An ethnic Chinese rebel group in northern Myanmar has consolidated its recent territorial gains along the China-Myanmar border, including a notorious border town infamous for its scamming business. This comes as China intensifies its crackdown on scamming schemes in Myanmar targeting Chinese citizens.
The Myanmar National Democratic Alliance Army (MNDAA), one of the many ethnic armed organisations (EAOs) operating in northern Myanmar, seized full control of the Kokang region, a narrow strip of land bordering China, in January.
Recent social media posts from Kokang reveal MNDAA soldiers patrolling streets and erecting propaganda posters in Laukkai, the regional capital. The MNDAA also began regular television broadcasts on 7 February, with news reports boasting Laukkai’s resurgence after the MNDAA takeover.
The MNDAA, an ethnic Han Chinese armed group founded by Peng Jiasheng, broke away from the Communist Party of Burma in 1989 and established a self-governing entity in Kokang. It was ousted from power in 2009 by a coalition of the Myanmar army (Tatmadaw) and MNDAA defectors.
The Tatmadaw set up a pro-government administration headed by former MNDAA deputy commander Bai Suocheng. MNDAA troops, loyal to Peng Jiasheng, retreated to the mountains. Peng Jiasheng died in 2022, never to return to Kokang.
The BBC describes Bai Suocheng’s 14-year rule over Kokang as Godfather-esque. Positions in the administration were divided among the notorious Four Big Families who controlled local police, militias and lucrative enterprises such as gambling, human trafficking, drug trafficking and money laundering.
Laukkai resembled a Wild West boom town, featuring thriving casinos and brothels and frequent gun battles between rival families. It also had extravagant displays such as Lamborghinis and pet tigers which were owned by the powerful families.
The prolonged closure of the China-Myanmar border during the Covid-19 Pandemic dealt a severe blow to the Kokang economy, heavily reliant on Chinese gambling clientele. Myanmar’s coup by the Tatmadaw on 1 February 2021 and the severe international sanctions that followed exacerbated the economic pressures of Kokang and other areas aligned with the military junta.
It was during this period that scamming became endemic in Kokang. Under the guise of high-paying job opportunities, scam centres, run by the powerful Kokang families and Tatmadaw generals, lured foreign individuals into de facto enslavement, coercing them to conduct telecom fraud schemes. BBC estimates that at least 100,000 people, mostly Chinese, worked in such scam centres in Kokang in 2023.
China has been hit especially hard by overseas fraud schemes. In 2022 alone, China lost 2 trillion yuan (22 billion pounds sterling) to overseas fraud schemes, most of which were based in Myanmar. China’s repeated demands for Myanmar to close down the scam centres in Kokang were ignored by the junta, desperate for foreign revenue, and the families, unwilling to forego a lucrative business.
The Dual Operations
On 20 October 2023, rumours arose that at Crouching Tiger Villa, a scam centre in Laukkai owned by the powerful Ming family, Chinese citizens including four undercover police officers were killed during an escape attempt. One week later, the MNDAA, now led by Peng Jiasheng’s son, Peng Deren, launched a joint military campaign with two other EAOs.
Their aim was clear-cut: to destroy the Kokang families and drive the Tatmadaw out of Kokang. China, typically averse to EAOs fighting near its border with Myanmar, refrained from opposing this operation. Additionally, China shut down border crossings and halted electricity supplies to regions controlled by the junta and the Kokang families.
As the rebel alliance gained momentum on the battleground, so did China’s anti-scamming operations. On 12 November 2023, as the MNDAA was making significant gains in Kokang, China issued arrest warrants for four members of the Ming family. The junta was forced to hand over two of the four wanted suspects, while the MNDAA apprehended another. The wanted family leader, Ming Xuechang, committed suicide.
In early December, when the MNDAA was clearly on the road to victory in Kokang, China issued 10 arrest warrants. Among the wanted was Bai Suocheng himself, as well as leaders of other prominent Kokang families. In the meantime, China actively mediated a ceasefire between the Tatmadaw and the rebels. On 31 January 2024, just days after the ceasefire agreement, the junta handed over 6 of the 10 wanted members of the Kokang families, including Bai Suocheng and his son, to China.
China’s anti-scamming operations have not been limited to apprehending crime bosses. According to Chinese police statistics, China has pressured Myanmar to repatriate more than 41,000 fraudsters from northern Myanmar. Of the 41,000 repatriated, the vast majority were extradited from Kokang during the Kokang conflict. MNDAA spokesman Li Jiawen has also pledged to implement a zero-scamming policy in Kokang and continue extraditing fraudsters to China.
The coincidence between the MNDAA offensive and China’s anti-scamming operations has led many to suspect coordinated action between the rebel group and China. Both China and the MNDAA have denied cooperation, but according to Radio Free Asia, China’s acquiescence to the MNDAA’s operation was crucial to the latter’s success, while the MNDAA’s operation enabled China to flush out the fraudsters in Kokang.
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