By Eric Vandenbroeck and co-workers

Beijing’s Strategy to Create Stability Through Dependence

Now, nearly five years after a military coup in 2021 unseated its civilian government, Myanmar has become extremely fragmented. A civil war flared after the coup, killing thousands and leaving upward of 18 million people in need of humanitarian aid. Today, the central government under the military junta effectively controls less than half of the country’s territory. A variety of ethnic armed organizations and other rebel groups jostle for land, resources, and sway, running large regions of the country on their own terms.

Such a fractured political landscape could produce endless instability that might threaten investments in Myanmar or even spill beyond the country’s borders. But China, Myanmar’s most powerful and influential neighbor, no longer fears this fragmentation. Instead, Beijing believes this turmoil is here to stay—and that it can manage the chaos. For much of the civil war, Beijing reluctantly worked with both the military junta and local armed groups near its border while holding out hope for the junta to emerge dominant and unify the country, which would stabilize Myanmar and make it easier for China to operate there. Now, Beijing seeks to actively maintain its influence by simultaneously providing the junta with conditional economic and humanitarian aid and pressuring ethnic armed organizations on its border into compliance. China is using its massive economic leverage to force rival groups to the negotiating table on its terms.

Myanmar’s election, which begins on December 28, is unlikely to produce a democratic transition. Although domestic political parties and local elites hope that the election creates an opening for some loosening of political restrictions, most external observers have already dismissed the elections as obviously unfree and unfair. But leaders in China view the polls as a crucial step toward their goal of managing the country. The election provides an opportunity to formalize a hybrid political system in which the military junta maintains its political authority behind a veneer of civilian administration. Military leaders will retain the symbols of state power, but the elected civilian parliament will process budgets and sign contracts. This will grant China the necessary administrative reliability it needs to invest in projects in Myanmar: whereas the junta’s decrees are fragile because they are subject to leadership turnover, territory loss, or sanctions, civilian-ratified procedures offer more continuity and provide legal leverage for Chinese firms regardless of which local group claims dominance in a part of the country.

The election will not solve fragmentation in Myanmar. Instead, it will help China institutionalize it in a way that reduces risk for itself. Beijing believes it can tolerate a divided Myanmar so long as the main power holders remain dependent on China for trade, energy, and administrative coordination. This means that no single group can secure access to key resources, cross-border channels of commerce, or official approvals without running it by Beijing first. Chinese diplomatic, security, and economic agencies support this approach because they believe they have the tools to adjust pressure on competing groups effectively enough to limit the risk that this managed chaos will devolve into wider instability. If this strategy succeeds, it represents a new pathway for China to operate in one of the world’s most volatile countries.

 

Disunited Nation

Even before the 2021 coup, numerous ethnic armed organizations ruled various parts of Myanmar. Since then, the civil war has fragmented the country even further. The military junta in the administrative capital of Naypyidaw retains international recognition and occupies most major cities, while strong ethnic armed groups, such as the Arakan Army and the United Wa State Army, exercise de facto administrative, military, and economic control over large, strategically vital territories.

In late 2023 and 2024, a joint military offensive of antigovernment rebels and ethnic armed groups, known as Operation 1027, seized more than 40 major towns and administrative centers. The government’s counteroffensive, which started in early 2025 and was supported in part by agreements brokered by China, enabled the military to regain some areas it had lost. But according to the think tank ISP-Myanmar, the junta has regained only about 11 percent of the territory previously ceded in northern Shan State, on China’s southwestern border. In much of the country, the government at best maintains isolated garrisons near key natural resource extraction sites and transport corridors.

But the junta’s weakness is no guarantee of rebel success. The various opposition groups are too disunited to mount a decisive national takeover. These groups include the National Unity Government, the political leadership in exile composed of elected officials deposed in the 2021 coup; bands of militias known as the People’s Defense Forces, some of which operate under the command of the National Unity Government; and a variety of other autonomous ethnic armed organizations that also oppose military rule. This motley resistance has been hampered by its divided political and command structures and a lack of weapons. Although Operation 1027 displayed impressive coordination among opposition groups, the ongoing infighting among rebels, including over natural resources and their attendant revenues, has undercut any attempt at forming and executing a collective strategy to topple the junta.

Chinese leader Xi Jinping meeting with Myanmar generals in Tianjin, China, August 2025

 

Divide and Concur

China sees utility in this fractured political landscape. It has cultivated direct ties to both the military junta and the most capable armed organizations around the country. This strategy of befriending all sides serves important Chinese material goals: securing access to Myanmar’s deposits of critical minerals and routes overland to the Indian Ocean.

In 2023, Myanmar became China's largest external supplier of heavy rare earths. These elements, such as dysprosium and terbium, are key components in electric vehicles, defense systems, and advanced electronics. In 2023, China imported about 41,700 metric tons of heavy rare earths from Myanmar—more than 90 percent of China’s overall supply.

But Myanmar’s central government does not possess these mineral resources. The richest deposits are located almost exclusively in northern Kachin and Shan States, within the de facto jurisdictions of various ethnic armed organizations. Groups such as the Kachin Independence Organization and the United Wa State Army exercise authority over key mining hubs and operate these sites beyond the reach of the junta. Only by working with these ethnic armed organizations can China ensure its supply chain.

Beijing also wants maritime access to the Indian Ocean by promoting the China-Myanmar Economic Corridor from Kunming, the capital of China’s Yunnan province, to the Chinese-backed Kyaukphyu deep-sea port and gas pipelines in Myanmar’s Rakhine State. China currently relies on exporting goods and importing energy through the Malacca Strait in Southeast Asia, a narrow waterway that is vulnerable to a naval blockade and where adversaries could cut off supplies to China in a regional crisis. Having direct access to the Indian Ocean via Myanmar will strengthen China’s energy security and strategic autonomy in the Indo-Pacific.

Although the central government in Naypyidaw formally operates the Kyaukphyu deep-sea port, the Arakan Army, an ethnic armed organization, has functional control because its territory encircles the project and its allies dominate the lengthy inland pipeline route stretching from China to the Indian Ocean. But China retains leverage over the Arakan Army because Beijing is the principal external sponsor of the port and the main source of future investment, financing, and decision-making connected to its development. It uses this leverage to effectively compel the Arakan Army to protect Chinese infrastructure even as the group battles the central government for regional dominance.

Its dealings in Myanmar have taught China that transactional dealmaking with competing local authorities is unavoidable in a fragmented political environment. But China has also learned that without more legal cover, temporary agreements with local armed groups are too fragile to support long-term investments. China wants standardized contracts, national-level permits, and legal guarantees, which protect its investments in case local power holders try to arbitrarily revise terms or a new group seizes power. Only a central state, even a weak one, can provide the basis for these national frameworks.

This combination of local rule and national administrative authority makes the junta and local ethnic armed groups dependent on one another, and, in turn, on Beijing. Central leaders in Naypyidaw need the revenue that projects such as mining and infrastructure partnerships bring, which encourages them to negotiate access and profit sharing agreements with the groups that physically govern the territory. Ethnic armed organizations, meanwhile, need national-level administrative approvals from central officials that will grant them Beijing’s endorsement. China thus uses procedural demands and the promise of future investments to secure stable and workable arrangements with different groups.

Given how dispersed power is in Myanmar, any attempt to bring all groups together in a unified coalition, such as through attempts to broker national peace, is a distant dream. Instead, if Beijing can manage these relationships by creating interdependencies, it can get what it wants without slow and politically fraught national peace talks.

Kingdom of Arakan (1531-1666)

 

Mirror Image

China’s internal bureaucratic structure makes it more likely that it can carry out this strategy in Myanmar. The division of labor between powerful central agencies in Beijing and experienced local authorities near the border mirrors and reinforces Myanmar’s fragmented political order, allowing China to more easily engage both the junta as a sovereign national authority and armed organizations as de facto power holders. By separating responsibility for national and local issues into different parts of its own bureaucracy, China can stabilize economic corridors in Myanmar and protect investment projects on a case-by-case basis without needing full political consolidation.

Central institutions in Beijing, such as the Ministry of Foreign Affairs (MFA) and the People's Liberation Army, handle state-to-state diplomacy and cultivate ties with their counterparts in Myanmar’s military leadership in Naypyidaw. The MFA, for instance, secures formal agreements, such as the Lancang-Mekong Cooperation, a Chinese-led initiative to coordinate development and infrastructure among countries in the Mekong River basin. The MFA is also responsible for the diplomatic legwork necessary to carry out major infrastructure projects, including signing sovereign agreements to formalize state participation and reduce risk for Chinese state-owned enterprises operating in Myanmar.

Although the MFA has the ultimate diplomatic authority to represent Beijing, it does not and cannot enforce peace in the borderlands. Instead, most stabilizing operations are carried out on the ground in Myanmar by local police and intelligence agencies headquartered in Yunnan, the southwestern province that borders Myanmar. The Yunnan branches of the Ministry of Public Security, China’s national law enforcement agency, and the Ministry of State Security (MSS), its intelligence agency, have decades-long relationships with ethnic armed groups. They have deep knowledge and experience of how to manage and coerce Myanmar’s ethnic armed organizations that their counterparts in Beijing lack. The Yunnan branch of the MSS, for instance, analyzes the political and security situation on the ground and mediates between Myanmar’s government and non-state actors.

These local divisions of China’s security and intelligence agencies broker cease-fire agreements, conduct anti-scam operations, and provide stability. They rely on China’s economic leverage to ensure that local groups support its interests. Ethnic armed organizations that run customs operations and infrastructure in northern Shan and Kachin states, the site of much critical minerals extraction, rely on Chinese logistics, currency, and banking systems to function. Chinese agencies operating out of Yunnan province are able to selectively open and close trade routes; regulate groups’ access to fuel, electricity, and financing; and provide incentives to encourage cease-fires among competing groups when necessary.

Each of these local institutional branches implements its mission independently, which frequently generates friction inside China’s massive bureaucracy. Conflict occurs most often when the mandates of the Ministry of Public Security and the Ministry of State Security overlap. But the agencies are broadly aligned with Beijing’s strategic objectives, and the Chinese Special Envoy for Asian Affairs—a top diplomat appointed by the Ministry of Foreign Affairs who has the authority to coordinate between agencies and meet with both official and nonstate groups—can step in to mediate between separate wings of the bureaucracy to prevent China’s own bureaucratic fragmentation from undercutting its larger goals.

 

Power Arrangers

The central question in Myanmar no longer whether the military junta in Naypyidaw or the exiled democratic government can restore national unity but whether Beijing can sustain a system built on permanent fragmentation. After the election, Beijing’s projected succession plan would keep the country’s current leader, Senior General Min Aung Hlaing, as interim president while shifting responsibilities to a group of senior commanders. This aims to ensure that no single figure can emerge as an heir apparent, which Beijing hopes will prevent the possibility that a competing power base inside Naypyidaw could grow large enough to disrupt a future leadership transition and break China’s carefully crafted balance.

Beijing has shown that it is willing to use direct mediation tactics, economic leverage, and joint monitoring mechanisms to shape the internal power dynamics of Myanmar—going further than it has anywhere else in the world. Even if this approach works, however, China’s influence remains geographically limited. Much of China’s focus is on the strategic northern and western borderlands of Myanmar, which is where China needs to mine critical minerals for its supply chain and secure port access for energy security. And the local security and intelligence agencies based in Yunnan, which make it possible for China to work with volatile ethnic armed organizations on the ground, have the bandwidth and experience only to deal with areas that directly touch on their provincial interests. Their influence does not extend to the central plains and the eastern and southern border states.

This limited Chinese reach creates room for other regional and international actors to play a role in Myanmar and balance China’s outsize influence. India and Thailand are deeply involved in Myanmar’s west and south because they coordinate border security with both the central government and rebel groups operating along their borders, facilitate cross-border trade, and manage humanitarian access points for refugees fleeing Myanmar. In addition to Thailand, members of the Association of Southeast Asian Nations can promote quiet political dialogue among opposition groups and then collectively with the junta without aligning with any side. The United States and its allies, meanwhile, can help build local administrative capacity, deliver emergency medical services and food aid, and reinforce safe humanitarian channels beyond China’s primary zones of engagement.

By piecing together a patchwork of negotiated local arrangements, China is seeking a pragmatic alternative to propping up a single unified national power. The pieces are in place for China to succeed, but there is a high risk of turbulence spiraling out of control. The more that China strikes to deals to empower rebel groups along its border, the more it erodes the central government’s authority. If the central government is weakened too much, it could trigger a total state collapse, which would result in a surge in cross-border crime, refugee flows, and unchecked ethnic rivalries and violence. Ultimately, Beijing is betting that it can sustain a delicate balance to get what it wants in Myanmar despite ongoing disorder.

 

 

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