Myanmar Clashes with Rebels

Myanmar, formerly known as Burma, has recently seen a rise of clashes in the Shan region near the Chinese border.  Some people have even fled Myanmar across the Chinese border.

The Kokang rebels have killed approximately 50 soldiers and injured 70 more.  Air strikes have caused roughly 10,000 people to flee.  The government has long feared the rebel groups that live in both the Shan and Kachin regions.  The government has been holding talks with the rebel groups in the capital, Nay Pyi Taw, but so far no deal has been reached.  

Myanmar has been ruled by a military government since 1962.  It has been considered by most to be a totalitarian government with no regard for human rights.  The government was known to shut off the internet, force citizens (even children) into labor camps.  Since 2011, though, there have been some elections and some attempts at reform.  However, the many ethnic groups and some religious differences (Buddhists and Muslims) has led to clashes on and off.  

In the case of the Kokang rebels, they have run a strip of land in the NE section of the Shan region for years but seek more autonomy.  What should a government do when a group tries to assert independence and/or acts violently?