Hillary Clinton in East Timor, hoping to lend stability to Asia's poorest country

US Secretary of State Hillary Clinton arrived in Asia's newest nation of East Timor on Thursday, hoping to bolster the fledgling government that is trying to bring the impoverished country closer in step with its booming neighbors in Southeast Asia.

Clinton arrived in the capital Dili after a day of talks in China and was due to meet President Taur Matan Ruak and Prime Minister Xanana Gusmao during a brief visit before heading on to Brunei.

US officials said the visit by Clinton - the first US secretary of state to travel to East Timor since it won independence from Indonesia in 2002 - was an effort to buttress both stability and growth in one of Asia's poorest countries.

"Timor is still plagued with substantial violence ... they have a long way to go," one senior US officials told reporters on Clinton's plane.

Clinton is not bringing much in the way of new financial assistance and is set to announce just $6.5 million in funding for scholarships to help East Timorese students study in the United States.

But US officials hope her visit will send a signal to East Timor's neighbors, some of which have strongly resisted suggestions that it be brought into the Association of South East Asian Nations (ASEAN) because it lags too far behind the rest of the region in both political and economic development.

Gusmao won parliamentary elections in April but fell short of a majority, forcing the formation of a coalition government.

US officials say East Timor is hobbled by a number of weaknesses following more than 400 years of Portuguese colonization and a 24-year battle against Indonesian occupation, and that closer ties with ASEAN would bring stability.

Isolated by their Portuguese language in a region where English is increasingly common and lacking much basic infrastructure, the country nevertheless began receiving oil and gas revenues from fields it shares with Australia in 2005 and now boasts a special petroleum fund with assets exceeding $10 billion.

CHINA LOOMS LARGE

During her trip, Clinton will also take stock of growing Chinese aid and investment in the country, part of Beijing's rapid push to accelerate its influence in the region.

China has built a number of major government buildings in East Timor. It has also signaled, however, that it is willing to partner with the United States in development projects aimed at assisting the country's people, some 40 percent of whom live on less than dollar a day and battle extremely high unemployment rates.

US officials said Washington hoped to step up cooperative development work with China, citing East Timor as one region in Asia where the two Pacific powers' interests could converge.

"The Chinese don't view the stakes as particularly high," the official said, although he noted that even in cooperative ventures, China shields much of the details of its development work.

"They put a lot of money into East Timor, but we don't have that much visibility" into what they do, the official said.

Indonesia invaded East Timor, a former Portuguese colony occupying half an island at the eastern end of the Indonesian archipelago, in 1975.

It spent decades trying to crush opposition to its rule before the territory won independence following a U.N.-sponsored referendum. A U.N. mission promoting stability remains to this day.

East Timor has enjoyed stability and peace for the past five years, following a factional conflict in 2006 and attempts to assassinate then-president Joes Ramos-Horta and Gusmao in 2008.

The United Nations, which mounted a major stabilization force in the country following independence, has said its mission will end in December.

Editing by Philip Barbara.