WASHINGTON — A recent report by the U.S. Institute of Peace highlights the resurgence of scam hubs, particularly in Myanmar's Karen State, due to China's softened stance toward the country's military regime.


China's posture has shifted, said Jason Tower, co-author of the report and the country director for Burma at the institute. 


"They're now much more focused on regime survival, looking at how they can prevent the [Myanmar] regime from toppling," Tower told VOA Burmese. "As a result, China has shown much less interest in taking forceful action to pressure the Myanmar military to address these problems."


According to the report, these criminal networks benefit from the complex dynamics between Myanmar's military and Chinese interests. China's focus has shifted from cracking down on scams to supporting the Myanmar military. This change in strategy has allowed the criminal organizations to flourish, using Myanmar as a base of operations.


After contacting the Chinese Embassy in Washington about the issue, VOA received a statement that did not directly address cyber scam operations. Instead, it emphasized China's focus on peace and stability in Myanmar.


"China and Myanmar are close neighbors with a deep bond of friendship," wrote embassy spokesperson Liu Pengyu. "As a friendly neighbor, China has always paid close attention to the development and evolution of the situation in Myanmar and northern Myanmar. We do not hope to see conflict or chaos in Myanmar and sincerely hope for an early restoration of stability." 


China's Ministry of Public Security portrayed the situation differently, according to a report published Monday by China's state-run Xinhua news agency. In a recent statement on its crackdown on cyber scams, the report said, the ministry highlighted joint efforts with Myanmar authorities, noting that "a total of 870 suspects, including 313 Chinese and 557 Myanmar nationals, were arrested during a crackdown on telecom and online fraud in northern Myanmar." 


Myanmar's state-controlled media Global New Light of Myanmar also focused on crackdowns, noting that Myanmar's police had worked closely with China in extraditing 20 Chinese nationals in September.


Shift in China's priorities


China's view on the conflict constantly evolves based on events inside Myanmar, said Thomas Kean, a senior consultant at the International Crisis Group, a nongovernmental think tank.


"Since 2021, we've seen different phases, but ultimately, China wants stability in Myanmar to pursue its strategic objectives, keep its borders safe, and ensure that Chinese nationals and the economy aren't affected," Kean said.


Tower described how China's priorities have shifted from addressing scams to focusing on maintaining its strategic interests in Myanmar.


"The Chinese government began prioritizing the advancement of the China-Myanmar Economic Corridor, which includes infrastructure and trade routes, giving China access to the Indian Ocean," he said.


Tower said some Chinese strategists had suggested that China had perhaps gone too far in its crackdown on the scam syndicates, losing sight of its broader strategic goals. 


As a result, Chinese authorities pushed hard to broker cease-fire agreements between Myanmar's military and ethnic armed groups to stabilize the region.


'Pig butchering' scams


The Chinese scams emanating from Myanmar have grown in sophistication, the U.S. Institute of Peace report noted. The United States has become one of the primary targets, losing billions of dollars annually to "pig butchering" scams.


"Pig butchering" is a type of investment fraud where scammers lure victims on social media only to defraud them for significant amounts of money, often in cryptocurrency.


Many Americans have fallen victim to scams originating from Myanmar, said Erin West, a deputy district attorney with California's REACT Task Force to combat high-tech crime.


"They've liquidated retirement accounts, children's college funds, only to find out that the entire thing is fictitious, and they've lost everything," West told VOA. Victims are lured into fraudulent online relationships, believing they are investing in cryptocurrency, she said.


While some criminals are deported back to China, Tower said, broader networks remain primarily untouched and continue to operate with the protection of local warlords and military elites. He is concerned that these scams will increasingly become a threat to U.S. national security.


"These scams are currently causing estimated losses in the range of $5.5 billion per year for the U.S., but other estimates place the numbers as high as $15 billion," Tower said.


These actors are often under the protection of the Myanmar military or other corrupt regional elites, he added, making it difficult for law enforcement to intervene.


"This is a serious crisis," Tower said. "We're seeing a massive transfer of wealth from the United States to bad actors in Southeast Asia — actors that are undermining democracy, highly corrupt and often under the protection of the Myanmar military or other corrupt elites. This is bad news for the U.S. on many fronts."

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