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China calls for talks over shelved Myanmar dam

Oct 1, 2011, 4:19 a.m.

BEIJING (Reuters) - China called on Saturday for talks with Myanmar after the government there suspended a controversial $3.6 billion, Chinese-led dam project.

After weeks of rare public outrage against the Myitsone dam, Myanmar's largest hydropower project, President Thein Sein told parliament his government had to act "according to the desire of the people.

Myanmar's then military government proposed the dam in 2006 and signed a contract in 2009 with the Myanmar military-backed Asia World Company and China Power Investment Corp to build it.

China's Foreign Ministry said "relevant countries should guarantee the legal and legitimate rights of Chinese companies."

"The Myitsone dam is a jointly invested project between China and Myanmar, and has been ... thoroughly examined by both sides," ministry spokesman Hong Lei said in a statement on the ministry's website (www.mfa.gov.cn)

"Both sides should appropriately deal with matters related to the progress of this project through friendly consultations," he added.

The northern Myanmar dam would have flooded an area about the size of Singapore, creating a 766-square-km (296-square-mile) reservoir, mainly to serve growing energy needs in neighboring China, which would have imported about 90 percent of its power.

In recent years, Myanmar's leaders have embraced investment from China as a deep and lucrative market for the former British colony's energy-related resources and to counterbalance the impact of Western sanctions imposed in response to human rights abuses.

But in recent weeks, the dam had become a symbol of resentment over China's growing influence and revealed a stark divide between cabinet ministers and parliamentary leaders, making it the first real public test over whether reformers or hard-liners had more sway over the country's direction.

While China and Myanmar have close economic and political ties, including the building of oil and gas pipelines into southwestern China, there are also deep mutual suspicions.

China has frequently expressed its concern at instability along their often mountainous and remote border, where rebel groups deeply involved in the narcotics trade have been fighting Myanmar's central government for decades.

Myanmar in turn looks warily at its vast neighbor, and has tried forging closer ties with India to offset China's influence.

(Reporting by Ben Blanchard; Editing by Robert Birsel)

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