The Irrawaddy
By BA KAUNG
Burmese Vice-President Tin Aung Myint Oo, left, and Chinese Premier Wen Jiaobao shakes hands on the sidelines of the 8th China-Asean
Nearly a month after Burma's President Thein Sein announced the suspension of the controversial Myitsone dam project in Kachin State, Chinese workers have begun returning to China, even as Beijing continues to signal its desire to resume the US $3.6 billion project in the near future.

On Thursday, the ethnic Kachin Independence Army (KIA) said that Chinese workers were leaving the project site and that there were no signs of construction.

“Chinese workers are leaving the site through border gates in Kachin State. We also learned that the construction materials stored for the project, such as cement and fuel, are being sold to local businessmen,” said KIA spokesman La Nan.

“But we don't know if this means the project is just suspended or canceled,” he added.

A similar report was made by the Rangoon-based Eleven Weekly journal this week.

The suspension of the controversial hydropower project on the Irrawaddy River was seen as a move by the new quasi-civilian government in Naypyidaw to counter growing Chinese influence in the country and improve ties with the West.

While the Burmese government said it acted according to the will of the people, Beijing was clearly angered by the decision and called for talks with Naypyidaw to resolve the issue. Recent reports from China, many of which described concerns about the environmental impact of the dam as exaggerated and fabricated by the Western media, made clear that Beijing remains hopeful the project will resume.

On Monday, The Global Times, a Chinese government mouthpiece, described Burma's decision to suspend the Myitsone project as a move to garner short-term political gain at the expense of business, adding that “the whimsical change will inevitably send troubling signals to potential investors.”

Apparently to contain the fallout, Burmese Vice President Tin Aung Myint Oo went to Beijing and held talks with Chinese Premier Wen Jiabao last week.

During the meeting, Wen asked the Burmese government to honor bilateral agreements between the two countries and allow the successful implementation of Chinese investments in Burma.

“Implementing important China-Myanmar cooperative projects is in the interests of both countries,” Wen was quoted as telling Tin Aung Myint Oo, according to China's state-run People's Daily newspaper, which also reported that the Burmese vice-president said that Burma valued cooperative relations and would “proactively look for ways to resolve issues.”

According the Burmese government, the project will be suspended until 2016 when Thein Sein's presidential tenure expires. A top Burmese presidential adviser recently told The Irrawaddy that Naypyidaw will probably compensate China by granting it further economic concessions in Burma. He added that bilateral relation would not be much affected by the dam suspension because there are still many other Chinese investments in the country.

Despite the suspension of the Myitsone dam, which was expected to generate 6,000-megawatts of electricity, most of it for export to China, both China and Burma expressed hopes that a strategic oil and gas pipeline from Burma's Bay of Bengal coast to China's landlocked Yunnan Province would be successfully completed.

According to the China National Petroleum Corporation, which is constructing the pipeline, work on section 4 of the pipeline has begun in Shan State, and the whole project is expected to become operational by May 2013.

The pipeline, with an estimated capacity of 20 million tons of crude oil per year that will enjoy tax concessions and customs clearance rights from the Burmese government, will enable China to bypass the Strait of Malacca when importing crude oil from the Middle East and Africa, cutting the shipping distance by around 1,200 km.

As part of the oil pipeline project, China is also constructing a deep-water crude oil unloading port and oil storage facilities on Burma’s Maday Island off the coast of Arakan State—an investment that will provide China with crucial access to the geopolitically strategic Indian Ocean, where the US is poised to increase its navy presence in the coming decade.