As fighting on Myanmar-China border rages on, scam networks hunt for new sites

Hundreds of Chinese citizens, many forced into scamming, have been freed as Beijing issued arrest warrants for once untouchable warlords for their roles in scamming billions of dollars from Chinese citizens.

China’s crackdown on scams, mostly targeting Chinese nationals and members of the Chinese diaspora with romance frauds and pyramid investment schemes, appears to have set off a chain reaction, reconfiguring a careful power arrangement in the border area.

In the chaos of recent days, scam networks have fled, folded or hastily set up in new secure buildings to continue their lucrative work, taking with them hundreds of trafficked workers from Asia.

“A lot of the compounds have merged together. Supplies are low, especially of rice, and there have been bombs and sounds of war for many days,” one person forced to scam in the conflict area told This Week in Asia. “Minutes feel like days, it’s terrifying, and I couldn’t imagine things ever becoming as bad as this hell.”

Many of those in the scam compounds have been tricked into it and are desperate to be freed as they watch other compounds nearby be broken up on videos circulating on TikTok, according to the worker, who requested their name, nationality and location to be withheld.

It is unclear how many people remain in the scam compounds of Shan State, but UN estimates before the crackdown said up to 120,000 people could have been trafficked to work in Myanmar’s scam rooms.

“Often when crackdowns or rescues occur, only some of the trafficking victims are released, while many others remain trapped,” said Rebecca Miller, the United Nations Office on Drugs and Crime regional adviser on human trafficking and migrant smuggling.

“People from across the globe have been trafficked into these scam compounds and it is difficult to know what their fate will be, especially given the active conflict.”

Junta stretched

In northern Shan State, militias loyal to the Myanmar junta control key trade outposts where hundreds of millions of dollars of goods cross into China each year, as well as the constellation of casinos used to launder drug and scam money.

But the territories have long been contested by a number of ethnic armed groups under different banners. The MNDAA and TNLA are joined in the Brotherhood by their final member, the powerful Arakan Army.

“Operation 1027 is significant for a few key reasons,” said Zachary Abuza, professor at the National War College in Washington DC.

“Obviously, it involves control over the roads to the border trading towns of Muse and Chin Shwe Haw. Trade with China remains one of the junta’s lifelines,” he added.

By taking the border town of Chin Shwe Haw, “one of the towns used for internet scam centres, a financial lifeline for the junta”, he said the Brotherhood had cut funds for local mercenary units allied to the Myanmar military which “is not nearly as strong as they believe”.

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China is a key ally of Myanmar’s isolated military, which has been fighting rebellion across the country and hemmed in by Western sanctions since it seized power in February 2021.

In an area beyond the reach of independent media, the Brotherhood’s PR channels have given a triumphant – if one-sided – glimpse into the fighting with daily images of rocket launches and alleged captured junta troops.

The UN says several thousand people have been displaced in the fighting, several hundred into China, while the armed groups claim dozens of Myanmar troops have been killed.

Some observers say the scale and speed of the Brotherhood’s advance could eventually pose an existential threat to the overstretched junta.

“This is the most serious military test for the junta since the 2021 coup,” said Morgan Michaels, conflict analyst and researcher on Myanmar at the International Institute for Strategic Studies.

“The junta’s strategy to date has been to uphold an informal ceasefire in Shan North precisely because it feared this sort of offensive from the Brotherhood groups, which are among the most powerful in Myanmar,” he added.

“[But] the geographical scope of the alliance’s advance is huge, so it will be challenging to guard all this territory if the military proves able to mount a major counteroffensive.”