Rising Trade Deficit with China Strains Myanmar’s Economy Amid Growing Dependence

Muse 105th Mile Border Trade Zone in China-Myanmar Border. (photo-Tun Nay Hlaing)

Nay Pyi Taw: The trade imbalance between Myanmar and China continues to deepen, reflecting significant economic challenges for Myanmar. In the fiscal year 2023-2024, the border trade value between the two countries surged to $3.279 billion, an increase from $3.1 billion the previous year, according to the Ministry of Commerce​ (MDN Myanmar)​. Despite this growth, the trade deficit persists, highlighting Myanmar’s growing financial dependence on China.

Myanmar’s exports to China primarily consist of agricultural products, livestock, fisheries, minerals, and forest products. In contrast, imports from China include capital goods, intermediate goods, manufacturing goods, and raw materials for the CMP (cut-make-pack) enterprises​ (World Bank)​. The Muse border post recorded the highest trade figure at $2.055 billion, followed by Chinshwehaw at over $703 million, Kampaiti at $208 million, Lweje at $158.568 million, and Kengtung at $154.239 million​ (MDN Myanmar)​.

Economic analysts point out that the trade deficit is exacerbated by Myanmar’s reliance on imports for its industrial and manufacturing sectors, which limits the country’s ability to balance its trade. The World Bank notes that Myanmar’s overall trade performance has been affected by declining exports and increasing imports, leading to a significant trade deficit in recent years​ (World Bank)​.

David Mathieson, an independent analyst, emphasizes that the geopolitical and economic dynamics between China and Myanmar are complex. “China remains a dominant trade partner due to geographical proximity and economic leverage. However, the trade imbalance is a critical issue that Myanmar needs to address through economic diversification and enhancing export capabilities,” Mathieson stated. He added that the reliance on Chinese goods and capital has made Myanmar vulnerable to economic pressures from Beijing.

The financial strain on Myanmar is further compounded by Chinese investments in key sectors such as infrastructure and energy. While these investments are vital for development, they often come with high-interest loans and conditions that favor Chinese firms. This dynamic creates a cycle of debt and dependence that weakens Myanmar’s financial stability. According to a report by the International Monetary Fund, Myanmar’s external debt has been rising, with a significant portion owed to China, raising concerns about the country’s long-term economic sovereignty​ (World Bank)​.

Efforts to address this imbalance are further complicated by internal conflicts and political instability in Myanmar, which disrupt trade routes and economic activities. The Myanmar government faces pressure to stabilize the economy, improve infrastructure, and create favorable conditions for local businesses to compete in international markets​ (World Bank)​.

Dr. Zaw Oo, an economist at the Myanmar Institute of Strategic and International Studies, noted, “Myanmar’s economic policies must focus on reducing dependency on any single country. Diversifying trade partners and enhancing local industries’ competitiveness are crucial steps towards achieving a balanced and sustainable economic growth.”

In summary, while the increase in trade value between Myanmar and China indicates active economic engagement, the growing trade imbalance underscores Myanmar’s vulnerability to Chinese economic influences. This situation calls for strategic economic reforms to achieve a more balanced and sustainable trade relationship, ensuring Myanmar’s long-term financial independence and stability.

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