Mismanaging of the Unmanageable: China Tries to Play All Sides in Myanmar’s Metastasizing Civil War

When fighting in Myanmar’s civil war escalated last fall, Chinese-origin weapons could be found on both sides. The military junta’s air force includes Chinese-supplied jets, while the anti-regime Three Brotherhood Alliance employs Chinese-manufactured small arms purchased from another China-backed group along the border. Is China backing both sides simultaneously? And if so, why?

Beijing’s cooperation with multiple opposing actors in Myanmar is nothing new. China’s policy in Myanmar is a “hedging strategy” wherein authorities in Beijing and Yunnan Province foster ties and leverage with actors throughout Myanmar’s complex political environment. By simultaneously backing ethnic armed groups along the Chinese border, keeping ties with the pro-democracy resistance behind the scenes, and supporting the junta in Naypyidaw, China wants to make sure that whatever happens, it comes out on top.

However, since the monumental anti-junta resistance offensive Operation 1027 in late 2023, the junta has lost over 30 towns across the country, seriously undermining the foundations of its grip on power. The offensive brought both boons and setbacks for China, triggering Beijing’s hurried diplomatic intervention and a brokered ceasefire in northern Shan State.

China’s actions since Operation 1027 highlight that its hedging strategy is now a commitment to (mis)managing an untenable status quo by supporting a rump junta’s survival in Myanmar’s center, under-the-table engagement with what it perceives as a Western-leaning democracy movement, and maintenance of a quiescent buffer zone controlled by ethnic armed organizations amenable to its geoeconomic interests. Although the resistance is not anti-China, Beijing will act according to its own interests and its belief that the junta remains crucial to Myanmar’s future. China will interfere with resistance efforts to establish an inclusive, federal democracy if it feels the need to. For Washington, this means that the United States should expand its support for the pro-democracy resistance to ensure that the coalition has a viable alternative to China and can push back against malign Chinese pressure.

The Contours of China’s Policy in Myanmar

Metaphorically, China views Myanmar like a pot of boiling water on a stove where it cannot turn off the heat, only crank the temperature up or down within a certain range. A rolling simmer is tolerable and perhaps beneficial. But Myanmar’s civil war boiling over and harming Chinese interests in stability and its investments is not. Indeed, despite some initial trepidation, Beijing forged a strong relationship with State Counsellor Aung San Suu Kyi’s democratic government between 2016 and February 2021 — setting aside ideological differences to advance its agenda.

After the military coup in February 2021, China outwardly embraced the junta but quietly maintained contacts with both the pro-democracy civilian government, the National Unity Government, and continued arming its longstanding proxies along the China-Myanmar border. Importantly, Beijing’s strongest ally, the United Wa State Army, receives and then sells or transfers Chinese weapons to many armed groups in Myanmar, including anti-junta groups.

Over the past three years, fighting steadily intensified. The junta’s indiscriminate reprisals and incompetence bred an increasingly cohesive resistance movement bringing together the National Unity Government and many ethnic armed organizations. Crucially, the majority Bamar, who have long dominated politics in Myanmar, are by and large against the military and increasingly aligned (but still in tension) with minority ethnic groups. Meanwhile, Myanmar’s crisis has metastasized, creating the conditions for criminal networks operating along the border — some under the junta’s protection, and others under some ethnic armed groups like the United Wa State Army. There groups run so-called pig butchering scams. These cyber crimes, which are a particular source of irritation for Beijing, involve trafficking thousands of people into scam centers stationed along Myanmar’s borders and forcing them to defraud victims, often Chinese, of billions of dollars.

China’s Turn Toward the Junta

For Beijing, Myanmar’s renewed civil war poses a dilemma. It perceives both threats to its multi-billion-dollar investments under the Belt and Road Initiative’s China-Myanmar Economic Corridor and opportunities to take advantage of an ailing and dependent junta with accelerated economic projects. At the same time, the National Unity Government’s perceived closeness to the United States triggers concerns in Beijing amidst worsening U.S.-Chinese competition. Complicating matters further, the military in Myanmar has thus far demonstrated only incompetence and allowed cyber scammers to operate with impunity along China’s border at a time of economic turmoil.

The situation was rapidly getting out of Beijing’s control, so it responded by engaging the junta more openly in late 2022. In May 2023, then-Foreign Minister Qin Gang became the highest-level Chinese official to visit Myanmar, ending a policy of arm’s-length bilateral diplomatic treatment but also pressuring the junta to cooperate in reining in cyber criminals. Over the course of the next six months, China also worked behind the scenes to pressure ethnic armed groups in the Three Brotherhood Alliance that opposed the junta but had not yet entered open warfare to negotiate with the military regime. On cyber scams, the junta remained intransigent, but Chinese-aligned border armed groups began to hand over suspected criminal leaders to Beijing.

Operation 1027 and China’s Role

Myanmar’s civil war reached a crescendo on Oct. 27, 2023, when ethnic armed organizations under the Three Brotherhood Alliance banner launched a surprise offensive against junta targets throughout northern Shan State along the Chinese border. Quickly seizing towns and cutting strategic highways facilitating border trade, they left the junta facing a cascading series of losses, which soon spread throughout the country.

Given its extensive connections to China, dependence upon China’s arms and economy, and prominent public justification for the offensive as a means of targeting cyber scammers, the Three Brotherhood Alliance and its Operation 1027 raise serious questions about Beijing’s role in Myanmar. Had China, irritated by the junta’s complicity in scams defrauding billions of dollars from Chinese nationals, flipped from the military to the anti-junta resistance — or at least some part of the anti-regime coalition?

Confounding easy analysis, Beijing’s actions and motives are opaque. On one hand, China likely tacitly backed the Three Brotherhood Alliance. The International Crisis Group has suggested that Beijing’s “desire to make inroads against the scam centers seems to have trumped China’s traditional border security concerns.” Some analysts linked the mass killing of Chinese nationals — including undercover Chinese intelligence officers — attempting to escape captivity in a junta-aligned scam center to China’s approval of Operation 1027, which started seven days later. Yet evidence also suggests additional motives exogenous to China, including the many months of cooperation between the National Unity Government and the Three Brotherhood Alliance. Importantly, it is likely that the ethnic armed groups, regardless of their intentions regarding a democratic Myanmar, sense a fatally wounded junta and the chance to make gains against it.

Scrambling to Take Hold of a Spiraling Situation

China’s actions in the months since October 2023 further highlight the extent to which Beijing’s policy involves mismanaging the unmanageable. During Operation 1027’s initial days, China reportedly did not weigh in against the Three Brotherhood Alliance, but it certainly hoped to assert its influence on the situation. During the first weeks of the offensive, high-level Chinese officials traveled to Myanmar for discussions with the junta, while also calling for a ceasefire and expressing “strong dissatisfaction” with the prospect of any spillover into Chinese territory. Chinese officials stressed the importance of border security, clearly laying out their worries about both stability and criminal networks.

While Foreign Minister Wang Yi’s remarks suggest that China was pleased by the destruction of criminal networks, Beijing evidently decided by early December that enough was enough. By that point, the Three Brotherhood Alliance had seized almost a dozen towns and significant territory, and the Arakan Army — one of the three alliance’s “brothers” — had launched its own series of attacks in Rakhine State near important Chinese infrastructure projects. The junta’s forces continued to crumble in strategic areas across the country, and its superiority in airpower and artillery appeared too overstretched to reliably hold ground at the tactical level.

In December, China therefore arranged negotiations in Yunnan’s Kunming, which Beijing then depicted as successful in achieving a ceasefire. Yet the limits of its influence quickly became apparent, as both sides continued fighting. The Three Brotherhood Alliance was clearly interested in taking more claimed territory along the margins of northern Shan State. They denied that a ceasefire had taken place, even saying, “Our aim is to end the military dictatorship.” Moreover, although the junta evidently desired a ceasefire, the military also wanted to hold the important city of Laukkai if possible.

Three Brotherhood Alliance troops cut off Laukkai by early January, and Beijing then reportedly brokered the surrender of the junta’s remaining forces in the city. Likely irritated by instability along its border and the strangling of bilateral trade, Chinese pressure resulted in further failed rounds of talks in Kunming before the two sides entered into a ceasefire on Jan. 12. They agreed to halt fighting in northern Shan State and “promis[ed] not to undermine the safety of Chinese people living in the border area and Chinese projects and personnel in Myanmar.” However, it is important to highlight that the agreement only deals with the Chinese border, not other battlefields in Myanmar where Chinese influence is much less.

Sporadic skirmishes broke out in the days after the announcement, but the ceasefire in northern Shan State has largely held since January. The breathing room bought by the Chinese-brokered agreement allowed the junta to focus elsewhere, such as retaking the town of Kawlin in Sagaing. But it had little influence on the Arakan Army, which continues to advance in Rakhine State.

With the fighting in northern Shan State along the Chinese border halted, news of another agreement became public on March 3. Important provisions included a 70:30 customs revenue agreement between the Three Brotherhood Alliance and the junta, military regime recognition of one of the alliance member’s control over Kokang, and, as always, the safeguarding of Chinese interests and assets. However, it was also seemingly leaked by the Chinese side, as the negotiations were reportedly not so successful. Both sides downplayed (outright denying, in the junta’s case) the terms of the agreement as leaked.

Escalated fighting continues elsewhere in Myanmar, and the ceasefire agreed to in January appears somewhat shaky as of March 2024. The junta announced martial law in three Shan State townships controlled by one of the alliance’s members, and the Three Brotherhood Alliance responded with a warning that fighting could resume. Making matters worse for China, the Kachin Independence Army — a prominent National Unity Government ally along the Chinese border but with less influence from Beijing — launched its own major offensive, leading to artillery shells falling on Chinese territory. China cannot control the war in Myanmar.

China may have tacitly approved of the Three Brotherhood Alliance driving out the border criminal networks — especially because it triggered the junta falling over itself to demonstrate it was now on board by deporting or eliminating high-ranking crime lords. But Operation 1027 sending the junta into a destabilizing tailspin was most likely not in Beijing’s plans.

The Limits of Chinese Influence

China’s efforts to control the spiraling situation in Myanmar suggests another key takeaway. While China may be the most influential outside actor in Myanmar, it has a double-sided “principal-agent” problem limiting its ability to control events.

Beijing certainly wields influence over both the junta and the border ethnic armed organizations. Although complex and with little mutual trust, China’s relationships with the Three Brotherhood Alliance and the junta are arguably different flavors of an exploitative principal-agent relationship. Both depend upon China for weapons and political support to differing degrees at different times. In return for its support, China receives leverage and influence in Myanmar to advance its China-Myanmar Economic Corridor and mitigate cross-border spillover and transnational crime.

To be sure, the descriptor “principal-agent” should not be confused with “puppet,” nor is it intended to overlook the stark differences between China-junta and China-Three Brotherhood Alliance ties (including with the individual members making up the Alliance). The Myanmar military distrusts China and views its support for ethnic armed groups as a serious national security threat, but it is increasingly dependent upon Beijing for arms and diplomatic and economic support. Meanwhile, China cannot wholly dictate to the Three Brotherhood Alliance’s three members, as their persistent opposition to the junta shows, but they are fundamentally dependent upon Chinese arms passed along by the United Wa State Army for their combat capabilities. If China decided to turn off that tap, they would be unable to fight so successfully against the junta. This explains their begrudging willingness to enter ceasefire negotiations with the junta. Moreover, the Three Brotherhood Alliance’s members are no monolith. It is an alliance, not a unitary actor, with the Myanmar National Democratic Alliance Army (the Kokang) remaining closest to — and most dependent upon — China. The Ta’ang National Liberation Army and Arakan Army value Chinese support but are less dependent upon it.

In essence, China’s relations with the junta and the Three Brotherhood Alliance are that of principal and agents, but one where Beijing is now experiencing a period of lessened influence because Myanmar’s renewed civil war fundamentally recasts these ties. In the words of Amos C. Fox, “As time progresses and objectives are accomplished, each parties’ self-interest begins to supplant the objectives and end states that brought the principal and agent together in the first place.” In classic “principal-agent problem” fashion, interests have changed, retracted, or diverged. This dynamic is also arguably more complex in Myanmar than in many other proxy-principal relationships, as China’s hedging approach means that both of its proxies, the military junta and the Three Brotherhood Alliance, are in active armed conflict against each other and China cannot easily reconcile them.

For the Three Brotherhood Alliance, attacking a distracted and weakened junta was too good of an opportunity to pass up, and tying their efforts to the cyber scam epidemic ensured Chinese tacit backing. Had they kept the peace and not launched Operation 1027, then the junta would still be in control of their territorial claims in northern Shan and Rakhine States. As such, the Three Brotherhood Alliance had evidently decided in the months leading up to October 2023 that the costs of peace were no longer worthwhile, signs of which included their refusal to negotiate with the junta in summer 2023. At the time, an Arakan Army spokesperson even stated openly that “we would not be willing to meet with the junta without China.” After Operation 1027, only when China applied real pressure — speculatively, perhaps with threats of reduced arms — to enter a ceasefire did the Three Brotherhood Alliance do so. Even so, the ceasefire remains limited to northern Shan State and is seemingly on a knife’s edge.

For the junta, the criminal networks provided vital revenue to a cash-strapped regime, leading it to initially stonewall China’s crackdowns on the cyber criminals until Operation 1027 upended its calculus. Now, the junta only abides by the ceasefire out of begrudging necessity. Losing lucrative border territory to such brazen opponents is intolerable in the long term, especially as the Three Brotherhood Alliance had been reportedly coordinating with the junta’s National Unity Government and training anti-regime forces well before 1027. If the junta recovers its strength in the future, we can likely anticipate a counteroffensive against the Three Brotherhood Alliance.

This loosening of control and diverging of interests is likely apparent to Chinese leaders, in both Beijing and Kunming. For example, it appears probable that China leaked news of the March 2023 negotiations to apply public pressure on both sides to comply, as well as to advance its narrative of playing a positive role in Myanmar peacemaking.

At the same time, it is also important to highlight that principal-agent relations are not a one-way street. Although Chinese control has weakened, both of its proxies are still trying to use China for their own benefit. The Three Brotherhood Alliance continues to accuse the junta of intransigence on criminal networks, while the junta works to advance China’s economic interests and warns of Myanmar’s fragmentation to trigger Chinese concerns. The military has also reluctantly complied with Chinese demands on criminal networks while also protecting its revenue source by relocating them away from the Chinese border. China is widely distrusted in Myanmar, but its role and support are still valuable for the junta and the border ethnic armed organizations.

Implications for Myanmar’s Future

The implications of shifting interests and misalignment between China, some of the border ethnic armed groups, and the junta are potentially stark. For the pro-democracy resistance, winning Beijing away from its belief that only keeping the junta in power can secure China’s long-term interests is paramount. The National Unity Government is well aware of this and has issued a statement designed to appeal to Beijing. In doing so, it hopes to counter both the junta’s own propaganda and Chinese fears about the pro-democracy movement’s perceived closeness to the United States. If the resistance can convince Beijing that the junta’s intransigence, economic mismanagement, and counterproductive brutality undermine China’s interests, China may draw down its support. Yet it is not quite there. Although China’s tacit approval of Operation 1027 indicates some frustration with the Myanmar military, as do reports of expanded outreach to the National Unity Government, Beijing still sees fragmentation and state breakdown as the dangerous and likely alternatives to the junta.

Even as it courts China, the pro-democracy resistance should also be careful to avoid dependence upon Beijing at all costs. Beijing will not hesitate to throw its proxies under the bus. It views Myanmar through a purely pragmatic lens.

Therefore, the United States can and should do more to provide material support for democratic forces, while also working to reassure China and persuade it to abandon the junta. Striking this balance is, of course, easier said than done.It will require cooperating with China on issues like transnational cyber crime while emphasizing that the Myanmar junta poses a serious long-term threat to regional stability. At the same time, material U.S. support for pro-democracy actors, such as financial and humanitarian aid and diplomatic backing, can mitigate the risk of growing Chinese influence and assist the pro-democracy resistance as it continues to fight the junta.

Lucas Myers is the senior associate for Southeast Asia at the Wilson Center’s Asia Program.

The views expressed are the author’s alone, and do not represent the views of the U.S. Government or the Wilson Center. 

Image: Wikimedia

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