The Chinese support of the oppressive regime is no surprise—China has displayed its habit of coddling repressive regimes in countries such as Sudan, Iran, and Zimbabwe. In all of these countries as well as in Burma, China has stepped in with diplomatic protection, usually in exchange for access to local market for its goods or a stake in oil fields or other natural resources.

But while the Chinese businessmen and Burmese military leaders will make out like bandits from the activities of the unaccountable Chinese state-run resource companies, the local Burmese people are expected to see almost no profit, while at the same time suffering severe damage to their environment and being forced in many cases to relocate.

The easily understood resentment of the Burmese population has recently begun to result in violent attacks in northern Burma.

Burma Rivers Network, an advocacy group that represents communities affected by hydro-power dam projects being constructed by Chinese companies, said that much of the recent fighting in Kachin State has occurred near Chinese-backed dams that are opposed by local residents. In mid-June, the group said the dams are "fueling further conflict" and "not benefiting the people of Burma.”

But Burma as a whole depends heavily on China for everything from military hardware to consumer goods, and therefore even attacks by ethnic armed groups have not persuaded the Burmese government to either slow or halt the Chinese economic invasion of their region.

 During his first visit to Beijing after the formation of Burma’s “new” government, President Thein Sein signed a slew of financial pacts, including an agreement for a $763 million line of credit from the China Development Bank, as the two countries upgraded their ties to a "comprehensive strategic cooperation partnership."

Meanwhile, Chinese goods now account for about 80 percent of Burma's imports, ranging from electronic devices to cement, paint, flour, textiles, iron products and raw materials for soap, reported the Rangoon-based newspaper Biweekly Eleven.

Although greater Burmese dependence should logically result in greater Chinese influence, the Burmese regime has always in the past managed to fend off outside pressure, including that of China. Part of the Burmese leaders’ willingness and ability to remain semi-independent politically, although increasingly dependent economically, is cultural.

Dr Poon Kim Shee, a scholar in international relations, pointed out in a paper called “The Political Economy of China-Myanmar [Burma] Relations: Strategic and Economic Dimension,” that the Burmese military never completely trusted any external major power because Burmese leaders have deep seated feelings of “sinophobia as well as xenophobia.”

Burmese leaders “were socialized in a political culture of distrust,” he said, quoting the late China scholar Lucian Pye, who was a political scientist and sinologist who also worked in Burma and concluded that psychology was more important than economics in explaining development.

But at the top level, Burmese and Chinese government leaders still call each other “Paukphaw,” a Burmese word for fraternal, which reflects the close and cordial relationship between the two countries. The clash in Mandalay, however, reveals a more antagonistic relationship at the grass-roots level, and if the leaders of the two nations are not careful, there could be a repeat of the anti-Chinese riots of 1967.

This must be prevented, but the question is how to do so.

One way is for both the Burmese and Chinese governments to recognize that it is in their own best interests for them and the Chinese businesses to act responsibly towards the Burmese population and environment.

For a start, the globally emerging sense of corporate social responsibility—a practice that requires companies to address social and environmental considerations alongside the drive for profits, a concept that remains unfamiliar to most Chinese businesses—should be required of Chinese enterprises in Burma.

On the Burmese side, new labor laws should be created to counter the increasing labor discontent and abuses and secure the rights of workers. This would develop trust by creating a perception of flexibility that would be beneficial to both the Burmese hosts and the Chinese investors.

Like it or not, China’s influence both on the Burmese and global economy, energy supplies, environment and security are growing. The best way for Burma to positively assimilate this outside influence is to achieve greater efficiency in its economy, and the best way to do that is to undertake political and economic reform and accept democracy.

 Improvements in respect for human rights are also necessary, as they are tied to aid and investment.