Introduction
During the COVID-19 global pandemic, we saw an increase in cyber scams across the globe. Interpol issued a warning regarding “…large-scale human trafficking where victims are lured through fake job ads to online scam centers and forced to commit cyber-enabled financial crime on an industrial scale.” These online scam centers concentrated in Southeast Asia, with massive trafficking hubs and scam syndicates found in Cambodia, Laos, and Myanmar. These operations drew victims mainly from China, Malaysia, Thailand or Singapore to operate romance and finance scams–with the majority from China. Victims of these scams spanned across the globe, mainly concentrated in English-speaking countries. Interpol’s enforcement actions alone brought thousands of arrests and hundreds of millions of dollars of assets seized. The UN estimates that over 120,000 individuals were forced to engage in cyber scams in 2023. In a sense, cyber scam and the interrelated trafficking activities have reached the level of a global crisis.
In fact, this issue has been present in Southeast Asia for decades, with well-established and extensive criminal networks entrenched in the region reaching industrial scale. In Myanmar, especially, because of the region’s turbulent social environments, these operations thrived. According to Chinese state-backed media reports, there were more than 1,000 scam syndicates active in the northern and eastern regions of Myanmar. It has been reported that the military government’s officials have long been involved in these criminal activities.
But scams became especially rampant during the COVID-19 pandemic, while the world grew more reliant on digital means of communication and thus created a bigger “market” for scams. This has induced among scam operations a greater appetite to expand. Thus, they increasingly utilized coercive and deceptive methods to recruit newcomers to engage in cyber crimes. Young people were lured to Southeast Asia in the guise of high-paying job opportunities, cheaper fly routes that circumvent China’s restrictive COVID-related travel policies, or even low-cost or free trips abroad. Many who had lost their livelihood or experienced financial troubles due to the global pandemic-induced economic slowdown became potential recruits. After arriving in their destinations for the promised “jobs,” victims were only kidnapped and detained to engage in forced criminal acts under inhumane conditions.
In one particularly infamous case, Zhang, a postdoctoral researcher at the Chinese Academy of Science, was lured and trafficked to Myanmar under the guise of a job offering in Singapore. In Myanmar, he stayed for over one year working whopping 18-hours-days for online scams. Zhang reported experiences of horrific treatment after being brought to the scam operation. Accordingly, more than a dozen of smaller operations (dubbed “companies”) existed in his scam compound, with two to three hundred people working under each. As the operations are carried out like lucrative, profit-generating businesses, scams were delicately crafted. Each operation carried out a dedicated type of fraud. Zhang, in particular, was in a “pig-butchering scheme” in which he posed as romantic interests to scam rich middle-aged men in Europe and the United States. In the operation, Zhang went through dedicated training to learn scripts and design realistic characters. The operations imposed strict rules on victims regarding outside contacts. Zhang, in particular, was beaten for two days and locked in solitary confinement for two months after it was found out that he sought help from the outside world. According to Chinese media, Zhang was released after paying a ransom in August 2023 because the scam operation felt increasing pressure from media and Chinese authorities. The case caused a stir in the Chinese internet.
It is important to note that the deceptive and coercive nature of these scam operations’ recruitment methods make scam operations inseparable from cross-border human trafficking and smuggling, an issue especially troubling during the pandemic.
Scam operations include quota-based fraudulent sales, illegal online gambling and investment schemes, and romance scams. Despite such operations being criminal in nature, they are often run under structures resembling industrial plants. Each syndicate generally occupied one or a few buildings enclosed by high walls and security presence. A dozen or more operations can operate under each syndicate, and these operations’ relationships with the compound varied. Some operations are subsidiaries of the larger compound, while others could be tenants. Some larger scam syndicates offered in-built restaurants, exercise, supermarkets, entertainment facilities, and other amenities. Victims are “introduced” into different scam or gambling operations by traffickers, smugglers, or the “plant management” for a price of around 30,000 RMB to 150,000 RMB (around $4,000 to $20,000), according to a research paper published by a Chinese police university. These funds often become “debts” victims must pay off before leaving the operations.
Victims were often forced to work up to 10-15 hours a day, or longer. Most are paid based on performance, and can be offered certain degrees of freedom to walk around the scam syndicate. They are also subject to revenue quotas and periodic performance evaluations. Depending on the syndicates, those who have met or exceeded their quotas can be awarded monetarily, verbally, or afforded more freedom or power within the operations. Punishment for those who fall short of the quota ranges from public humiliation, physical punishments, and beatings, to solidary confinements and other methods of torture. Violence and imposed debts is used as an effective mechanism to keep victims at bay, and many were told that they could only escape their conditions if they pay a ransom (or a “debt” imposed by the operations) or lure one or more newcomers to take their place. In some cases, victims can be “resold” to other scam operations if they do not agree to fraudulently recruit additional members, or if they do not meet their revenue quotas. Victims’ “reselling prices” routinely became their new debt owed to their new “employers.” Some victims CLW and our partner directly connected with reported repeated coercion and threats, public humiliation, imposed arbitrary debts, extreme violence, rape and other sexual violences, torture, and disappearances. One victim that CLW connected with resorted to jumping off a building in an attempt to escape.
In this dynamic, victims have a dual value – first as an object of transnational trafficking–as the trafficked “goods,” and second as an instrument to conduct transnational cyber crimes. Because of the systematized coercion as a part of these scam centers’ operations, all personnel brought to these criminal organizations, regardless if they were lured by deceptive practices from the start, should be considered victims of trafficking, per the Palermo Protocol. After victims are inducted to the operations, victims are transformed into perpetrators of criminal activities including scamming and the trafficking of others under circumstances not fully in their control.
Chinese government’s enforcement against cyber scams
The Chinese government has long been exerting efforts to curb cross-border gambling and scam operations that target Chinese citizens. In 2015, China’s State Council approved an inter-departmental conference for combating gambling and cyber scams, consisting of 23 departments and units, including the Ministry of Public Security, the Ministry of Industry and Information Technology, the People’s Bank of China and others. Starting then, the interdepartmental committee has been carrying out enforcement actions against cyber scams periodically. A special operation targeting cyber scams was launched at the same time. In 2016 alone, domestically, Chinese law enforcement resolved 93,000 cases of telecommunication fraud where 52,000 people were prosecuted. Internationally, law enforcement cracked more than 6,000 cases of cross-border cyber scam and prosecuted more than 1,000 suspects. The enforcement did not stop there. Towards the end of 2016, the Supreme People’s Court, the Supreme People’s Procuratorate, and the Ministry of Public Security pushed out a new guide for prosecution against telecommunications crimes. In this guide, persons participating or facilitating telecommunication crimes involving a profit of 3,000 RMB (or around $415) or more can be criminally charged.
There has been an exponential increase in the number of individuals prosecuted for cyber fraud related crimes in China. According to statistics from the Supreme People’s Court, 74,500 individuals weren prosecuted for cyber fraud related crimes in 2020 compared to 5,300 in 2017. In 2021, the Supreme People’s Court, the Supreme People’s Procuratorate, and the Ministry of Public Security issued a second guide to the prosecution against telecommunications crimes, specifically outlining the prosecution of cross-border forms of these crimes. Accordingly, 70% of telecommunications crimes involve cross-border criminal activities. The guide broadened jurisdictional determinations on the prosecution of cross-border gambling and cyber scams, defining it based on information flow, capital flow, and equipment flow in connections to China.
Enforcement against transnational gambling and scam in Myanmar
Chinese authorities have been increasingly targeting Myanmar in their cyber crime enforcement efforts in recent years. Starting in around 2020, local law enforcement began inspecting persons who traveled from Myanmar. According to state-backed media, as of March 2022, across the country, law enforcement has inspected a total of more than 40,000 persons who returned to China from Myanmar. A police university research report also indicates that law enforcement had begun “educating and stopping” personnel intending to travel to Myanmar at the border around the same time.
Towards the end of 2022 and early 2023, this enforcement impetus continued. News stories about human trafficking and horrors occurring in cyber crime syndicates in Southeast Asia–especially in Myanmar and Cambodia–mushroomed around the world and especially in the Chinese internet. According to Chinese official statistics, 68.5% of cross-border cyber scams occurred in scam operations in Myanmar. In July 2023, China issued a warning to the junta, calling gambling and telecommunication crimes in Myanmar to be “rooted out.” All of these drummed up the cross-border enforcement actions beginning later in August 2023.
In August 2023, a joint enforcement action was kicked off by the law enforcements in China, Myanmar, Laos, and Thailand to combat transnational cyber and gambling related activities “…as well as the resulting crimes of human trafficking, kidnapping and illegal detention.” According to Chinese state-backed media, as of May 6, 2024, a total of 49,000 suspects of cyber scam were arrested and deported from Myanmar to China.
Consistent with its prosecution of gambling and telecommunications crimes throughout the years, the Chinese authorities’ discourse frames the four-country cooperation as a transnational enforcement action against “gambling and fraud”, as well as “crimes derived from such activities” including cross-border human trafficking, kidnapping and illegal detention. Human trafficking and illegal detention are not the main focus of enforcement. This has led to the criminalization of trafficking victims.
New arrests handed from Myanmar to the Chinese law enforcements were reported every month after the launch of the four-country corporation. Voluntarily or involuntarily, many were involved in crimes during their stay in scam operations in Myanmar, including wire fraud, human smuggling and trafficking, and others. According to a CLW partner who works on the ground and evidence from Chinese court documents, Chinese authorities do take into account coercion and voluntary participation in their charges and sentencing. Some victims of trafficking who participated in cyber scams were not charged, but were instead released after administrative penalties. Yet in many cases, victims of trafficking seemed to have been prosecuted for fraud and other charges despite involuntary participation in fraud. Charges varied from cyber scams, cross-border human trafficking, illegal crossing, and other criminal activities. Their sentences range from several months to 15 years, often coupled with civil penalties. We are not able to ascertain the statistics of personnel charged for their criminal conduct in Myanmar.
Immediate effect of the enforcement action in Myanmar
Many local armed forces warring with the Myanmar military government, including the Myanmar National Democratic Alliance Army (MNDAA), the Ta’ang National Liberation Army (TNLA), and the Arakan Army (AA), expressed support or corporated the joint enforcement. They formed an alliance known as the Brotherhood Alliance. In fact, Beijing’s anti-gambling and scam enforcement functionally aligned with resistance’s combat against the junta, especially as many scam operations were backed by junta officials. In recent months, armed resistance forces operating along the Chinese border–especially the Three Brotherhood Alliance–have coordinated massive victories against the military government. In particular, Operation 1027, named after the date it was commenced, was launched not just to counter the military government’s rule but expressly aims to address online scams near the China-Myanmar border. The Operation caused the junta to lose major grounds to the resistance. In fact, the BBC characterized it as “…the worst defeat suffered by government forces since they seized power in February 2021.”
After the hit, the junta’s reaction was almost immediate. In December 2023, Myanmar’s military government agreed to resume a port construction project in Rakhine, Myranmar’s westmost province, in the village of Kyaukphyu. The Kyaukphyu Port Project is considered a flagship project under China’s trillion dollar Belt and Road Initiative, undertaken by a Chinese entity under 70% ownership. The Port project is said to create a more direct trade route for Chinese shipments to the Indian Ocean.
China’s Kyaukphyu project, like other Chinese projects in Myanmar, had been repeatedly interrupted in recent years. It was initially bid by state-backed conglomerate CITIC Group in 2015. Meanwhile, Myanmar experienced a change of government. The project was later recognized by Myanmar’s new democratic government in 2017 but was stalled for years after this official recognition because of the democratic government’s geopolitical and economic concerns, as well as domestic push backs against deepening association with China. Finally, the project was said to inaugurate in 2020, but was later halted again due to civil unrest and the COVID-19 pandemic. The military coup of 2021 that toppled Myanmar’s democratic government added new scrutiny to the Kyaukphyu Project.
Despite the project being stalled for years, perhaps there are reasons why Beijing could not give it up. Some observers see the Kyaukphyu Project’s geopolitical strategic potential for China in safeguarding the country’s energy security and circumventing what former President Hu Jintao dubbed the “Malacca Dilemma,” or China’s overwhelming dependence on its maritime trade route through the South China Sea – one which induces an important strategic vulnerability.
In January 2024, China’s Ministry of Foreign Affairs said it had brokered a ceasefire agreement between the military government and the Three Brotherhood Alliance in Kunming China. This might be viewed as a showcase of Beijing’s stance supporting the junta, given that the ceasefire occurred as the junta has lost major grounds to the resistance. However, analysts suggest that Beijing’s targeting of junta-backed warlords during the joint enforcement action and indirect support of the resistance signal Beijing’s pressure on the junta.
Specifically, early in 2024, three Myanmar military-tied Chinese warlords were handed over to China for their role in running cyber crime centers in northern Myanmar in the name of cross-border gambling and telecommunications crime enforcement. According to the BBC, these individuals are of “Godfather-esque” status in the region, heading “four families” of local mafias that have developed extensive business networks in Myanmar, with stakes in mining, energy, infrastructure and casinos in other countries like Cambodia. They are also linked with organized criminal networks in China.
China’s recent battle against gambling and scam in Myanmar concerns much more than the traficking crisis alone. Myanmar and China’s relationship runs deep. This, coupled with China’s political and economic interest, and Myanmar’s complex history and social conditions have collectively created the current situation:
Brief on Myanmar’s history leading up to today
Myanmar’s history has been governed by turmoil. After struggles against British rule and Japanese invasion during the Second World War, Myanmar–then Burma– gained independence in 1947. A period of parliamentary democracy began. However, briefly after the independence, a civil war ensued between the country’s ruling government, disgruntled communist factions and ethnic groups, and the Chinese Kuomintang nationalists forces. In 1962, a military coup was staged by military leader Ne Win, beginning the country’s struggle with military dictatorship.
Under the previous junta’s isolationist politics and socialist economic programs, the country’s economy deteriorated. Corruption, food shortage, and poor governance led to widespread oppositions, which the junta violently suppressed. As issues continued to fester and facing global and domestic oppositions, the junta began loosening control, until its official dissolution in 2011. Replacing it was a military-dominated parliamentary democracy. In 2015, Nobel Peace Prize winner Aung San Suu Kyi led her National League for Democracy (NLD) to an overwhelming victory in Myanmar’s first openly contested election in decades. Meanwhile, the military continued to control Myanmar’s key institutions. This democratic governance was proven to be short-lived. In 2021, during the COVID-19 pandemic, the military junta overthrew the democratic government, arresting its leaders.
Immediately after the takeover, pro-democracy demonstrations were ignited across the country. Later, amidst the military government’s brutal suppression, pro-democracy oppositions and ethnic militias formed parallel government and military groups occupying regions of the country. Despite ethnic conflicts and competition over economic resources, resistance is banding together–loosely–to fight a common enemy. Three years after the coup, incessant civil wars are still fought. The oppositions have successfully stopped the junta from consolidating control over the country. Some observers attributed the resistance’s success, especially in Operation 1027, to the reportedly China-backed armed resistance group United Wa State Army (UWSA). Meanwhile, the rise of openly operated cyber crime syndicates in Myanmar, especially in the North, was reportedly at least partially tied to the military government.
Myanmar’s economy experienced a heavy hit in these struggles. Millions of citizens are facing hunger, and tens of thousands have fled the country. A gruesome reminder of pain Burmese people suffer, AP News reported recently on a “purposefully sank boat” off Indonesian shore filled with ethnic refugees from Myanmar. On the boat, refugees seeking a new life in Malaysia were instead tortured and raped by ship crews. Only around half of the 146 refugees on the boat were recovered alive.
China’s stake
Most of the population in Myanmar rely on agriculture. The country’s tumultuous history has taken a severe toll on the agricultural society, leading to high degree of poverty in rural areas where most people live. The country also has major mineral deposits and natural gas reserves, which are historically under military control. Some of the mineral reserves found in Myanmar are used in electronic vehicle and wind turbine productions–fields dominated by China. As such, while poverty and underdevelopment functioned as a “push” for Myanmar’s call for global investment, the country’s rich natural resources is a “pull” attracting international investments, particularly those from neighboring China.
As mentioned, the region’s instability has led to increased transnational criminal activities, an issue that China has been exerting efforts to combat.
China’s interest in its relationship with the southwest neighbor therefore lies in combating cross-border crimes, maintaining regional stability, protecting its investments, and maintaining its dominating influence in the region.
China has been one of Myanmar’s biggest trading partners. China’s investment in Myanmar totaled $21.867 billion as of July 2023, mostly concentrating in infrastructure and projects related to the BRI and the mineral extraction and processing and the manufacturing industries. China has been maintaining a warm tie with the previous junta, even as most of the democratic world have voiced resolute support for Suu Kyi’s democratic movement. After the rise of the Suu Kyi administration, China invested considerable effort in maintaining a friendly relationship with the democratic government. Yet after the 2021 coup, China warmed up to the junta after brief initial reservations. In fact, Beijing has not acknowledged the 2021 event as a “coup.”
Perhaps there are reasons behind Beijing’s cozy attitude towards Myanmar. Myanmar is a key part of the BRI strategy to create a China-Myanmar Economic Corridor that connects China’s landlocked Yunnan Province to the Indian Ocean. Since 2021, China has been signing deals with the junta to implement the China-Myanmar Economic Corridor plan under the BRI strategy. Myanmar also holds strategic and practical importance in securing China’s energy needs and avoiding the Malacca chokehold. The Strait of Malacca is a pathway between the Indonesian island of Sumatra and the Malay Peninsula, which functions as a key gateway for shipping vessels journeying between the Pacific and the Indian Ocean. Over half of China’s maritime trade volume, and close to 80 percent of oil import navigates through the waters of the Malacca Strait. Chinese strategists have long discussed a US military blockage of this pathway and its national and energy security ramifications. The long-awaited Kyaukphyu Port, located in the coastal town of Kyaukphyu, a terminus of the 800 kilometer China-Myanmar Oil and Gas Pipeline, carries the potential to broker a new regional landscape much preferable to Beijing.
However, incessant civil war has harmed China’s trade and security interests. After the recent coup, as mentioned, warfares have led to stalls in Chinese-invested projects, increased attacks on Chinese businesses, and an increase in criminal activities affecting thousands of Chinese citizens. Warfares between the junta and resistance have also affected cross-border trade and forced thousands of refugees into China. Gunfire and bombing have reportedly affected a bordering town in China.
Therefore, despite continued endorsement of the new junta, Beijing has put forth a series of actions to seemingly pressure the junta. This included tacit approval of Operation 1027, the Chinese military’s combat training along the Myanmar border in November 2023 following the destruction of over 100 trucks carrying goods from China during armed conflicts, and a wanted list of 10 military-tied “fraud-gang leaders” in December 2023, leading to the aforementioned handover of three junta-back warlords in early 2024.
These back-and-forths, in many observers’ eyes, showcase China’s ultimate interests in the region being safeguarding its national interests and sustaining regional security instead of establishing a certain moral or ideological stance. And Beijing has the arsenals to do so. China’s crackdown on fraud and human trafficking, in particular, showcases Beijing’s influence over Myanmar’s internal politics – not just the military or the elected democratic government, but also the country’s local resistance forces. Operation 1027 is the pinnacle of such influence. In a sense, events like Operation 1027 not only inflicted heavy losses to the military government, but showed the Myanmar junta and Beijing’s surrounding neighbors China’s power to intervene if Myanmar’s conducts –and potentially other Southeast Asian countries’– hurt China’s interests.