At a border crossing in the Chinese town of Nansan, refugees were crossing back into Myanmar on Monday in groups of about 40 at a time.
"The Myanmar government has told us through diplomatic channels to send them back," Li Hui, a spokesman for the Yunnan government told reporters.
"Those who want to go back can return. We are finding that most of these people want to go back to their homes," he said.
"The Myanmar government is saying that it is calm over there. From what we see, we don't think that there is any armed fighting."
But many refugees said they were unconvinced by the government's claims that calm had been restored in Kokang.
"They were shooting ordinary people. I saw it myself. We don't believe what they say. We are afraid to go back," said 24-year-old farmer Li Jun.
"They say they will not shoot again but they will shoot."
Rows of blue tents had been set up in Nansan to accommodate the refugees.
Li said 13,000 refugees were staying in camps, while 10,000-20,000 more were believed to be living with friends and relatives in and around the town.
China is one of the few allies of Myanmar's, providing the country's ruling generals with military hardware and is a major consumer of Myanmar's natural resources.
However Larry Jagan, a Myanmar analyst, told Al Jazeera that China has grown increasingly worried over the conflicts in Myanmar.
"While China continues its policy of non-interference, it has shown and expressed its concern to the ruling generals in Myanmar that it wants a stable neighbour," he said.
The Kokang rebels - known as the Myanmar National Democratic Alliance Army -agreed to a ceasefire with the government in 1989 after fighting for autonomy in the region.
However, Myanmar's military government has recently stepped up efforts to secure the support of ethnic minorities and political groups ahead of national elections due some time next year.
|Over 30,000 refugees poured into China from Myanmar's Shan state [Reuters]
It wants to co-opt armed ethnic minorities living on the borders of China and Thailand.
These groups have long fought for independence, but between 15 and 20 years ago, the central government signed cease-fire agreements with many of them.
Now it wants to completely absorb those rebel groups, finally ending their push for autonomy.
Many analysts fear this latest flare-up with ethnic Chinese Kokang fighters could spread to draw in the Wa and Kachin ethnic groups, both of which are heavily armed.
Myanmar's other major internal conflict is with the Karen on the border with Thailand.
Until June, The Karen National Union rebel group controlled much of the border with Thailand. But a major push by the military that month overran seven major camps.
That resulted in around 5,000 people fleeing into Thailand.