ‘Look, we might hate the military and we might even support the resistance, but can we also think about the knock-on economic effects on the population from all of this?’” he said. “And at some point I think the resistance has got to go, ‘Well, how much is this really damaging the population?’” “These are questions that have to be asked: At what cost?”

Civilians feel the pinch as conflict hits Myanmar’s border trade with China

The impact of Operation 1027 is being felt throughout Myanmar’s economy, and could be decisive in determining the country’s political future

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