Myitsone Dam’s Real Price: Can Political Dignity Become a Bankable Deal in Myanmar-China Ties?
Myanmar President Gen. Min Aung Hlaing’s efforts to restart the Myitsone Dam in the Kachin State in northern Myanmar raise a central question: can China convert the political setback from the 2011 suspension of the project into a commercially viable agreement? While Beijing seeks to restore its political standing in Myanmar and the credibility of its overseas contracts, political gains alone do not justify renewed investment. China remains open to dialogue but is unlikely to commit significant funds unless Myanmar President Gen. Min Aung Hlaing’s administration secures a profitable electricity market, guarantees security, and addresses local opposition.
Former Myanmar President Gen. Thein Sein had halted the project in September 2011, in response to widespread opposition. For China, the suspension signaled more than the loss of a hydropower project. Agreements had been reached with Myanmar’s former military government, and Chinese companies had begun preparations. The suspension demonstrated that political shifts in Myanmar could jeopardize major Chinese investments. Consequently, Beijing’s confidence in Myanmar as a reliable economic partner declined, and the issue became a “festering thorn” in their relationship.
Here, the concept of political dignity is relevant. Beijing expects Myanmar to recognize that the suspension harmed Chinese interests and that agreements cannot be disregarded without consequences. China also aims to demonstrate to other investment recipients that domestic political changes do not nullify contractual obligations. While political dignity explains China’s willingness to negotiate, it alone does not justify renewed financial investment.
The project’s economic outlook has only worsened with time. The original Myitsone Dam was expected to generate about 6,000MW, with 90 percent of the electricity sent to China. A 2026 estimate indicates that reviving the project could cost US$11.5 billion, over three times the original US$3.6 billion price. Meanwhile, Yunnan’s electricity infrastructure has changed considerably in nearly two decades. The province has expanded its hydropower, solar, wind, and transmission capacity. The assumption made in 2009 that Yunnan would provide a natural and dependable market for Myitsone’s electricity must, therefore, be reconsidered.
The electricity generated could be sent on from Yunnan to other areas of China’s southern power grid, and a greater portion could be sold within Myanmar or eventually included in regional electricity trading. However, all these options involve extra costs. Sending the power over long distances would require large-scale infrastructure, while Myanmar’s financially weak situation means it might not be able to buy the electricity at a price high enough to cover the huge construction costs of the project. Moreover, the Myitsone project would have to compete with electricity from existing Chinese projects which encounter fewer political and security risks.
At the same time, Gen. Min Aung Hlaing is portraying the Myitsone dam as a way of solving Myanmar’s serious shortages of electricity. His government maintains that having the project completed earlier would have helped achieve nationwide electrification and promote economic development. Likewise, Khet Htein Nan, the junta-appointed Chief Minister of Kachin State, has also committed to the project to end electricity shortages and claims it could be finished in about eight years. Although these promises are politically advantageous, they do not address the question of who will buy the electricity, how the transmission will be financed, and whether the original export arrangement has been altered or whether the original agreement to export most of the power to China has changed.
Beijing might find it advantageous to settle for something short of a full revival. A settlement that preserves face could consist of compensation, new replacement projects, a smaller dam, altered electricity allocations, or a prolonged technical review. In this way, China could say that Myanmar had acknowledged its own interests without committing immediately to a broad and unpopular scheme. It is, therefore, wrong to regard China’s willingness to talk about the Myitsone project as equivalent to a final investment decision.
China will likely to ask Myanmar for a commercially meaningful settlement rather than a symbolic announcement. Beijing may demand recognition of the original agreements, protection of the State Power Investment Corporation’s previous expenditure, guaranteed electricity prices, revised ownership arrangements, or compensation through alternative projects. Myanmar might offer alternative concessions to secure China’s acceptance of permanently shelving Myitsone without paying a substantial cash compensation. China’s objective would extend beyond recovering sunk cost as, reported at roughly US$800 million, to preserve strategic commercial access through other hydropower, port, or infrastructural projects. Thus, the concessions would constitute a negotiated substitute for the dam rather than accompany its unilateral cancellation.
Meanwhile, local opposition will always be the biggest practical barrier. Although the military authorities say that they have held dozens of community meetings, critics maintain that these meetings are meant as a way of creating the appearance of public support. It has been reported that some of the participants have been pressured to applaud, and the officials have made promises regarding electricity, employment, flood protection, and earthquake-resistant technology. While material rewards might encourage a small amount of participation, they are not likely to overcome the project’s impact on sites of cultural significance, the environmental dangers, fears of displacement, and its link with military coercion.
To many Kachin communities, Myitsone is more than just a construction site because it is ancestral territory situated at the point where the Ayeyarwady River starts. Previous opposition arose because the project became linked with national identity, environmental protection, and resistance to unequal Chinese influence. Should the construction go ahead without genuine consent, resistance could change from statements and demonstrations to actual disruptions of the construction sites, the transmission lines and the access routes, as the project areas are mostly influenced by the Kachin Independence Army (KIA).
The most likely outcome is prolonged negotiation rather than an immediate restart. China wants Myanmar to repair the political and contractual damage caused by the 2011 suspension, but it also needs profit, security, and a credible electricity market. Gen. Min Aung Hlaing can offer political cover and carefully managed consultations but he cannot easily provide peace, legitimacy, or commercial certainty. Political dignity may bring China back to Myitsone, but it will not be enough to build the dam.
About the Author: Wai Yan Phyo Naing, PhD is a Visiting Scholar at Institute of Modern History, Academia Sinica, Taipei, Taiwan