Scam Hubs Surge in Myanmar as China Shifts Focus to Supporting Military Regime

A recent report from the U.S. Institute of Peace highlights a resurgence of scam hubs in Myanmar, particularly in Karen State, fueled by China’s softened stance toward Myanmar’s military regime. According to Jason Tower, co-author of the report and country director for Burma at the institute, China has pivoted from taking forceful action against cyber scams to prioritizing the survival of Myanmar’s military regime.

“They’re now much more focused on regime survival, looking at how they can prevent the [Myanmar] regime from toppling,” Tower told VOA Burmese. This shift, he explained, has allowed scam operations to flourish. Criminal networks in Myanmar are taking advantage of the evolving relationship between China’s strategic interests and the country’s military, using Myanmar as a base for operations targeting international victims.

China’s Evolving Priorities

Previously, China had worked to curb online scams originating from Myanmar, but its current focus is on supporting the Myanmar regime, which benefits Chinese strategic interests. This shift, according to the report, has enabled scam networks to expand in Myanmar, exploiting the region’s instability for criminal activities.

When contacted for comment, the Chinese Embassy in Washington issued a statement emphasizing China’s commitment to peace and stability in Myanmar, without directly addressing the issue of cyber scams. “China and Myanmar are close neighbors with a deep bond of friendship,” said embassy spokesperson Liu Pengyu, highlighting China’s wish for stability in Myanmar.

Meanwhile, China’s Ministry of Public Security presented a more proactive stance in a report from the state-run Xinhua news agency, detailing joint efforts with Myanmar authorities in combating cyber fraud. The report noted that 870 suspects, including both Chinese and Myanmar nationals, were arrested during a crackdown on online fraud in northern Myanmar.

Myanmar’s state media echoed this sentiment, emphasizing recent extraditions of Chinese nationals involved in cybercrime. However, analysts remain concerned that China’s broader strategic interests, particularly the China-Myanmar Economic Corridor, have taken precedence over sustained efforts to dismantle scam syndicates.

The Impact of ‘Pig Butchering’ Scams

Among the most damaging forms of fraud are “pig butchering” scams. These sophisticated operations lure victims, often through social media, into fake investment schemes, frequently involving cryptocurrency. Once the victim is “fattened up” with a sense of trust and fake returns, the scam culminates in significant financial loss.

Erin West, a deputy district attorney with California’s REACT Task Force, which combats high-tech crime, explained how deeply these scams have affected Americans. “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 said.

These scams are proving to be particularly lucrative for the networks behind them. Tower noted that U.S. victims lose an estimated $5.5 billion annually to such frauds, with some estimates placing losses as high as $15 billion. These networks are often under the protection of Myanmar’s military or local warlords, complicating international efforts to dismantle them.

A Growing Threat to U.S. National Security

Tower warned that this surge in fraud is not just a financial issue but a growing national security concern for the U.S. The funds being siphoned into the hands of corrupt and authoritarian actors in Southeast Asia are undermining democratic efforts and propping up dangerous regimes.

“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,” Tower said.

As these scam hubs continue to operate with impunity, U.S. authorities face a difficult challenge in protecting American citizens from these far-reaching criminal networks. Without stronger international collaboration and efforts to pressure Myanmar’s regime, experts fear that these scams will continue to grow in scale, making them an even greater threat in the coming years.