From another thread
Is QBZ-95/97 standard for PAP?
Reason I ask is because I've read that PAP was the main user of QBZ-03, but I rarely see it.
QBZ-95 is pretty much standard for every branch of Chinese military. Some uses QBZ-03 like earlier paratroopers, but even them have switched to QBZ-95.
QBZ-97 is chambered 5.56 NATO round, it is not used by Chinese military.
Honestly, I've seen just as many pictures of Myanmar militias with QBZ-03. I imagine that dealings with the militias would need to be under the table, so seeing such an esoteric weapon is even more curious, unlike smuggling something like Type-81 which was widely deployed and currently surplus. Makes you wonder about arms export control...
These dealings are nominally under the table, they are never official. But IMO, pretty much open secret. As of "arms export control", I don't recall China has signed up to any treaty that limit small arms trade. So legally speaking, non of these trades are illegal and punishable.
Practically, these trades play a role in China's influence in Myanmar. To understand why China is doing what it is doing we need to revisit Myanmar's history since its foundation.
Aung San Suu Kyi's father General Aung San led the independence from UK at the end of WWII. At the beginning, he set the country as a federal state with high autonomy promised (not yet implemented according to the constitution) to other ethnic groups. The Burmese army were mix of all ethnic groups, Burman nationalists and communists. After his assassination, his successors (the Burman nationalist faction) renegaded the promises to the ethnic groups and also started to persecute the communists in the government and army. This is exactly like what happened in Indonesia after Suharto deposed Sukarno. Ethnic soldiers and communists in the army were either purged, or deserted and formed the rebels. The most numerous rebels were communists with high percentage of Wa people. Now the ethnic conflict inter-winded with ideology. Around this time, Burma also turned anti-communist, and conducted ethnic cleansing of Chinese Burmese. So China began to support the rebels aligned to Communists in the north.
At the time of Deng's rule, China stopped arming the rebels officially due to 1. infighting within Burmese communist party had broken it along ethnic lines, 2. the relationship with Burma was warming up again.
But I don't think China is willing to fully and totally cut the tie with certain factions in Burma. 1. it is about moral, abandoning allies is bad for credibility for the long run, nobody would ally with you if you did once. 2. Burmese government's historical hostility to China (during the cold war) and today's "democracy", neither of these two are trustworthy in Chinese mind. There is no guarantee that the "democratic" leader would not invite US military base tomorrow if China give up every card today, compare Myanmar with Ukraine, you get the picture. China's non-intervention policy has a condition that the other party does not gang up with someone else to threat China. The good examples were Korean war and Vietnam war.
Important to note, these dealings are in gray zone where Chinese government may close one eye but may shut them off if need to be.