China’s mediation in the Kachin-Myanmar conflict is harvesting results, as the parties reached a tentative truce on 31 May. Although no ceasefire has been declared, a breakthrough is evident in deciding Myitkyina as the venue of peace talks. A seven-point agreement on de-escalating fighting and holding political dialogue has been signed.

How is China balancing its objectives in Kachin state with local dynamics? What has been China’s strategy to achieve its interests?

Chinese Interests in the Kachin State
On the economic and investments front, the Kachin state is important from China. The China Power Investment Corporation’s Myitsone Dam project provoked Kachin protests against Yangon in September 2011, for permitting a threat to local socio-environmental harmony. With a ceasefire imminent, China hopes the shelved hydropower scheme will reopen in 2016. Slated as the first of seven more Irrawaddy proposals, it will generate 90 percent of its electricity to feed Yunnan in exchange for $17 billion over 50 years. The general population resents intrusions, but the Kachin Independence Organization invited China for hydropower projects. KIO’s stake in China’s Datang Corporation project on Tarpein River was sidelined by the regime, leading to obstruction efforts.

The nearby Shwe oil and gas pipelines due to operationalize this month are vulnerable to crossfire. The oil-pipeline with an annual capacity of 12 million tones reduces transport costs. Ceasefire would ensure no more stray shells landing inside Chinese borders.

Economically, China also needs the Kachin to sustain an informal economic boom. The entire state being cut off from Naypyidaw depends on Yunnan for its entire subsistence: from rice to cars, from cell phones to university education. Chinese currency is used in standard bank transfer procedures. Jade smuggling took a new avatar since the days when a Chinese party could buy a Kachin mountain for mining. Hpakant now teems with Chinese businessmen armed with bulldozers displacing locals. They work as contract labourers for the million-dollar jade industry.  PLA allegedly indirectly sells unused channels to KIO for satellite communication. The gain is mutual as seen in Kachins’ entrepreneurship. Casinos here offering international entertainment draw crowds from Yunnan directly or by videophone. Gamblers and traders pay KIA immigration officials for daily visas. Opium farming in Kachin supplying cross-border clientele is a burgeoning crop-substitution industry.

Internally, the Kachin conflict threatens to spill into China’s domestic social fabric- Jingpos, as Kachins in Yunnan are known, form a network of 100,000 Chinese citizens. The desire for peace does not imply Chinese interest for complete settlement in Kachin. A disbanded KIA may redirect anarchy; an integrated Kachin will mean collapse of unofficial albeit significant links.

The Kachin Peace Roadmap
21st century China projects an image as an international conflict intermediary. Diplomatic pressure was apparent in oil-rich Darfur. Similarly a significant role was played by hosting earlier Kachin peace talks at Ruili- a Yunnan border town. Security guarantees were assured for both warring factions’ officials. Chinese influence conceived the May discourse.

CPC’s apprehension on US and UK attending talks scheduled for April forced delays until their attendance was shunned. The UN and the United Nationalities Federal Council were allowed as witnesses. Appeasing the UNFC- the union of Myanmar’s ethnic organizations- is vital for dealings with Kachin- surrounding provinces.

Yunnan forced most Kachin refugees to leave camps in August 2012. China is sure to have swayed the homecoming provision for displaced Kachins in May’s agreement. Jingpo demonstrations approaching the border were returned to avert an overarching cultural connection.

The PLA denies armed support to the armed wing of the KIO- the only separatist organization without a ceasefire agreement with Myanmar.

Beijing-Laiza Axis Slows the US-Naypidaw Loop?
China will use the conflict as a card in bilateral relations with Myanmar vis-à-vis U.S.A. The neighbours will continue as strong allies. Yet Myanmar’s liberalization is not looked upon kindly. A firm Kachin policy guards against future American involvement. U.S.A’s December 2012 visit to the warzone may have stirred China to step up intervention.

Increasing the Chinese grip on Laiza- the de facto Kachin capital, is easier than improving ties with American supported NDL. Beijing implicitly supports Thein Sein’s disapproval of U.S.A’s criticism.

The PLA actively trains for mountain warfare near the Kachin border. This signals to KIA to avoid intrusions and adopt armistice. It may also warn all sides that China can launch operations in its southern backyard if necessary. Xi Jinping’s administration will continue applying leverage as mediator and using a soft approach unless forced otherwise.

China’s partial non-interference policy in Myanmar tactically blends with national interest. Kachin is never claimed as sovereign territory despite linkages since the fifteenth century. A two-pronged strategy is employed to preserve Laiza’s alliance without provoking the parent state. If the numerous development plans in the war-torn area take off, Yunnan can count Kachin as a sixth finger for Beijing’s foreign policy glove.