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Struggling Burmese Economy Looks to China for Trade, Investment - 2002-05-08

Burma's economy will continue to struggle, as foreign investors wait for further political reforms following this week's release of an opposition leader. This means Burma remains dependent on China as a trade and investment partner.

Many political and business analysts say foreign investors will not rush to Burma, despite the release of opposition leader Aung San Suu Kyi this week.

Burma - rich in resources, especially oil and gas - is one of the world's poorest countries, plagued by corruption and mismanagement.

Analysts say the military government had hoped other countries would ease crippling economic sanctions now that Aung San Suu Kyi is free. But the National League for Democracy leader has reaffirmed her party's policy of discouraging international investment. Many foreign companies - pressured by human rights groups - have withdrawn their investments in Burma.

Chaaiyachoke Chulasiriwong is a professor of regional politics at Thailand's Chulalongkorn University. He said the economic sanctions and corruption discourage investment.

"The level of foreign investment is getting very low. This is because of the economic sanctions. At the same time, the corruption within the rank and file and officials in the Burmese government obstructs the flow of investment," he said.

Mr. Chaiyachoke thinks Burma's natural resources will draw foreign investors. He said, however, that for the money to flow, the country needs new commercial laws, and must curb corruption.

Some analysts have said Burma's economy has been kept afloat by investment and trade from its northern neighbor China.

David Oldfield, an analyst with Bangkok-based consultancy the Brooker Group, said commercial relations between Burma, also called Myanmar, and China run deep.

"A number of companies are directing their trade activities to the north with China and if you look from the center of the region all the way to the northern part of Myanmar, basically all the trade is directed toward China," Mr. Oldfield said.

Analysts say a thriving black-market trade between Burma and China adds cash to the Burmese economy.

But analysts warn that China may fear any real political reforms in Burma. They say Beijing may prefer to maintain the status quo and could even deter political change in Burma.