Peace talks were held on February 4 between representatives of the government of Burma (Myanmar) and of the Kachin state separatist movement in the Chinese city of Ruili, located near the Chinese-Burmese border.

The two sides have agreed to resume negotiations by the end of the month. A statement foreshadowed the invitation of third party “observers” and “witnesses” to the next round of talks as well as the establishment of “a surveillance system in the conflict-affected areas” to facilitate a ceasefire.

High level Chinese and Burmese officials were present along with representatives of Kachin Independence Army (KIA), the military wing of the Kachin Independence Organisation (KIO). Two other major ethnic groups in northern Burma, the Karen National Union and the Shan State Restoration Council, also attended.

The Chinese government has become increasingly concerned over the escalating fighting near its border between the Burmese army and the KIA.

Since December the Burmese military has used air strikes and heavy weapons to attack KIA positions, a major intensification in the fighting that followed the breakdown of a 17-year peace agreement in mid-2011. On December 17, the Chinese foreign ministry noted that artillery fire from within the Kachin area had fallen on Chinese territory for a fourth time.

Burmese President Thein Sein announced a unilateral ceasefire on January 19. However, Burmese army units continued operations near the KIA’s headquarters at Laiza late last month, capturing high ground only seven kilometres from the town. Laiza is just over the border from China.

China has intervened to shore up its relations with the Burmese government and also to prevent the conflict from spilling over the border into southern China. China has long been preoccupied with stability in its border areas with Burma that include the Kachin and Shan states. These ethnic groups are mirrored across the border in China’s south western province of Yunnan.

China cultivated ties with the ethnic groups in northern Burma, both to prevent unrest on its border and as leverage with the Burmese military junta. Some of the separatist militias were breakaways from the Burmese Communist Party, which Beijing supported until the end of the 1980s. Beijing never supported independence or a high degree of autonomy for the Burmese separatists lest it encourage similar movements inside China.

Western sanctions against Burma from the late 1980s resulted in the junta becoming more economically and politically dependent on China, changing Beijing’s relationship both with the government and the northern separatist groups.

Chinese investment in Burmese resource and hydroelectric projects expanded. Much of it was in the border areas on terms worked with the military rulers that took little heed of the demands of ethnic groups for economic and political autonomy.

Under an agreement signed in 2009, China is constructing oil and natural gas pipelines through Burma that are due to begin operation in June. The parallel pipelines will run from the Indian Ocean port of Kyaukphyu through Burma to Kunming in Yunnan. The oil pipeline will have an annual capacity of 12 million tonnes.

The energy corridor will cut the time and expense for Chinese oil and gas imports from Africa and the Middle East and also shipment via the Strait of Malacca. The pipelines are part of Beijing’s plans to lessen its dependence on shipping routes that could potentially be blocked by the US and its allies.

Chinese relations with Burma have been complicated by the developing rapprochement between the US and the Burmese regime, which created a quasi-civilian government under President Thein Sein in 2011.

Thein Sein signalled a diplomatic opening for the US and its allies in September 2011 by suspending the massive Chinese-funded Myitsone Dam hydro-electric project in Kachin. High-level visits followed and most economic sanctions were lifted after the opposition National League for Democracy (NLD) was allowed to stand in Burma’s parliamentary elections in April 2012.

China was particularly concerned that the latest Burmese military offensive proceeded without taking vital Chinese interests into account. Beijing is anxious to settle the Kachin ethnic conflict, but the Burmese government is expected to take a hard line in talks, ruling out anything but token autonomy.

As US ties with Burma have improved, the opposition NLD headed by Aung San Suu Kyi, while formally supporting autonomy, is increasingly lining up with the government and military.

Suu Kyi has failed defend either the Kachin or the Muslim Rohingya in the western Burmese state of Rakhine who have suffered sectarian attacks. During a visit to the East-West Centre in Hawaii on January 25, as the army was moving in on Laiza, she expressed her admiration for the Burmese military, saying: “I can’t help it, it’s the truth.”

Following the brutal military crackdown on strikes and protests in 1988, Suu Kyi has been systematically built up as an icon of democracy. In reality, she and the NLD represent Western-aligned sections of the Burmese bourgeoisie whose interests were previously blocked by the military junta. Suu Kyi has been crucial to the Obama administration in providing democratic window dressing for renewed US relations with Burma.

The strengthening of US ties with Burma is part of Obama’s aggressive “pivot to Asia” which is aimed at undermining Chinese influence throughout the region. Washington has called for the settlement of the ethnic conflicts in Burma’s north has made limited criticisms of the military’s recent offensive against the KIA. Indeed, at the height of fighting, Western creditors relieved Burma of $US6 billion or 60 percent of its total debt.

The US has already expressed interest in becoming a third party to the peace talks sponsored by China. Any American involvement will be aimed at boosting US influence, not only in Burma, but in the sensitive northern border areas adjacent to China. The US is already developing closer ties not only with the Burmese government, but also with the military, posing a potential threat to vital Chinese economic and strategic interests.