By Michael Martina
BEIJING (Reuters) - Myanmar's military has clashed for several days with a militia controlled by the country's ethnic Kachin minority in a remote but strategic region where China is building hydropower plants, various sources said on Tuesday. The fighting, which began last Thursday, has killed at least four people and forced thousands to flee toward the Myanmar-China border, the sources, including a Washington-based advocacy group and Chinese media, said.
More than 2,000 villagers from the conflict area have fled toward China, and 28 Chinese engineers and dam workers were being held by government forces, the U.S. Campaign for Burma said in a statement.
Ethnic rebel armies like the Kachin Independence Army (KIA) have fought Myanmar's military for decades, and the clashes mark one of the most serious upticks in hostilities since the government held rare but tightly controlled elections late last year.
Those elections were widely condemned abroad and by ethnic groups within the former British colony, also known as Burma, which have no interest in giving up control of their land for what they believe are hollow promises of self-government and political representation.
An observer based in Kachin state capital Myitkyina confirmed that battles broke out between KIA and Myanmar troops on June 9 in Momauk Township, about 130 km (80 miles) southeast of Myitkyina and about 40 km from the Chinese border.
"It's said that the battles are still going on but we have no idea about the casualties," a source who asked for anonymity told Reuters.
"We don't think the government wants to launch a major offensive against the KIA headquarters at the moment. So far as we heard they just want to drive the KIA away from the Taping hydropower project being developed in cooperation with China," the source said.
Chinese-built dams have been divisive projects, experts say, with ethnic minorities in Myanmar seeing the construction as expanding military presence into their territory.
Last year, a series of bombs exploded at a hydropower project site being jointly built by a Chinese company in the Kachin state.
At least 100 Chinese engineers and workers returned to China after fighting erupted near the Taping (Taiping in Chinese) River dam sites, only about 90 km from Yingjiang in China's southern Yunnan province, China's Global Times newspaper said on Tuesday.
The condition of the 28 workers apparently being held by government forces is unclear.
"China has always attached much importance to the safety and legitimate rights of Chinese nationals abroad, and the Chinese side has taken stock of the situation and is making all out rescue efforts," Chinese Foreign Ministry spokesman Hong Lei told reporters in Beijing.
Four ethnic militia groups have pledged to fight against the Myanmar government forces, U.S. Campaign for Burma said, citing Kachin General Gwan Maw.
According to the advocacy group's statement, the fighting erupted following a dispute on prisoner transfers between government troops and the KIA, prompting government forces to advance on KIA-held territory.
A notice on China Datang Corporation's website, the Chinese state-owned company that operates the Taping River hydroelectric plants, said 90 percent of the power generated at the facilities will flow into China's power grid. Chinese media reports said the project is already producing electricity.
Aung Naing Oo, a Myanmar analyst and deputy head of the Thailand-based Vahu Development Institute, said the next few weeks would be crucial in determining if the clashes were about the dams or the broader conflict.
"The main issue here appears to be the security of these dams. All the stakeholders involved, the government, the Chinese, the Kachin -- they have interests to protect," Aung Naing Oo said.
"Low-level fighting has been going on for a year now and it's only logical that at some point there would be a crisis. All that was needed was a little spark, a catalyst."
(Additional reporting by Aung Hla Tun in Yangon and Martin Petty in Bangkok; Editing by Daniel Magnowski)