China is a major ally and arms supplier of Myanmar's ruling junta, but is also thought to maintain ties with ethnic minority armed groups that hold territory along the countries' shared border where fighting often flares up.

Local media in Myanmar reported this week that Chinese authorities had arrested Peng Deren, the head of the Myanmar National Democratic Alliance Army (MNDAA), one of the most important rebel groups in the country.

Asked to confirm the reports at a regular press conference on Tuesday, Beijing's foreign ministry said Peng had "previously applied to come to China for medical care, and is currently undergoing treatment and recuperation".

Ministry spokesman Lin Jian gave no further details of Peng's condition or whereabouts.

Peng -- who is also known as Peng Dashun -- keeps a low profile, typically declining media interviews.

The MNDAA is one of dozens of rebel groups in Myanmar that have battled the military for decades for autonomy and control of lucrative resources including jade, timber and opium.

Myanmar's current junta chief Min Aung Hlaing made a name for himself as a regional commander in 2009, pushing the MNDAA out of Laukkai, a town in Shan state.

The region borders China's Yunnan province and is a vital piece of Beijing's Belt and Road infrastructure initiative.

In January last year, the MNDAA recaptured Laukkai after more than 2,000 junta troops surrendered there in one of the military's biggest defeats in decades.

In August, they pushed even further, capturing the city of Lashio -- around a hundred kilometres (62 miles) from its traditional homeland, the Kokang region, around Laukkai.

Lashio was the largest urban centre to fall to any of Myanmar's myriad ethnic minority armed groups -- who have been fighting the central authorities on and off for decades -- since the military first seized power in 1962.

- Security concessions -

Analysts say Lashio's capture by the rebels was a step too far for Beijing, long suspicious of Western influence among some pro-democracy armed groups battling the military and now worried about the possibility of the junta falling.

"Given China's strong desire to achieve a ceasefire... it is probable that China could be holding Peng, potentially as it tries to persuade him to give up Lashio," Jason Tower of the United States Institute of Peace told AFP.

Beijing is also "likely still leveraging the MNDAA as it presses Min Aung Hlaing to make even greater security concessions to China vis-a-vis Chinese investments," said Tower.

"Should Min Aung Hlaing refuse to make such a concession, China could easily tilt back towards providing greater support to the MNDAA to enhance its bargaining power with the military."

Since Lashio's fall, China has cut electricity, water and internet services to the Kokang region, located in northern Shan on the border with Yunnan province, a source close to the group earlier told AFP.

Junta chief Min Aung Hlaing met Chinese Premier Li Qiang this month, saying the military was ready for peace if armed groups would engage, according to Myanmar state media.