How does a regime survive when it faces sustained armed resistance amid severe economic deterioration? The Myanmar military depends on economic relationships that sustain its coercive capacity without restoring its legitimacy.
Keywords: Myanmar, political legitimacy, China, military, scam centres
The military junta in Myanmar continues to confront a fundamental crisis of political legitimacy, more than five years after it seized power on 1 February 2021.
Armed resistance has expanded, ethnic armed organisations and resistance forces have contested significant territory, approximately four million people remain internally displaced, the economy has contracted by two percent in the 2025/26 financial year, and inflation reached 24.6 per cent year-on-year in April 2026. Yet the military regime continues to govern and retain substantial coercive capacity.
How does a regime survive when it lacks popular legitimacy, faces sustained armed resistance, and presides over severe economic deterioration?
The military increasingly depends on economic relationships that sustain its coercive capacity without restoring its legitimacy. China provides strategic connectivity, diplomatic leverage and economic opportunities, when they serve its interests. Scam centres in Myanmar’s borderlands generate rents for the military and employment within territories beyond effective central control but generate political and diplomatic problems.
I argue that authoritarian resilience may depend not only on territorial control, but also on the management of fragmented authority and unequal dependencies that allow illicit economies to persist.
China and the political economy of authoritarian resilience
China occupies a central position in this survival architecture. Beijing has pursued a pragmatic strategy, mainly driven by its own interests, centred on border stability, strategic connectivity, economic interests and regional security. Myanmar’s geography gives this relationship exceptional strategic significance.
The China-Myanmar Economic Corridor connects China’s Yunnan Province with Myanmar through infrastructure, trade, energy and transportation networks. The Kyaukphyu deep-sea port offers China access to the Bay of Bengal, while oil and gas pipelines connect Myanmar’s western coast with Yunnan. In June 2026, China and the junta agreed to accelerate work on the Kyaukphyu deep-sea port and Muse-Mandalay railway, which forms another component of this broader connectivity strategy. This engagement demonstrates that Beijing continues to pursue strategic economic interests in Myanmar despite the country’s prolonged civil war.
For the junta, these projects provide more than material benefits. They produce what can be understood as functional or infrastructural legitimation. For example, the China–Myanmar Economic Corridor, Myitsone Dam project, the Kyaukphyu deep-sea port and the proposed Muse–Mandalay railway allow the military leadership to present itself as a necessary partner in national development and regional connectivity. The military cannot convincingly demonstrate democratic legitimacy, but it can demonstrate that foreign governments continue to negotiate with its institutions, Chinese companies continue to pursue strategic projects, and international actors continue to treat the regime as a relevant interlocutor. Under these conditions, infrastructure becomes politically performative. Ports, pipelines, roads and railways allow the junta to project an image of governmental functionality. They help the regime perform sovereignty even when its political authority remains deeply contested.
Scam centres and the emergence of a criminal political economy
Myanmar’s borderlands reveal a second and more illicit mechanism of economic survival, that produces contradictory effects. Over recent years, large scam compounds have emerged around Myawaddy and other border areas. These compounds combine cyberfraud with human trafficking, forced labour, illegal gambling, money laundering and transnational organised crime.
The International Organisation for Migration warned in July 2026 that scam centres across Myanmar, Cambodia and Laos could involve up to 300,000 trafficked workers originating from more than 80 countries, including China. Workers are recruited through deception, traffickers transport them across borders and compound operators confine and manage them. Digital infrastructures connect trafficked workers to scam victims across the world and financial networks move proceeds through multiple jurisdictions. Territorial actors provide varying forms of protection, access and infrastructure. Thus, the system connects global digital capitalism to local coercive authority.
A report by the United Nations Office on Drugs and Crime estimates that scam centres in Southeast Asia generated almost US$40 billion in annual profits. The scale of this industry fundamentally changes its analytical status. It no longer represents isolated criminality operating at the margins of the state but rather constitutes a transnational system of coerced accumulation.
Scam-centre economies function as a mechanism of economic survival for a wider constellation of actors operating under Myanmar’s fragmented system of authority. While armed groups, military-linked businesses, and criminal networks may derive direct financial benefits from these operations, their economic activities can also sustain the junta indirectly by creating resources, dependencies, and political relationships that help reproduce authoritarian rule despite the regime’s limited territorial control. The U.S. Department of the Treasury (2025) documents that the Karen National Army (KNA) generates revenue by leasing land to scam operators and providing security and logistical support. Although evidence more clearly establishes financial benefits to the KNA than direct transfers to the junta, these networks can strengthen military-linked patronage.
However, scam centres produce pressures for the military junta. Myawaddy provides a particularly revealing case. Located opposite Thailand’s Mae Sot region, the border town connects Myanmar to regional networks of transportation, electricity, telecommunications, labour and finance. Yet no single actor exercises uncontested authority across the wider area. The Myanmar military, Border Guard Forces, ethic armed organisations, militias, business actors and criminal networks exercise overlapping forms of power. This produces fragmented sovereignty—the state remains present, but it does not exercise uniform authority across territory. Sovereignty consequently becomes partially monetised. Actors do not need to govern an entire territory to benefit economically from political authority, they only need to control strategically valuable forms of access.
The military derives political and economic benefits from networks it only partially governs. The scam centre economy shows that Myanmar’s state weakness is a reconfiguration of authority across military, armed, commercial, and criminal networks, through which fragmented territorial control can simultaneously weaken central sovereignty and sustain authoritarian resilience.
The Chinese dilemma
China wants Chinese citizens in Myanmar protected, but the Myanmar military does not exercise uncontested authority across many areas. China wants strategic infrastructure protected, but conflict and criminal networks complicate that objective. Collectively, China requires the junta to address problems that the junta cannot completely control. This dependency gives Beijing additional leverage. The junta’s relationship with China becomes increasingly conditional on its ability to protect Chinese strategic interests and reduce threats emanating from Myanmar’s borderlands.
The scam-centre crisis thus transforms from a policing problem into a question of regional political economy. Beijing has incentives to reshape Myanmar’s borderland order even when doing so generates tensions with the junta and armed actors.
The junta’s response to scam centres demonstrates the political importance of visible enforcement. Since late 2025, military authorities have publicised raids, demolitions, arrests and confiscations around Myawaddy and Shwe Kokko. These operations perform two functions. Domestically, they allow the regime to present itself as restoring order and exercising sovereign authority. Internationally, they demonstrate to China and other governments that the junta possesses the capacity to confront transnational crime. However, the persistence of the industry demonstrates the limits of coercive state capacity when the underlying political economy remains intact.
The region of Kokang, in the northern part of Myanmar’s Shan State and bordering China’s Yunnan Province, demonstrates the financial magnitude of the regional scam economy and why Beijing increasingly treats scam centres as a strategic security issue rather than simply a criminal justice problem. The International Crisis Group (2024) documents how the junta-aligned Kokang Border Guard Force obstructed China’s efforts to close scam centres and benefited from their operations. On 27 October 2023, the Myanmar National Democratic Alliance Army and its allies launched Operation 1027, explicitly pledging to dismantle scam networks. The offensive culminated in the fall of Laukkai in January 2024 and the collapse of junta-aligned Kokang leadership. Myanmar authorities subsequently handed over prominent figures, including Bai Suocheng and members of other criminal families, to Chinese authorities. Chinese authorities linked the network to more than 300 scam compounds in Kokang and estimated that it generated more than US$1.4 billion in illicit revenue. The case illustrates how the industry has reached a scale at which it affects bilateral relations, financial flows, border governance and regional stability. Scam networks affect Chinese citizens, generate transnational illicit revenues, strengthen criminal organisations, interact with armed groups and exploit territories where Myanmar state authority remains fragmented. Consequently, the industry directly challenges the regional stability that China seeks to construct around its southwestern frontier.
Sovereignty as an economic resource
The interaction between China, the junta, armed organisations, militias and criminal networks reveal a broader transformation of the meaning of sovereignty. Classical political theory conceptualises sovereignty as supreme state authority over territory. Myanmar increasingly departs from this model. The military controls some territories, but resistance forces control or contest others. Ethnic armed organisations exercise authority across borderlands. Militias and other criminal organisations regulate particular economic spaces, and foreign states such as China hold significant economic leverage. Businesses negotiate simultaneously with multiple authorities. The sovereignty of the junta is therefore fragmented and negotiated.
A shadow fiscal system consequently develops alongside the formal state: control over economic access generates political power. This, in turn, means that the fragmentation of fiscal authority reinforces the fragmentation of sovereignty. As the central state loses its capacity to monopolise taxation and economic regulation, alternative authorities acquire greater economic and political significance.
The junta has responded to external vulnerability by diversifying its international relationships. Russia provides military cooperation and diplomatic support. China provides economic connectivity and regional leverage. India maintains strategic engagement. Thailand remains essential to cross-border trade, humanitarian access and economic exchange. Thus, the junta pursues a strategy of dependency diversification: it develops multiple external relationships to reduce the leverage of any single partner. Nevertheless, China remains structurally distinctive because of geography, economic scale, border access and strategic connectivity.
No other major power can easily replicate China’s position along Myanmar’s northern frontier. Consequently, the junta can diversify its partnerships without escaping the structural importance of China. This creates a paradox. The more the junta seeks autonomy through diversification, the more it must manage multiple dependencies simultaneously. Myanmar thus challenges a conventional assumption about authoritarian durability. Regimes do not necessarily survive because populations accept them. They can survive because coercive institutions remain intact and because domestic and international networks continue to supply material resources.
The junta’s resilience operates across several dimensions. Politically, its legitimacy remains deeply contested. Militarily, its coercive institutions remain resilient. Territorially, its authority remains fragmented. Economically, the population experiences severe hardship while selected sectors continue to generate rents. Internationally, the regime remains engaged by powerful states.
These conditions interact rather than contradicting one another. The junta’s lack of legitimacy increases its dependence on coercion and coercion increases fiscal and economic costs. Economic weakness increases external dependency which creates foreign leverage. Territorial fragmentation creates alternative revenue systems which further weaken central sovereignty. The result is a cycle of dependency-mediated authoritarian resilience.
The regime survives not by resolving the contradictions of military rule but by managing them. As a result, China’s formal engagement and Myanmar’s criminal economies should not be treated as unrelated phenomena. They represent two sides of the same political-economic transformation.
Chinese infrastructure connects Myanmar to formal transnational capital. Scam centres connect Myanmar to illicit transnational capital. Chinese investment increases Myanmar’s strategic relevance. Criminal economies increase the economic value of contested borderlands. Chinese pressure constrains the junta. Criminal networks evade the junta’s regulatory capacity. Both systems operate across borders. Both depend on Myanmar’s strategic geography and both expose the limits of central state authority. From this perspective, the formal and illicit economies intersect within a fragmented transnational political economy.
The central question is not simply whether the junta controls these economies. Rather, it concerns how the junta derives political value from relationships that it only partially governs. This distinction changes how observers should understand state weakness. Myanmar has not simply experienced the erosion of state authority. It has experienced the reconfiguration of authority across state, armed, commercial and criminal networks. The boundaries separating state power, economic power, armed control and criminal accumulation have consequently become increasingly porous.
Conclusion
Myanmar’s military regime has survived more than five years of political crisis because it has developed multiple mechanisms for reproducing coercive power. China provides strategic connectivity, investment and diplomatic engagement. Natural resources and border trade with China generate revenue for the military. Fragmented territorial authorities create alternative rents. Criminal economies generate substantial illicit wealth. Military coercion protects the regime’s remaining centres of power.
None of these mechanisms restores political legitimacy. Instead, they deepen the contradictions surrounding military rule. The junta needs China, but China’s strategic interests give Beijing leverage over the regime. The junta benefits from fragmented territorial economies, but those same economies demonstrate the limits of its sovereignty. The military can raid scam compounds, but criminal networks can relocate. The regime can claim sovereign authority while negotiating with actors it cannot fully control. This is the central paradox of Myanmar’s post-coup political economy. The junta’s capacity to survive increasingly depends on relationships that simultaneously expose the limits of its sovereignty.
Indeed, the very networks that sustain military rule may ultimately expose its deepest structural weakness. The regime that claims sovereign authority over Myanmar increasingly depends on foreign governments, armed intermediaries, contested territories, digital infrastructures, illicit financial networks and economic relationships that it cannot fully control. The junta’s economic lifeline is also a map of its vulnerability. Its survival rests on the continuous management of asymmetrical dependencies.
The longer this political economy persists, the more clearly it reveals a fundamental transformation in Myanmar: the military may retain the capacity to rule without possessing the capacity to command the political, territorial and economic order on which its survival depends.
Image: The Myanmar city of Shwe Kokko, a centre of scam centres, 2025. Credit: Prachatai/Flickr.
