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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