YANGON/SHANGHAI (Reuters) - Myanmar’s eight-month-old government faced a fresh crisis on Monday, after four ethnic armed groups attacked security forces in the north of the country, dealing a major blow to leader Aung San Suu Kyi’s top goal of reaching peace with ethnic minorities.

Eight people were killed and 29 wounded when a coalition of northern rebels attacked military and police outposts and a business center near an important trading hub on Myanmar’s border with China on Sunday, the government said.

China put its army on high alert and said it was providing shelter for some people who fled across the frontier to escape fighting in the towns of Muse and Kutkai, in Myanmar’s northeastern Shan state. Beijing called on the parties involved to exercise calmness and restraint.

The sudden escalation of fighting comes as the government grapples with a conflict in northwestern Rakhine that has sent hundreds of Rohingya Muslims fleeing to Bangladesh, posing a new challenge to Nobel peace prize winner Suu Kyi, who swept to power last year on promises of national reconciliation.

In an important realignment of ethnic armed forces, one of Myanmar’s most powerful militias, the Kachin Independence Army (KIA), joined three smaller groups that have been in a stand-off with the Myanmar military since clashes on the border last year.

The fighting last year pitted the army against the predominantly ethnic Chinese Myanmar National Democratic Alliance Army (MNDAA) and its allies, the Ta’ang National Liberation Army (TNLA) and the Arakan Army (AA).

The three groups said they had joined with the KIA to attack the military over the weekend.

“The Burma armed forces have been assaulting to destroy all political and military struggles of the ethnic peoples because they have no will to solve Myanmar’s political problem by politically peaceful negotiation methods,” the four groups said in a statement.

STUTTERING PEACE PROCESS

One of the government’s peace negotiators, Hla Maung Shwe, told Reuters the fresh violence may severely delay the stuttering peace process.

“It was really regrettable that civilian areas have come under attack. This is likely to further complicate the peace process,” he said.

The fighting threatened to derail whatever progress has been made by Suu Kyi since she organized a major peace conference with most ethnic armed groups in August.

“We will increase the operations to secure these areas and protect the civilians,” said Ministry of Defence spokesman Major General Aung Ye Win. He did not comment on questions regarding the military’s next steps.

Thousands of people have been displaced by decades of fighting between the military and ethnic armed groups in Shan state, which is home to several large groups operating close to the borders with China and Thailand.

Chinese Foreign Ministry spokesman Geng Shuang said a stray bullet from the fighting had wounded a Chinese resident and China has lodged a protest.

China was infuriated last year when five Chinese people were killed when the fighting spilled over into Chinese territory.

“The Chinese army is on high alert and will take the necessary measures to safeguard the country’s sovereignty and safety, as well as protect the lives and property of Chinese citizens living along the border,” a defense ministry statement said.

(This version of the story was refiled to clarify that statement in the last paragraph is from defense ministry)