The banks began freezing the accounts on June 14, and now have blocked estimated deposits worth 40 billion kyats (U.S. $28.8 million), according to a report by Eleven Myanmar media group.
Traders told RFA's Myanmar Service that the situation has made it difficult, if not impossible, for them to do business.
The banks did not inform the merchants that their accounts would be frozen, and the Chinese government has yet to comment on the matter, they said
Chinese police have questioned Myanmar people who have withdrawn money from Chinese bank accounts, they said.
Importers and exporters set up bank accounts to conduct cross-border business in Muse, a town in Myanmar's northern Shan state, which is situated across the Shweli River from a road to Ruili, a key border town in southwestern China's Yunnan province.
Sources told RFA that the Chinese government will not accept sugar exports from Myanmar, though it does accept rice, corn, sesame, and bean exports, so traders have to export sugar illegally. To do this, they must open bank accounts with fake names.
"They froze the bank accounts of exporters and importers," a trader from Muse told Eleven Myanmar.
"For instance, if we transfer money to buy goods, the Chinese trader, who accepts the transfer, is also banned, so we cannot issue the goods."
A woman surnamed Phyu, who is chairperson of the Myanmar Pulses, Beans amp; Sesame Seeds Merchants Association, said that although traders' bank accounts have been frozen in the past, this time it is worse.
"We are in trouble and business could be delayed," she told RFA.
Sai Kyaw Hein, a lawmaker in eastern Myanmar's Shan State, said the Chinese banks must check the types of businesses their account owners are operating before they subject them to an asset freeze.
"If not, not only Myanmar people but also Chinese people will be harmed," he told RFA.
"When the traders are hurt, the farmers will suffer, and ultimately the country's economy will be affected," he said. I want them [the authorities] to solve this problem."
Traders said they have demanded that the Myanmar government negotiate with the Chinese government to create a system of legal money transfers and legal trade between the two countries.
If the authorities fail to respond to their demands, they will protest at the border crossings, they said.
Reported by Kan Thar for RFA's Myanmar Service. Translated by Khet Mar. Written in English by Roseanne Gerin.
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