Beijing Reaps Benefit of Protective Embrace

Ruili is a border town in China's Yunnan province that has been transformed from grubby backwater to palatial boom town in the past decade as Chinese and Burmese business interests have met profitably on the road once used by Burmese monarchs to cart green jade to Beijing as tribute.

Set in lush jungle, it is a mysteriously affluent place of karaoke and neon, choked with Mercedes and Land Cruisers, flat-capped farmers on motorcycles swerving to avoid swarms of boys with envelopes of green stones.

Its old bamboo shacks have given way to white-tiled mansions owned by Chinese jade and heroin dealers in partnership with the Burmese junta and individual generals. It has grown so rapidly that all roads leading to it are still mudslicks and there are no street signs.

Ruili's tawdry wealth explains much about China's role in the Burmese crisis. Beijing has long been the junta's main guardian, ready to resist any attempt to subject it to scrutiny.

In recent days it has been repeatedly urged to use its influence, and issued a rare call for restraint - though only after blocking punitive action or even censure in the UN security council.

China has expanded into key Burmese sectors such as natural gas, hydropower, minerals, wood, fisheries and farm produce as well as illicit narcotics, gems and gambling. Chinese goods are flooding Burmese markets. Parts of northern and north-eastern Burma have become Chinese settlements.

With natural gas reserves of 2.48 trillion cubic meters (1.4% of the world supply) and little capital or infrastructure to exploit it, Burma is at the center of fierce competition between China and India to develop production and supply their home markets.

Soft loans and incentives are offered to sweeten deals. Chinese media recently announced agreements to develop three offshore gas fields and to build a pipeline connecting the port of Sittwe with southwestern China.

Research by the Burma Project found at least 26 Chinese multinational corporations involved in 62 hydropower, oil and gas, and mining projects in Burma. China is also financing engineering projects worth $1.2bn (£600m) in 2004 and with China enjoying a hefty surplus of $731.5m.