China sees "RMB zone" taking shape on Myanmar border

China sees "RMB zone" taking shape on Myanmar border

By Andrew Quinn

JIEGAO, China (Reuter): China's "people's currency", the Renminbi (RMB), may take second place to the dollar, yen and Deutschmark on world financial markets, but in Myanmar it sparkles diamond-hard.

Traders along the rugged border are swapping RMB faster than ever before thanks to China's rising economic power -- a lift-off which could finally prise open the lid on one of Asia's last hermit economies.

"We are a perfect match," said Fan Xilang, a senior trade official in Yunnan, the southwestern Chinese province which shares a lengthy border with Myanmar.

"We make what they need. The quality of our products is matched to their capacity to buy."

In its flourishing trade with Myanmar and the other border states of Vietnam and Laos, China is easing into a new role as big brother, role model and regional economic powerhouse.

While China's coastal hotspots vie for investment, technology and expertise from Japan, South Korea and the United States, underdeveloped Yunnan is re-casting itself as the new hope for poorer countries to the south.

The RMB, bound by conversion limits and dogged by inflation, has become the hallmark of this about-face.

Used almost universally by local traders, it flows widely throughout northern Myanmar and is seen as a far more dependable hedge than the beleaguered Myanmarese kyat.

"Once a Myanmarese makes money, they turn it into RMB and deposit it in our banks. They trust it," said Huang Yi, vice governor of Dehong prefecture which covers the border area.

The "RMB Zone" extends far into Laos and to Vietnam, where Chinese newspapers estimate that some 1.5 billion yuan (US$172 million) is in circulation.

Chinese officials proudly recount how one can use RMB to buy souvenirs at the Ho Chi Minh Museum in Hanoi.

"We are looking for mutual cooperation, but on the whole China gives more than it gets," said Wang Dazhang, manager and Communist Party chief of the Jiegao Economic Area in the Yunnan border city of Ruili, seen by planners as the focus of future cross-border trade.

Entrepot

Jiegao, a spit of Chinese land jutting into Myanmar, is developing into an entrepot.

In dusty lots Myanmarese and Chinese trucks swap goods before heading home -- Myanmarese timber, aquatic products and grain in exchange for Chinese household appliances, clothing, tools and machine parts.

Outside, tourists and traders stroll in a small market under blazing sunshine. The border is marked by occasional pylons and a garbage-filled ditch.

Jiegao's unfinished look belies the fast growth of trade between Yunnan and Myanmar. Officials say the province saw 2.5 billion yuan ($288 million) in trade in 1993, a rise of about 26 percent over the previous year.

Chinese officials proudly tick off their contributions to Myanmar, one of the world's poorest countries after decades of isolation under its military rulers' policy of seeking a "Myanmarese road to socialism."

Political ties have grown closer as Beijing and Yangoon face down similar Western pressures over such issues as human rights.

Now, the economies are beginning to mesh.

Chinese engineers re-work dilapidated railways. Others are building roads, bridges and hotels. Chinese tourism, much of it business in disguise, floods across the border for the wilder possibilities of Myanmarese nightlife.

When a fire breaks out in Mujie, the Myanmarese town neighboring Jiegao, the Chinese fire truck often makes it there first. "We are faster," Wang said simply.

So fast, in fact, fears are already sharp that Myanmar and her neighbors are in danger of being swamped by China's push to expand its economic horizons.

As fast-trading Chinese businessmen move further and further south, opening shops and buying up property, some economic analysts say national economies are tilting toward Beijing instead of toward their own capitals.

With fast-growing Thailand exerting a similar pressure from the south, the fear is of being caught in a pincer, stripped of valuable timber and other resources before the vulnerable area has time to set its own priorities.

For Yunnan officials, such talk misses the point. The point, as they see it, is that the Chinese economic boom is shaking up its neighbors enough to provide riches for all.

"Shenzhen (in south China) sits across the border from Hong Kong, a rich capitalist city. Across our border we face a poor friend," said Wang. "They need us."

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