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Students write in books during a Chinese language lesson in a school at Namtit, Wa territory in northeast Myanmar September 30, 2016. REUTERS/Soe Zeya Tun

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By Yimou Lee and Antoni Slodkowski

PANGSAN, Myanmar (Reuters) - In a remote casino in northeastern Myanmar, China's pervasive campaign against graft has taken its toll. Hundreds of local traders and farmers place petty bets as low as 10 cents, outnumbering a few Chinese who were once the VIPs of a gambling hall decorated with chandeliers and Renaissance-style paintings.

"The business has been really bad since Chinese tourists stopped coming," said casino waitress Ling Ling who was considering leaving Pangsan, capital of the self-proclaimed Wa State that borders China, to look for better paying jobs.

The three-story gambling parlour, with some 1,000 workers, offers games from jackpot slot machines to high-stakes VIP rooms featuring bets of up to $16,000. It is deep in the Wa hills in one of Asia's poorest regions, where its majority ethnic Wa farmers earn an annual income of $115.

In the statelet the size of Belgium controlled by the United Wa State Army (UWSA), Myanmar's strongest ethnic armed group, the once bustling gambling industry is not the only casualty from the falling number of high-roller mainland punters.

From shopkeepers to moto-taxi drivers, local people said Beijing's tightening of visas for Chinese gamblers travelling to the Wa in recent years - part of the anti-corruption campaign launched by President Xi Jinping - has cast a shadow on livelihoods in the reclusive territory.

The Wa State is now trying to diversify its economy, which relies heavily on China as a market for its exports of rubber and metals such as tin.

Reuters visited the rugged territory in October - a rare trip by a major international news organization that offered a glimpse into the Chinese-speaking statelet of 600,000 people that is beyond the control of Myanmar leader Aung San Suu Kyi's government.

POPPY ERADICATION

The Wa State took shape in 1989, after the Communist Party of Burma disintegrated following a purge by Wa leaders. The 30,000-strong UWSA signed a ceasefire with the Myanmar army shortly afterwards and the two sides have not fought in years.

Wa leaders say the region, which used to grow opium on a vast scale, underwent an eradication campaign against the plant used for production of heroin more than a decade ago. Poppy fields were replaced by plantations, mostly rubber, as well as coffee and tea, they say.

Many plantations are backed by investors from China, alongside businessmen connected to the Wa State leadership. Their "state-supported private companies", as described by several Wa leaders, control key businesses in the territory from gasoline to mining.

"I hope there is more foreign investment so that I can diversify my business," said C Yang, son of a UWSA commander who owns a rubber plantation of 132 acres.

The stocky 25-year-old is typical of the wealthy, if narrow, Wa elite. The rubber plantation affords him a comfortable life in a mansion overlooking Pangsan, and fancy gadgets such as the newest model of iPhone and a fine-tuned Toyota Hilux truck.

All these goods are unattainable for regular citizens in Wa, where life expectancy, at 60, is 5 years below Myanmar and 16 years behind neighbouring China. Some Wa farmers rely on a World Food Programme (WFP) operation to supplement what they can produce.

The agency, active throughout the area which has also experienced outbreaks of vaccine-preventable diseases such as tuberculosis, had planned to deliver 152 metric tons of food last year through its community asset creation program.

"We don't have enough doctors and we are in need for medicines. We need help from the international community," said Tun Kyi, who oversees the Wa Healthcare Bureau.

NO OPPORTUNITIES

The Wa education program is in an equally poor state. The illiteracy rate stands at 90 percent, with 83 percent of adults having less than a year of schooling or none at all, according to a 2008 report by Health Poverty Action.

That is in sharp contrast to Myanmar's illiteracy rate of less than 5 percent, based on data from the United Nations.

Business owners and the Wa political elite send their children to China for schooling.

"Their parents want them to learn Chinese and to work in China, because children educated in Wa schools can't join the Chinese education system and have no opportunities," said Wa Wa Myint, a teacher at an elementary school of 700.

Back in downtown Pangsan, bright, neon signs dangling from low-rise hotels, massage parlours and bars light up the main street a few minutes walk from a border crossing with China.

A rowdy birthday party is under way in a two-story karaoke lounge that resembles a Roman temple, with life-size sculptures by its gate.

In a VIP room with a giant screen playing Chinese pop songs, a Wa woman, wearing jade-dotted earrings and a ruby ring, offers her guests China-imported beer, red wine and locally-made liquor.

The hostess challenges her guests to drink as much as they can.

"You can't go home without getting drunk," she says. "This is how we party in Wa."

(Additional reporting by Shwe Yee Saw Myint; Editing by Alex Richardson)

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