BEIJING (Reuters) - China's top diplomat and Myanmar's president agreed on Monday to steer a steady course on relations which have been strained by the former Burma's suspension of a China-funded dam and Washington's tentative moves to re-engage with the country.
Meeting in Myanmar's capital Naypyitaw, Chinese State Councillor Dai Bingguo, who outranks the foreign minister, told President Thein Sein that the two nations enjoyed "model" ties, China's state television reported on its main evening news.
"I hope that both sides can appropriately resolve through development and increased cooperation any problems which arise, so that cooperation can develop even better," the report paraphrased Dai as saying.
China, he said, has always "supported Myanmar in following a development path which suits its national conditions."
"I believe that the Myanmar government has the wisdom and ability to deal with the problems and challenges it faces," said Dai, on a two-day visit to attend a summit of Mekong River countries.
With sanctions blocking Western investments, China has emerged as Myanmar's biggest ally, investing in infrastructure, hydropower dams and twin oil-and-gas pipelines to help feed southern China's growing energy needs.
But relations has been strained, with a long history of resentment of China among many Burmese and public opposition to a Chinese-built dam at Myitsone that prompted Thein Sein to shelve the project in September. That move stunned Beijing.
China has also counted on Myanmar as a bulwark against what Beijing sees as U.S. attempts to surround China. That could be threatened now that Washington has begun contacts with a Myanmar embarking on a measure of liberalisation, culminating in a visit this month by U.S. Secretary of State Hillary Clinton.
The report did not mention the dam or Clinton's trip.
Thein Sein said Myanmar was grateful for China's friendship.
"Myanmar thanks China for its long-term support, and pays great attention to the smooth development of all joint projects, will not let bilateral relations be damaged, and will continue to develop the all-round strategic relationship," Chinese state television paraphrased him as telling Dai.
AMBASSADOR MEETS DEMOCRACY LEADER
China has also been reaching out to Myanmar's pro-democracy leader Aung San Suu Kyi, confirming its ambassador in Yangon had met her, in the highest level contact in two decades between Beijing and Myanmar's opposition.
Foreign Ministry spokesman Liu Weimin told reporters there was "no arrangement" for a meeting between Dai and Suu Kyi.
Myanmar's new leadership hopes the United States will eventually ease or remove the sanctions, opening the resource-rich but poor country to more foreign trade and investment and help it catch up to neighbours like Thailand and India.
Improved ties could underscore Obama's determination to up U.S. engagement in Asia and balance China's fast-growing economic, military and political influence.
While China is wary of greater U.S. influence in the region, especially in countries on its border, as Myanmar is, a stable Myanmar is also in China's interests. China has long worried about violence and drugs in Myanmar spilling into its territory.
(Reporting by Ben Blanchard; Editing by Ron Popski)