Myanmar ethnic minority rebels on Thursday appealed for China to help end a deadly standoff with government troops as Beijing called for calm after people fled across the countries' shared border.

Fierce fighting began a week ago near a large hydropower project being built in Myanmar's northern Kachin State to provide power to China, and has since spread to northern areas of neighbouring Shan State.

China -- one of the Myanmar military's closest allies -- on Thursday urged both sides to "resolve their differences through peaceful negotiations".

"We are closely following the situation on the border between China and Myanmar and call on the parties in conflict to remain calm and exercise restraint so as to avoid an escalation of the situation," foreign ministry spokesman Hong Lei said.

The remarks came after the Kachin Independence Army (KIA) said it wanted China to be a "referee" in any potential negotiations.

"Without the involvement of another country as a witness, as a facilitator... there is no solution," KIA press spokesman Henry Branglai told AFP from the group's headquarters near the Chinese border in Kachin State.

Battles with the national military continued to rage on Thursday, a week after hostilities began with what Branglai said was a government incursion into KIA-held territory "to get some influence over that area".

More than 10,000 people have massed on the Myanmar side of the frontier, with many people seeking out KIA-held areas as they look to avoid being forced into carrying supplies for the Myanmar military, according to the rebels.

Branglai said thousands had crossed the border during the fighting and were being allowed to move back and forth between the countries.

Hong denied reports that Beijing was not allowing Myanmar refugees to cross the border and said China was providing support.

But a local official in the Yunnan province foreign affairs department, who refused to give his name, said there were no refugees at all.

"The borders are open as per usual. Myanmarese nationals come and go every day. We are not considering providing tents or food as at the moment. There is no need," he said.

The authorities in Myanmar -- where power was handed to a nominally civilian government in March after almost half a century of military rule -- have given no information about casualties or displaced people.

But a government official confirmed the fighting on Wednesday and said some bridges had been destroyed.

Myanmar has been plagued by decades of civil war with armed ethnic minority rebels in various parts of the country since independence in 1948.

The mainly Baptist and Catholic Kachin account for about seven percent of Myanmar's population and an insurgency agitating for greater autonomy gathered momentum from the 1960s until a ceasefire was signed in 1994.

The KIA, thought to have at least several thousand fighters, used to be one of the most powerful rebel groups but was until recently considered to be open to dialogue.

Relations between the army and ceasefire groups have soured over the past year as ethnic minority fighters were pressured to give up their weapons or come under state control in the run-up to a controversial November election.

Several local Kachin parties were refused permission to contest the vote, dashing long-held hopes for greater self-rule.

Rights groups accuse the army, which has doubled to 400,000 personnel over the past two decades, of waging a brutal counter-insurgency campaign in areas where civil war continues involving the rape, torture and murder of villagers.

Myanmar's military rulers earned a rare rebuke from China in 2009 when an offensive against ethnic Chinese Kokang rebels in the country's northeast caused tens of thousands of people to spill over the border.

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