The Arakan Army (AA) is battling the military in western Rakhine state, where projects including oil pipelines, power plants and transport links are sprouting up with billions of dollars of Chinese funding.

The region has emerged as a key front in Myanmar's highly fractured civil war, pitching a myriad of ethnic minority rebels and pro-democracy fighters against the junta that seized power in a 2021 coup.

New battles have flared since late last month around the town of Kyaukphyu, where the junta's key ally Beijing has pledged investment worth an estimated $9 billion for a deepwater port.

"Due to recent clashes, people from 10 villages around the fighting area have been fleeing," said Aung Aung, a representative of a local rescue committee.

"According to our data received, there's been around 4,000 people displaced," he told AFP, adding that the total number of people displaced in the area was now around 15,000.

While the port project has been largely stalled by the fighting, Kyaukphyu is also the site of a completed China-backed power plant and natural gas pipeline, as well as a naval base.

A Rakhine-based charity leader, speaking on condition of anonymity, said "there is a need for healthcare and medicine for those displaced".

A junta spokesman could not be reached for comment, while an AA spokesman did not respond to a request for comment.

China has invested in the coastal state, which neighbours Bangladesh, under its Belt and Road Initiative founded in 2013 to expand its international trade footprint.

However, control of the projects has emerged as a key objective for both the internationally isolated junta, which is deeply reliant on China, as well as the AA, one of the junta's most powerful adversaries.

The AA claimed complete control of a key region along the Bangladesh border in December, piling further pressure on the junta battling opponents elsewhere in the country.

More than 3.5 million people are internally displaced across Myanmar, according to United Nations data, more than 500,000 in Rakhine state alone.