Ties take a deep plunge

Bloody conflict in a remote corner of northern Myanmar has spilled violently across the border with China, risking a rift with the mighty neighbour and threatening peace efforts with an array of rebels.

Myanmar's army is battling ethnic-Chinese rebels in the Kokang region of Shan state, with aerial bombardments and close-quarter combat, just as the quasi-civilian government is grappling to end decades of border insurgencies in fresh ceasefire talks that began Tuesday.

China mobilised fighter jets after a bomb apparently from a Myanmar warplane landed in a sugar plantation in Chinese territory on Friday, killing five Chinese farm workers.

The incident marked an "astounding" breach in relations between the two long-term allies, said Yun Sun from the Stimson Center's East Asia Program.

He said it was the "worst security incident" since Beijing's embassy in Myanmar was attacked in 1967 during an anti-Chinese riot, although he believes the border unrest will remain contained for now.

Tens of thousands of refugees have fled into China's Yunnan province since fighting in Kokang first flared up in early February.

Mountainous Kokang is known for its strong bonds with China -- local people speak a Chinese dialect and China's yuan is the common currency and the conflict has tapped into long-standing nervousness in Myanmar about its giant northern neighbour.

Officials have also accused Yunnan provincial authorities of helping the rebels, who were previously driven out of Kokang in a bloody push by the army in 2009.

"Anti-Chinese sentiment has re-emerged strongly" in Myanmar, said Elliot Brennan, from the Institute for Security and Development Policy.

He said this was of "grave concern" to Beijing, which has to contend with public anger of its own over the deaths of the five Chinese.

China acted as an economic and political shield for Myanmar for decades, when the country was under military rule and the junta isolated by the West.

Its reward was a wealth of sometimes controversial investments -- particularly in dams, mines and energy infrastructure.

But as Myanmar has begun to reform and open up it has sought to reduce that dependence, sometimes to Beijing's irritation -- it called for the rights of Chinese companies to be protected after a huge dam project was suspended.

China has vowed not to allow rebels to use its territory and scolded Myanmar over the escalation of border tensions.

For its part, China has urged both the Myanmar government and Kokang rebels "to exercise restraint, cool down the situation and realise peace and stability as soon as possible".