Htet Tayza: China

Htet Tayza discusses the recent news that China has decided to offer billions of dollars’ worth of loans to countries in South East Asia, such as Myanmar. 

Li’s offer 

Chinese Premier Li Keqiang recently attended a summit with leaders from several South East Asian countries including Myanmar, Vietnam, Thailand, Laos and Cambodia. While attending the meeting, Li offered to lend these five nations US$11.5 billion (bn) in loans and credit lines.

Yahoo News reports that Li’s offer included a hefty 10 billion yuan (US$1.1 bn) in preferential loans. The deal also featured China’s offer of a US$10bn credit line to the leaders of these countries, which along with The People’s Republic, all lie along the region’s mighty Mekong River.

Family of nations  

This is not the first time China has made such an offer at a regional meeting. At an East Asia summit in Myanmar in 2014, Li offered US$20 billion in loans to leaders in the region. This time around, Li said that he would also act to ensure that China’s new Asian Infrastructure Investment Bank and its Silk Road fund would bankroll upcoming infrastructure projects in the area.

Commenting on his offer, Li said: “There are six countries on one river. The Lancang-Mekong sub-region [the Chinese name for the upper part of the river which runs through the People’s Republic] is our joint home… Over the many years of being neighbours we have become family.” Li implied that as a family of nations, China should provide the region with the financial support it requires to prosper.

Helping Myanmar prosper 

Myanmar could certainly benefit from an influx of Chinese capital. In 2014, the Asian Development Bank suggested that Myanmar needs to address a number of key issues to promote economic growth. The report said that “these include weaknesses in infrastructure, human development, market and government institutions, regional integration and environmental protection.”

Yet, the country is gradually implementing the economic changes it requires to thrive. An International Monetary Fund report writes: “Myanmar has made impressive strides in economic reform, including in the dismantling of trade barriers and the opening of the banking sector… With continued economic reforms and foreign direct investment [FDI], the country’s economic prospects look favourable.” UNCTAD (the United Nations Conference on Trade and Development) recently suggested that the country was a world leader on liberalising investment in the final quarter of 2015.

It is clear that FDI plays a vital role in Myanmar’s economic fortunes. If the nation chooses to take China – the world’s largest growing economy – up on its offer, it will receive a major influx of capital to address its most significant infrastructural weaknesses. By utilising Chinese capital, Myanmar could potentially create an environment which allows businesses to succeed and its economy to grow.

Htet Tayza

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About Htet Tay Za

My name is Htet Tay Za and I’m a young banking professional from Myanmar. I was born in Yangon, Myanmar twenty-four years ago. I have a keen interest in business, cuisine, lifestyle and philanthropy.

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Business, Finance, Htet Tayza, htoo htet tayza

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