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From today's Times

++http://business.timesonline.co.uk/tol/business/columnists/article6816392.ece

For China, the cost of oil and gas has just doubled. You will not find this new oil price quoted anywhere, but its burden will weigh heavily on the leadership in Beijing.
It is not an oil price that can be measured in dollars per barrel on the New York Mercantile Exchange. There has been no cutback by Opec, nor has a hurricane toppled offshore platforms in the Gulf of Mexico. It is China's oil price; the cost of oil for the People's Republic is now measured in refugees, in tens of thousands of people fleeing Burma into China.
The UN High Commissioner for Refugees said on Friday that as many as 30,000 people had crossed the Burmese border into Yunnan province in southwest China. An assault by the Burmese Army on the Kokang militia, an ethnic Chinese rebel group in Shan state, started the flight, but the refugees mean much more than a spot of trouble on the border. The brazen assault by Rangoon threatens to wreck China's carefully drawn strategy to transform Burma into a trading corridor of highways and oil and gas pipelines bringing energy and minerals into China's heartlands.
It is trouble for Beijing because the refugees are ethnic Chinese, traders who have established small businesses in remote northeast Burma. About 7,000 Burmese troops moved to the border and reports suggest that they pursued the rebels on to Chinese soil.


Wrong-footed by the unexpected assault by an ally, a government on which Beijing has lavished military aid, China's response has been timid. A spokesman for the Chinese Government urged Burma to protect the legal rights of Chinese citizens and said Beijing hoped that Myanmar could "appropriately solve its relevant internal problems and safeguard the stability of the China-Myanmar [Burma] border".
China's loss of face might not have been so obvious had it not been for Daewoo's announcement of last week. The South Korean conglomerate trumpeted its participation in the Shwe gas project, a $5.6 billion (£3.4 billion) venture to exploit an offshore gasfield in the Bay of Bengal and pipe the gas to fuel-hungry cities in southwestern China. It is a massive undertaking, a steel tube stretching more than 1,000km across Burma and into the mountainous Yunnan province. The Shwe partners, which include Moge, the Burmese state oil company, have to supply gas to CNPC, the Chinese state oil group, for 30 years.
China outbid India for the right to buy the gas and the Shwe venture is only one of a gamut of Chinese collaborations with one of the world's detested regimes. America has banned investments in Burma by US citizens since the 1988 pro-democracy protests and the imprisonment of Aung San Suu Kyi, the opposition leader. The European Union prohibits military sales and has imposed a visa ban and asset freezes on the Burmese generals.
China has no such qualms. There are plans for an oil highway, a second pipeline that would link southwest China to the Burmese coast. The link would provide cheaper and safer transport for Middle Eastern and African crude, avoiding a lengthy and dangerous passage through the pirate-infested Straits of Malacca. Chinese companies are sinking cash into Burmese mines, logging its forest and digging up its precious stones.
After the bloody suppression of the monks' street protest in 2007, the West banged the table and harangued the generals, but for China it was business as usual. Foreign direct investment in Burma rose fivefold last year to almost $1 billion; almost all of the money was Chinese.
Last week the lapdog bit its master's hand, not badly but a wound that will, nonetheless, create embarrassment and expense for Beijing. In London and Washington, there will be smirks as Beijing's cynical realpolitik gets its just desert.
We should not be too smug. Britain was recently slapped by a general who turned out to be no poodle. We wanted lots of things from Libya - an end to its support for terrorism, diplomatic friendship, oil and gas deals and petrodollar investment. We may get some of those things but, in the embarrassing celebrations on the return to Tripoli of Abdul Baset Ali al-Megrahi, the convicted Lockerbie bomber, Colonel Muammar Gaddafi has reminded us that we have no right to presume; in diplomacy, everything is negotiable.
China's calculation over Burma is unlikely to be so different from our Government's assessment of Libya. Arguably, China is more realistic, less prone to moral histrionics. Burma's generals have waged war for decades against the country's ethnic minorities. Its Government is engaged in an intermittent but brutal campaign to subjugate a constellation of tribal groups whose stubborn independence mocks the generals' claim to dominion over the state that they renamed Myanmar.
Beijing knows the history, geography and ethnography better than we do - the warring tribes, the heroin trade, Rangoon's dubious peace deals with opium warlords on the Thai and Chinese borders. The ceasefire between the Burmese Army and the rebels appears to be unravelling and we could speculate as to the reasons. As Burma's links with China multiply, as roads are built, as pipe is laid, the risk posed by the rebels and the drug trade become more inconvenient than the short-term profit. Burma's new friend is not keen on insurrection and it might be prepared to look away while the Burmese Army cracks a few heads on Chinese soil.
We looked away; we dumped Burma, abandoning its people to their fate in a fit of righteous indignation over the pigheaded behaviour of the generals, a violent clique who showed not the slightest interest in bowing to the teachings of former colonial masters. We had Tony Blair's "ethical foreign policy" and Burma was the pilot test, the first and last occasion when we put morality before money. Premier Oil, a small British company, was told to quit Burma. Eventually, it did. Burma turned its face East and found bigger friends.
Our writ no longer runs east of Suez. It is China's dominion and one good outcome of this Burmese refugee crisis is that Beijing must begin to acknowledge that, if it wishes to plunder the world like a colonial power, it must police it, too. Power brings responsibility and refugees. A more civilised Burma would bring Beijing less trouble and more profit.
The same can be said of Libya. Our new "ally" is a staging post for African migrants who make their way in leaky boats to Sicily. It is a flow that could easily turn to a flood. As Burma is to China, Libya is our southern border. It is there, an opportunity for profit and for trouble, whether we like it or not.

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An assault by the Burmese Army on the Kokang militia, an ethnic Chinese rebel group in Shan state, started the flight, but the refugees mean much more than a spot of trouble on the border. The brazen assault by Rangoon threatens to wreck China's carefully drawn strategy to transform Burma into a trading corridor of highways and oil and gas pipelines bringing energy and minerals into China's heartlands.