While Beijing’s military‑centric approach — backed by its “three bottom lines” — defines China’s Myanmar policy, the ground reality shows that civil war is not the only source of instability. Alongside the widening conflict, Myanmar’s foundations are being shaken by a deepening economic crisis with historical echoes. The collapse of General Ne Win’s Burma Socialist Programme Party regime four decades ago was not triggered by battlefield defeat, but by economic breakdown — a reminder that today’s regime faces the same danger.
Deepening economic crisis
When Chinese Foreign Minister Wang Yi visited in August 2024, the junta was facing not only military setbacks but also severe inflation marked by surging commodity prices. Thanks to Chinese financial assistance, inflation eased after his trip and the kyat stabilized at around 4,000 per US dollar. But it plunged again after military-staged elections early this year and now hovers near 4,600 per dollar.
Starved of hard currency, the junta restricted imports and choked off border trade. The cost of fuel and cooking oil surged, followed by staples such as rice, eggs, and onions, as well as household electronics and medicines. Vehicle prices soared, and black markets reemerged. Domestic manufacturing, agriculture, and livestock industries — reliant on imported technology, seeds, feed, fertilizers, and medicines — were hit hard, while foreign investment also dwindled.
As the kyat weakens, commodity prices are surging again and shortages are widespread. This is not merely a policy miscalculation: the junta channels all foreign currency into military spending, compounding the economic crisis. Without an end to war, the economic crisis cannot be fixed.
Corrupt state apparatus
Another major issue is systemic corruption in the bureaucracy. Graft grew steadily under military rule from 1988 to 2010 but was restrained somewhat by public oversight during the 2010–2020 reform period. But since the 2021 coup, the entire machinery of government — from Min Aung Hlaing and the top brass down to the lowest ranks — have exploited power for personal gain.
Legal restrictions and licensing requirements have become tollbooths for bribery. Payment is required for import permits, ID cards, passports and the right to travel at home or abroad. Importers routinely pay bribes, while ordinary people face extortion by soldiers and police on the streets. This endemic corruption has also facilitated the boom in narcotics production and online fraud gangs.
Narcotics and online scams
Myanmar is among the world’s largest producers of heroin, methamphetamine, and synthetic drugs, with output now rising annually as officials, soldiers and police turn a blind eye in exchange for bribes.
Online scam syndicates previously confined to borderlands are now spreading inland. Evidence from Karen State and northern Shan’s Kokang shows that gangs are relocating under the protection of military‑linked MPs, administrators, border guards, police, and senior officials. Even as criminal syndicates elsewhere in northern Shan are dismantled, Muse—the only border town Naypyitaw still controls thanks to China—remains an online scam hub, highlighting the regime’s complicity in cyber-fraud.
In other words, the economic crisis is not a standalone problem, but deeply intertwined with systemic corruption, narcotics production, and scams.
Poverty and social collapse
Illicit revenues from narcotics and scam syndicates have flooded Myanmar, fueling inflation and driving property values to unsustainable heights. Ordinary citizens are bearing the brunt as the country’s economic crisis deepens. Chinese loans cannot solve this problem.
The persistent civil war, combined with entrenched corruption and criminality, rampant inflation, and worsening shortages, has created a dire situation. While a handful of elites hoard wealth, most of the population struggles to afford basic food, leaving Myanmar society fractured and unstable.
A UNDP report released on October 8 revealed that one in three Myanmar citizens — over 17 million people — are already experiencing multidimensional poverty, with another 19 million at risk. In total, about 37 million people, or 68 percent of the population, are either poor or vulnerable to poverty.
Years of conflict, displacement, economic collapse, and climate shocks have devastated housing, healthcare, education, and livelihoods, worsening deprivation.
China’s other Myanmar headaches
Beyond these crises, China must also reckon with four other problems.
First is anti‑China sentiment — which is rising not only among resistance forces but also within the regime itself. Resistance anger is fueled by Beijing’s support for a failing military regime, not hostility toward Chinese people.
For the regime, however, anti‑China sentiment remains a core worldview. In times of political, economic, or military crisis, the Myanmar military often resorts to Burman nationalism, routinely stoking anti‑China and anti‑Muslim prejudice. In this way, it diverted public anger over rice shortages in 1967 by orchestrating anti‑Chinese riots. Today, the regime sponsors ultranationalist groups such as Ma Ba Tha to sustain this narrative.
Propping up the regime offers China no protection from Naypyitaw’s deep-seated disdain. This hostility is not incidental but fundamental; Beijing will be forced to confront it again and again no matter how much support it provides.
Second, the regime’s corrupt apparatus continues to protect online scam syndicates, undermining China’s efforts to suppress them.
Third, the regime has closed key border trade gates including Muse and Chinshwehaw once worth billions annually to China. At a time when Chinese goods are cheaper than Japanese or Western equivalents, the border-trade shutdown is a major loss. Meanwhile, talk of opening trade routes with India has alarm bells ringing in Beijing.
Fourth, the regime is seeking to reestablish relations with the United States. While China might accept restoration of normal diplomatic ties, anything deeper would be difficult for Beijing to tolerate given its red line over Western engagement with ethnic armed groups.
‘Three bottom lines’ collapse
China’s policy goal is stability in Myanmar. But by betting on the Myanmar military to deliver it, Beijing has tethered itself to failure. The regime’s reliance on force over negotiations, corruption over the rule of law, entanglement with narcotics and scams—coupled with economic breakdown—guarantee perpetual instability.
Despite Beijing’s support, Myanmar remains mired in conflict and crisis. The “three bottom lines” have not been upheld: civil strife is intensifying, ASEAN engagement is faltering, and international powers are finding new entry points.
China’s core objective — stability in Myanmar — remains unfulfilled.