Kokang army tightens grip on China-Myanmar trade routes amid junta’s political transition

Recent developments in northern Shan State—where one ethnic army has seized a key town from an allied armed group, giving it effective control over border trade with China—could be a boon for Myanmar’s junta as it transitions to military-led “civilian” rule. On March 14, the Myanmar National Democratic Alliance Army (MNDAA) forced its fellow member in the Brotherhood Alliance, the Ta’ang National Liberation Army (TNLA), out of Kutkai, a town on the Mandalay-Lashio-Muse highway—Myanmar’s most important overland trade corridor with China. This move, which could reshape cross-border commerce and conflict dynamics, marks a rare clash within the alliance, which also includes the Arakan Army. Together, these three groups, along with more loosely aligned resistance forces, inflicted heavy losses on the regime during Operation 1027, a major anti-junta offensive launched in October 2023. Since capturing Kutkai, the MNDAA—sometimes referred to as the Kokang army—has moved quickly to assert control over surrounding routes, effectively placing most of the Muse-Lashio corridor under its authority, according to local residents and traders. The highway links central Myanmar to China’s Yunnan Province through the border town of Muse. Trade along this route was heavily disrupted by Operation 1027, which saw the Brotherhood Alliance seize large parts of northern Shan State. While these territorial gains began to unravel last year after China pressured the MNDAA to return Lashio, the region’s main city, to the junta, normal trade flows have yet to resume. This has been mainly due to ongoing clashes, but friction between the Kokang army and the TNLA, which has been slower to cede hard-won territory, has also played a part. Myanmar National Democratic Alliance Army Major General Peng Deqi (centre right) during operations against Myanmar’s military near Lashio Township in northern Shan State in 2023. (AFP / Kokang Information Network) Tensions between the two groups had been building for months, especially over the fate of Kutkai, which was under their joint administration. Following talks last week, the TNLA has reportedly agreed to give up any claims to administrative control. Sources close to the alliance said the group is expected to receive a share of trade revenues, but will no longer maintain a visible armed presence. Meanwhile, the MNDAA has also taken over TNLA positions along major trade arteries, including routes linked to the Muse 105-mile trade zone and the Kyin San Kyawt border crossing, further consolidating its dominance. The consolidation has started to streamline movement along the corridor. Residents and traders said checkpoints run by multiple armed groups—including the Kachin Independence Army and the Shan State Progress Party/Shan State Army—have been removed in some areas, reducing travel time. Commercial activity is gradually resuming. The Muse 105-mile trade zone, which previously handled around US$500 million in monthly trade, is seeing the return of goods, including agricultural exports and Chinese imports such as food and textiles. However, significant restrictions remain. Goods entering from China are reportedly only going as far as Lashio, while the military continues to block further transport into central Myanmar, complicating efforts to fully reopen the route. China pressure and political timing Analysts and resistance sources say the MNDAA’s push to consolidate control may be linked in part to pressure from China, which has strong economic interests in restoring cross-border trade. The timing also coincides with political developments in Naypyitaw, where the military has convened a new parliamentary session following controversial elections. Junta chief Senior General Min Aung Hlaing is expected to assume the presidency under a civilian-style administration later this month—a process publicly backed by Beijing. Among ethnic armed groups operating along the China-Myanmar border, China is widely seen as having the greatest influence over the MNDAA and the United Wa State Army, the best-armed ethnic military force in the country. Both groups maintain close ties with Chinese authorities. Observers say Beijing may be encouraging the consolidation of control along the trade corridor not only to facilitate the reopening of routes linking Yunnan with Myanmar, but also to support the junta’s political transition. Restoring the Mandalay-Lashio-Muse trade route could allow a new administration led by “President” Min Aung Hlaing to project economic stability and gain further legitimacy, particularly as it seeks international and regional acceptance. Despite improved movement along parts of the corridor, traders say high taxes imposed by armed groups and ongoing military restrictions continue to hinder trade. The future of the route is likely to depend on negotiations between MNDAA and the military, with China expected to play a mediating role. For now, MNDAA’s control of Kutkai and surrounding routes marks a significant shift in northern Shan State—reshaping both the balance of power among ethnic armed groups and the prospects for reopening one of Myanmar’s most vital economic lifelines.

Kokang army tightens grip on China-Myanmar trade routes amid junta’s political transition

The MNDAA’s growing control over northern Shan trade corridors could have major implications for the regime’s push for legitimacy

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