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The mausoleum of former Shan kings in Burma. Construction of a dam being built by Chinese interests in Shan state has been suspended amid popular opposition. REUTERS


Myanmar, also known as Burma, is to send a vice-president to China in an effort to soothe tensions after the suspension of a $3.6-billion (U.S.) Chinese-backed dam in the country cast a shadow over ties between the normally close allies.

News that Tin Aung Myint Oo will visit Beijing came as Chinese state media launched a defence of Beijing's investments in Myanmar, with The People's Daily, a state-run newspaper, accusing foreign media of stirring up public opinion against the scheme.

China, the world's biggest consumer of energy and commodities, has huge energy and infrastructure projects in resource-rich neighbouring countries, including Myanmar, Mongolia, Kazakhstan and Laos. In several cases, neighbours' opposition to Chinese influence has been growing, particularly in the countries that contest Beijing's claims to territory in the South China Sea.

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China's strategic interests in Myanmar range from hydropower to mining to natural gas, and Beijing is also Myanmar's biggest lender. But last week's surprise decision to suspend construction of the Myitsone Dam – which the Myanmarese government said was based on public opposition to the project – underscores growing anti-China sentiment in the country and could be a warning sign for other Chinese interests in Myanmar, analysts warn.

"The Burmese regime feels that we have to balance Chinese clout," said Aung Zaw, editor of the Irrawaddy Magazine. "There is a growing fear of Chinese influence … They realize they have been heavily dependent on China for so long."

Earlier this year, U.S. diplomatic cables published by Wikileaks revealed that Myanmarese officials secretly chafed under China's influence and hoped that closer ties with the U.S. might serve as a buffer against Beijing.

Recent political reforms have led to louder criticism of Chinese investment in Myanmar because the space for debate has been slightly expanded, analysts say.

The suspension of the dam project by Myanmar's authoritarian government came after rare demonstrations in the country's biggest city, Yangon (Rangoon), and was welcomed by de facto opposition leader Aung San Suu Kyi and others as a sign of reform in the country.

Beijing has been a key ally for Myanmar at the United Nations Security Council, and has previously used its veto power to block resolutions against the regime. In return, China has been in prime position to tap Myanmar's natural resources, particularly the large offshore gas fields that were the subject of a bidding war between China and India. China has poured capital into the country, investing $10-billion in Myanmar during the 2010-2011 fiscal year. New loans worth $7.4-billion have been announced during the past two years.

The suspended Myitsone Dam, which lies close to the Chinese border and was already under construction, was being developed by China Power Investment (CPI), a state-owned Chinese power group, and funded by Chinese loans. The dam was the first of seven scheduled to be built on the Irrawaddy River, and would have provided China's Yunnan province with much-needed electricity.

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Beijing's most strategically important project in Myanmar is a set of oil and gas pipelines that will run from the Bay of Bengal into southern China, providing access to oil shipments from the Middle East without sending oil tankers through the Strait of Malacca, off Singapore, and the South China Sea. The pipelines will also ship natural gas from Myanmar's offshore gas fields into southern China, creating a key source of revenue for the Myanmarese government.

Analysts say the pipeline project, being built by China's largest oil producer CNPC, and other large hydropower projects in Myanmar could be next in line as anti-China sentiment grows.

The pipeline project has faced opposition from activists as well as local ethnic groups, particularly in the Shan state, where a decades-long military conflict is still going on between the Shan and the Myanmarese.

Chinese energy and infrastructure companies have been paying increasing attention to community relations and political risks in their overseas projects, following the high-profile evacuation of Chinese workers from Libya earlier this year.

CPI said the Myanmarese government decision was "very bewildering" and said a large amount of money had already been spent on construction preparation.

"If suspension means construction halt, then it will lead to a series of legal issues," said CPI president Lu Qizhou in an interview with state media.

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