Peace talks between Myanmar's government in Naypyidaw and the Kachin Independence Organization (KIO) rebel movement in Kachin state halted March 12. The KIO has controlled most of Kachin state since the movement's founding in 1961 and is the only remaining major ethnic opposition group to have not reached a peace agreement with the government. The region's relative autonomy stems from its geography, culture and ethnic makeup, which are distinct from the rest of the country and make the area difficult for the central government to control. China has taken advantage of that difference, positioning itself as mediator between the group and the government. Since Myanmar's isolation from the West after 1962, China has been Naypyidaw's only major ally, investor and trading partner. China's approach to Myanmar is grounded in its need for energy and alternative international trade routes to the South China Sea. As Myanmar's value grows, Beijing eyes warily any domestic political shift that could affect those interests. This entails a two-fold tactic: build strong relations with the central government while maintaining a balance of power between the government and ethnic opposition groups. Already, opposition by ethnic groups (and Naypyidaw's desire to expand its potential trade partners beyond China and improve ties with the West) have led the government to halt the construction of the Chinese-financed Myitsone dam projects near Myitkyina in Kachin state. Part of a seven-dam hydropower complex planned for the upper reaches of the Irrawaddy River in Kachin state that would provide power to southern China, the Myitsone dam sparked public controversy in 2011 when it was learned that completion of the project would require an area the size of Singapore to be flooded, which would displace several thousand Kachin civilians. Conflict at Myitsone thus threatens both China's material interests and its reputation within and beyond Myanmar's borders. China is similarly concerned about oil and natural gas pipelines that begin at the Myanmar coastal port of Kyaukphyu but run through both ethnic Shan- and Kachin-dominated territory on their way to Kunming in Yunnan province, leaving them open to sabotage from a variety of potential antagonists. China will try to maintain a balance of power within Myanmar to maintain its role as arbiter between Myanmar's center and periphery and thus maximize its leverage over both sides in securing Beijing's interests.
