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Myanmar's geopolitical situation is strategically important to access the two oceans of Indian and Pacific. Myanmar is vital for the rising China to achieve its strategic presence in long-term two-ocean objective and to access a trading outlet to the Indian Ocean for the development of its landlocked provinces of Yunnan and Sichuan. Traditionally, the diplomacy of Myanmar-China relations is Pauk-Paw relations. Since 2011, the rapid expansion of Myanmar's diplomatic profile has complicated its relations with China. The Obama administration's 'return to Southeast Asia' of pivot toward Myanmar has obviously aimed to "contain" and "encircle" China from the southwest. Myanmar dependency on the US and western countries is uncertainly because of geographical differences and rules and regulations of assistances. Thus, Myanmar's economic and infrastructure development totally depends on China's grants, loans, assistances and investments. This research discusses Myanmar's political economic reform with level of analysis. It also examines Myanmar's balancing diplomacy between the US and China.