At a controversial Chinese-backed copper mine in Sagaing Region in Myanmar, hundreds of local villagers rallied last week to protest against resumption of the project, reigniting contentious issues that have been long seen as a challenge for Sino-Myanmar relations.

It will be a lose-lose situation for China and Myanmar if the project is halted. Myanmar entered a new era earlier this year as the military-backed transitional administration handed over power to Aung San Suu Kyi's National League for Democracy.

The new government now faces big challenges in reviving the country's economy, including attracting more investment.

The country must maintain continuity and stability in its economic policy during the period of regime change to help overseas investors build up their confidence in Myanmar's investment environment and legal system. With a total investment of $1.07 billion, the development of the Letpadaung copper mine was approved by the Myanmar government in 2010. If the new government inappropriately intervenes in an approved commercial project or announces suspension of the project, overseas investors may have doubts about the sustainability of their investment in Myanmar.

Following the country's abrupt announcement in 2011 that work would be suspended on the Myitsone Dam, a hydroelectric mega-project with a total investment of $8 billion from China Power Investment Corporation, there have been concerns that Myanmar's democratic transition has caused uncertainty for foreign investment, with Chinese-backed projects bearing the brunt.

China will pay close attention to how the new government in Myanmar handles the protests over the project. The frictions between Chinese investors and the local villagers need to be resolved according to the law and through dialogue.

According to media reports, the previous government in 2012 used white phosphorous, an internationally prohibited chemical weapon, against people protesting against the Letpadaung project, causing an escalation of tensions. However, this is not a good way to solve the problem. The Myanmar Times said in a recent report that a 2013 parliamentary inquiry into the attack recommended that construction should continue if certain conditions were met, such as better transparency.

China has shown its desire to handle the issue properly, after the resumption of operations triggered local protests. China's foreign ministry said on Monday that China requires its companies to abide by local laws and fulfill their social responsibilities when operating overseas.

The new government in Myanmar should also remain calm and properly handle this issue with the right legal procedures. Following the dispute over the Myitsone Dam, the two countries need to be careful to avoid allowing the project to become another obstacle to Sino-Myanmar relations.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn