Burma's ever-repeating cycle of ethnic conflicts, tenuous ceasefires and resumed hostilities have left the country in a quagmire. But after decades of armed insurgencies, it appears economic pressures, in part due to geographical happenchance, could offer the region's best hope of achieving peace and prosperity.

Both India and China—boasting almost half the world's population between them—stand to profit enormously from progress in Burma's tumultuous border regions. The most direct route between the industrial zones in China’s center-east to India is via Burma and Bangladesh, thus avoiding the inhospitable Himalayas and unstable Tibet.

Despite bombastic rhetoric from India about China's “string of pearls” ambitions in the Bay of Bengal, the true picture is in fact far more complex. In 2008, China emerged as the largest trading partner of India and the nations have also attempted to extend their bilateral strategic and military relations.

Trade between the two goliaths has risen steadily over recent years and peaked at US $73.9 billion in 2011. It thus appears the Asian superpowers are well on the way to achieving the target of $100 billion of bilateral trade by 2015 set out when Chinese Prime Minister Wen Jiabao met his Indian counterpart Manmohan Singh in New Delhi in December 2010.

Little wonder that officials in Naypyidaw are fostering Burma's image as as the “strategic nexus” between China and India and Southeast Asia—potentially boasting unbeatable access to the world's three fastest-growing markets.

Understandably, financiers from all over the globe are licking their lips at the prospect of an open Burma and pushing hard for stability in the region.

“It doesn't happen every day that a country of 60 million people in the most dynamic region of the world is suddenly open for business,” Singapore consultant Hans Vriens told The Economist earlier this month.

Of course, it would be naïve to assume India's only interest is simply trade with China. Burma has massive natural gas reserves in its western province of Arakan and nearby waters—estimated at more than 30 trillion cubic feet.

In October, India promised Burma $500 million credit for oil and gas exploration, border trade and infrastructure projects—including roads, inland waterways and ports—when the Indian Prime Minister met Burmese President Thein Sein in New Delhi.

Chief amongst these is the construction of the $120 million Sittwe deep-sea port in Arakan State which should be operational by June 2013. The facility will allow cargo ships from India’s landlocked Mizoram State to navigate the Kaladan River and connect with Southeast Asia.

“We have an important relationship with Myanmar. And we have an important relationship with China. There is no competition,” Indian External Affairs Ministry spokesman Vishnu Prakash said at the time, playing down any economic rivalry with Beijing.

And there are already substantial trade links between Burma and India, with Indian companies investing heavily in its western neighbor's energy sector. The latest $500 million of credit comes on top of $300 million of extended credit in 2010.

India was the second largest receiver of Burmese exports in 2010 with 20.8 percent, while China was third at 12.9 percent. Thailand remains Burma's closest trading partner by receiving 38.3 percent of exports, but is already facing up to the additional competition caused by Burma's looming international rebirth.

But exploitation of Burma's natural resources remains constrained by infrastructure—particularly road and rail routes—which also remains a major stumbling block for increased trade through the region.

The expense of shipping from China's eastern ports via the Straits of Malacca has led Beijing to investigate myriad alternatives.

Thein Sein was reportedly asked if the Chinese navy could have access to Burmese ports in the Bay of Bengal during a visit to Beijing in June last year, prompting predictable remonstrations from New Delhi.

There is also the possibility of resurrecting the old Trans-Asia Railway idea—first suggested back in the 1960s—to increase trade in the region. Indian Railways is studying a proposal to construct a high-speed rail link from New Delhi via Manipur through Burma to Kunming in southwest Yunnan Province, reported The Times of India last April.

This adds weight to a 2007 agreement for a network of three lines between India and Burma that traverse Bangladesh—involving India building and restoring rail links in Burma through projects estimated at more than $730 million.

A sustained concern remains regarding insurgencies in India's resistive northeast around Nagaland, which has prompted the Indian government to request military assistance from the Burmese armed forces in exchange for armaments in recent years.

But the new Trans-Asia Railway, which aims to connect the continent from Istanbul to Hanoi, has already begun construction in Manipur—despite the United Naga Council organizing repeated blockades—and work has been hastened by political developments.

The Asean–India Free Trade Area agreement between the 10 bloc members and New Delhi was first signed in October 2008, and came into effect at the start of 2010. Opening these borders could bring about the renaissance of a modern Silk Road, with Burma's chair of Asean in 2014 cementing its place at the center of commerce with India and beyond.

“I think it’s very possible that connections between Burma and northeast India will greatly intensify in the years and decades to come, not just in terms of trade, but also people and ideas,” eminent historian Thant Myint-U told The New York Times.

“To some extent, this is a return to the past, and the reawakening of centuries-old ties, especially between places like Manipur, Assam, and Burma. It once took weeks if not months to travel from Assam to Burma. Today it takes days. Soon it may take hours.”

However, there are other crucial factors to consider. “A sustainable peace, including in the Kachin State, is essential for all this to happen,” he added.

And so the calming of the Kachin conflict in northernmost Burma takes on renewed significance for the region. Not only are major Sino-Burmese construction projects—such as the Shwe Gas pipeline, Myitsone hydropower dam and Trans-Asia Railway—dependent on a sustainable peace, but the lifting of punitive US and European Union sanctions could also be jeopardized.

A Human Rights Watch report released on Tuesday accused the Burmese government of a litany of abuses in the conflict-ridden area, and opening up trade in the region may well rest on achieving a lasting peace.

China's interests in Burma are indisputable with loans and credit to the regime, as well as economic aid and investments for the construction of dams, bridges, roads and ports as well as exploiting natural gas reserves in the Arakan region.

Beijing often quotes the issue of border security as its single greatest concern when dealing with the Kachin issue, but economic factors may soon have a greater bearing with the weakening of traditional markets in Europe and the US.

The Chinese government has repeatedly hosted peace talks between a Burmese government peace delegation and the Kachin Independence Organization (KIO)—most recently in the Yunnan bordertown of Ruili on March 8 and 9—but little progress has been made as fighting continues to date.

Observers fear that the continued Kachin opposition to Chinese-backed projects such as dams on the Irrawaddy River could provoke a fiercer reaction from Beijing, which has lots to lose from the continued conflict and is wary of a flood of refugees crossing into its southwest.

It appears likely that China will encourage Naypyidaw to find a peaceful solution to the fighting. On March 1, Thein Sein spelled out his three-stage “peace roadmap” to the Union Parliament. This included ceasefire truces, economic development with assimilation into the state apparatus and lastly amendments to the 2008 Constitution to address ethnic concerns.

However, decades of mistrust means that ethnic armed groups—particularly the KIO—will be unwilling to surrender their arms for the “promise” of constitutional reform. It is possible that Beijing's lust for prosperity could push their mediating position further to give both Naypyidaw and rebel groups a nudge towards compromise.

Only this week US President Barack Obama signed a bill that restores his ability to impose tariffs on imports from nations such as China when their goods are believed to have been subsidized or dumped on the US market. And China has just posted a massive trade deficit in the first two months of 2012.

It is likely that both India and China could well be pinning greater hopes on Burma as a source of economic salvation.