Around 10,000 ethnic Kachin are now believed to have fled their homes in northern Burma but reports yesterday from the frontline suggest that days of intense fighting have eased.

La Nan, spokesperson of the Kachin Independence Army (KIA), said that although large-scale clashes have died down, small bursta of gunfire are continuing around the Bhamo district of Kachin state, close to the border with China.

Six Burmese soldiers have been captured by the KIA, whose senior command earlier issued an announcement that troops should prepare for all-out war with the Burmese army.

“We are not attacking the Burmese Army first but we have issued an order to fight them back if they enter our territory,” said Lieutenant-Colonel Yaw Hton from the group’s information committee.

As well as the 2,000-odd Kachin who have crossed the border to China in recent days, thousands more have fled to Laiza, the headquarters of the KIA, and areas further north close to Myitkyina and Manwein.

Much of the fighting has taken place close to China-backed hydropower projects, with some analysts speculating that the Burmese government is aiming to rout insurgent groups from these sensitive areas, perhaps under pressure from Beijing.

The group of Chinese engineers freed on Tuesday after being trapped for days in the Taping dam site said that the whole of nearby Bhamo township was without electricity after they disabled the power before leaving.

China’s made its first official acknowledgement of the escalating conflict came yesterday when it called for “restraint” from both sides, following requests from the KIA that Beijing plays an intermediary role between it and the Burmese government.

China has been a key ally to Naypyidaw but is ever wary of the instability that Burma’s ethnic politics seemingly creates. In August 2009 the Chinese chastised Naypyidaw for creating a similar influx of refugees, this time from the Kokang region in Shan state where fighting broke out.