(For main story, click on [nSP475303] By Martin Petty BANGKOK, Aug 29 (Reuters) - Fresh fighting in Myanmar's northeast Shan state erupted on Saturday after days of clashes between ethnic fighters and government troops that broke a 20-year-old ceasefire. The exodus of as many as 30,000 people across the border into China's Yunnan province is likely to strain ties between Yangon and Beijing, whose trade provides an economic lifeline for a country crippled by Western sanctions. WHAT HAVE MYANMAR TROOPS BEEN DEPLOYED IN SHAN STATE? The Myanmar regime wants ethnic groups to take part in its elections next year, the first in two decades. Activists and observers say the junta is trying to forcibly recruit rebel fighters for an army-run border patrol force. Analysts say the aim is to disarm the ethnic insurgents and neutralise their threat ahead of the polls. They say the clashes erupted because of their refusal to agree to the army's demands. The groups do not trust the regime and feel they have nothing to gain by taking part in the electoral process. WHO IS INVOLVED IN THE STANDOFF? The fighting has been between the Kokang Group, also known as the Myanmar National Democratic Alliance Army (MNDAA), and the Myanmar army, backed by fighters from a local splinter group. An alliance of ethnic groups, known as the Myanmar Peace and Democracy Front (MPDF), has called for dialogue with the junta and has issues statements to the regime, and to Beijing, urging an end to hostilities. The alliance involves the MNDAA, the Kachin Independence Organisation (KIO) and the United Wa State Party (UWSP). The groups are aware that a joint effort is necessary to counter the Myanmar army. IS THE SITUATION LIKELY TO ESCALATE? There are concerns that if the fighting intensifies, other members of the alliance could enter the fray and provide a serious challenge to the Myanmar army, resulting in fierce fighting and heightening the risk of a refugee crisis for China. The Wa are widely regarded as a formidable fighting force, with at least 15,000 armed members, but they are not involved, yet. The Shan State Army, which is outside of the alliance, might also seek to capitalise on the instability and strengthen its own position in the region. Analysts say a lot is at stake for all groups involved -- China included -- and neither side will want to engage in any kind of protracted conflict. However, any wrong moves by forces on the ground could trigger an all-out war. "There's a degree of brinkmanship that's extremely precarious and things could get out of control," said Anthony Davis, a security analyst at IHS-Jane's. "When both sides are engaged in brinkmanship, the potential for miscalculation is considerable and dangerous." HOW HAS CHINA REACTED? Beijing, one of Myanmar's few diplomatic backers, has called on Myanmar to maintain stability in the border region and urged more measures to protect the security and legal rights of Chinese citizens there. It has beefed-up its security presence in the border area and is providing support for refugees, giving them instant noodles, water and temporary housing. HOW WILL THIS AFFECT THE JUNTA AND ITS ELECTIONS? In the almost five decades it has ruled the country, Myanmar's junta has never been able to establish control in the region and wants to do so before next year's elections. It wants to bring the groups into the political fold to neutralise their threat and give legitimacy to the polls, but its breach of the ceasefire will seriously complicate matters. Yangon has yet to announce a date for the election, or say who can take part, and analysts say the delay is largely centred on its inability to convince -- or force -- ethnic groups to enter into the political process. (For an analysis on Myanmar's elections: [ID:nBKK533340] for possible scenarios afterwards: [ID:nBKK400681] and a Q+A on how the elections will work: [ID:nBKK532864]) WHAT IS AT STAKE FOR CHINA AND MYANMAR? China is building oil and gas pipelines through Myanmar that will supply Yunnan province, relieving pressure on its own oil industry to supply the remote southwestern corner of its territory. China's overriding concern is a stable Myanmar, and the Yangon regime cannot afford to upset its powerful neighbour because of the economic and diplomatic assistance it provides through trade and through protection in the international political arena. (For a Q+A: [ID:nSP432912]) Floods of refugees entering China, shelling over the border and injuries to Chinese civilians are likely to anger Beijing, although not enough for a rare intervention or any move that would damage their close, but increasingly awkward, relationship. "This is an irrational and short-sighted move by the army. Not only have they increased tensions and caused distress with the ethnic groups, they're straining ties with China," said Aung Zaw, editor of Thailand-based Irrawaddy magazine, told Reuters. "Beijing's biggest concern is stability near the border, and it is not pleased about what's happening now." (Additional reporting by Tom Miles in Beijing; Editing by Nick Macfie)
Residents line up to collect drinking water distributed by local government in drought-hit Fenghuang county, Hunan province, August 29, 2009. As severe drought ravages China's northern areas and begins to extend ...
