Myanmar Army Deepens Offensive on Ethnic Rebels near China Border

The conflict, which flared on February 9 when ethnic Kokang rebels killed nearly 50 soldiers during a series of attacks on Laukkai town, has seen at least 30,000 people flee into China, prompting Beijing to call for an end to the clashes.

A similar number of people are believed to be displaced within Myanmar's northern Shan State, but clear estimates are hard to glean as local aid groups have limited operations after a Myanmar Red Cross convoy came under fire.

The army has struck back against the rebels with air strikes and ground forces, after apparently being caught flat-footed by the pace and ferocity of the initial rebel assault.

"Army columns were in hot pursuit of Kokang insurgents into retreat," around the Laukkai area, state mouthpiece the Global New Light of Myanmar reported Friday.

The report said the bodies of two rebels were recovered by Myanmar soldiers after fighting early Thursday to secure roads leading to Laukkai -- which is now an apparent ghost town.

Rebels say they have also inflicted casualties on army over recent days.

The conflict has renewed doubts over a government attempt to forge a nationwide ceasefire in a country peppered with bitter ethnic insurgencies.

The Kokang, who are mainly ethnic Chinese, have continued ambushes on army convoys despite losing dozens of men in the government push back.

They have been joined by other nearby rebel groups, including the Ta'ang National Liberation Army and the powerful Kachin Independence Army, an ominous sign for peace in the country as it opens up and heads toward crunch general election later this year.

Civilians have continued to stream into the Shan town of Lashio, some 140 kilometers (85 miles) from the fighting.

"We left yesterday (Thursday) morning because we were scared," a tired, sunburnt 50-year-old woman taking shelter at a Lashio monastery told AFP on Friday.

"The fighting was continuous... we could see the firing. One day it started around 3 pm and went on until the next morning," she added, requesting anonymity.

Efforts to evacuate remote communities have been hampered by Tuesday's attack on a local Red Cross convoy which wounded two aid workers.

It is unclear who shot at the six-vehicle convoy, which was carrying civilians and journalists.

Myanmar has blamed Kokang rebel leader Phone Kya Shin for the upsurge of violence -- after six years of relative peace -- and called on Beijing to rein in any local officials who might be helping the group on its side of the border.

Reform-minded President Thein Sein has vowed "not to lose an inch of Myanmar's territory" to the rebels.