China’s Role in Myanmar’s Dangerous Jade Trade

Gabriel Walker is a research associate in Asia Studies at the Council on Foreign Relations.

In late October, Global Witness released an important report that systematically explored Myanmar’s jade industry, calling it the “biggest natural resource heist in modern history.” The mining and trade of the gem have been catalogued by journalists, photographers, and authors in the past, but most accounts only mention China’s economic role in driving demand for jade. In reality, a wider range of Chinese actors are directly connected to Myanmar’s jade, some benefiting at the expense of miners and traders, and others suffering from the industry’s unintended consequences. Because of these close, but often overlooked, connections, China has a shared responsibility to take action and advocate for reform of Myanmar’s jade industry.

The jade trade is rife with corruption, conflict, and disease. According to the report, jade production in Myanmar was worth nearly $31 billion in 2014, of which as much as 80 percent was smuggled directly into China, bypassing taxation and border controls in both countries. Companies in Myanmar linked to politically influential tycoons and senior government officials, including the former dictator Than Shwe, hold multiple mining concessions and reap millions as a result. Jade also funds both sides of the ongoing armed conflict in Kachin State, the center of jade production, underwriting the activities of both Myanmar’s military and the Kachin Independence Army/Kachin Independence Organization. An HIV/AIDS crisis also travels hand-in-hand with the gem: Myanmar’s illegally produced heroin flows freely into the main jade-mining town of Hpakant, a place to which tens of thousands of migrants flock hoping to find valuable stones on the margins of the mines. Drug use and prostitution are almost institutionalized there, with a heroin injection offered widely for the same price as a small piece of jade. Payoffs to authorities mean that both dealers and prostitutes operate with impunity. Unsafe practices result in an extraordinarily high prevalence of HIV/AIDS, with reportedly nine out of ten drug-using miners HIV positive.

Chinese players participate on at least three levels of the jade trade:

• First, Chinese companies have underwritten the jade trade for decades, beginning with early investments in the 1980s. In Hpakant, it is an “open secret” that most of the twenty largest mining operators are owned by Chinese companies or their proxies, and one individual interviewed by Global Witness estimated that the biggest jade players received as much as 70 percent of their financing from Chinese sources. Although even an Extractive Industries Transparency Initiative report may not reveal the true source of a jade company’s funding streams, it seems likely that certain individuals within China may be deeply integrated within jade’s shady payout structure. If transparency measures aim for complete disclosure, Chinese actors must be unmasked.
• Second, in recent years rising prices and growing demand by wealthy Chinese buyers for Myanmar’s jade, in addition to the record-breaking sale of a $27 million jade necklace, have increased the stone’s market value and entrenched its mystique in the popular imagination. Because the vast majority of Myanmar’s jade ends up in China, a policy like the JADE Act—a U.S. import ban on all jade products from Myanmar—becomes largely symbolic and essentially ineffective in fighting the rising tide of demand. If any country should take the lead in restricting the free movement of jade in the worldwide economy, it should be China.
• Third, China’s neighboring Yunnan province also struggles with HIV/AIDS. Ruili county, the “world’s biggest market for unfinished jade,” has one of the highest risk profiles for HIV/AIDS in Yunnan—making it and a neighboring county essentially the worst place for the disease in all of China. As one case study pointed out, Ruili is a clear example of how HIV epidemics “cannot be dealt with solely at a local level.” And CFR expert Laurie Garrett has written that Myanmar’s HIV contribution to the rest of Asia poses a “clear security threat to the region.” If China is truly committed to solving its own HIV/AIDS crisis in Yunnan, it must work towards a cooperative solution that addresses the unchecked practices that ravage the jade trade.

Beijing is in a position to advance critical improvements in the jade industry by engaging with Chinese stakeholders on multiple levels. The Chinese government in fact has already released conflict-mineral guidelines for Chinese mining companies working abroad, suggesting that it can at least nominally encourage responsible practices on the world stage. But for Beijing to have a real impact in Myanmar, it must stanch illegal smuggling, uncover jade industry–related corruption, and push for greater financial and operational transparency. It would be an encouraging sign for China to step forward to reform the jade trade—if only for this one stone, a symbol of China’s own prosperity—and take responsibility for protecting the welfare of its ailing citizens and regional neighbors.