Hanoi accused a Chinese vessel of ramming the wooden Vietnamese boat on Monday and fleeing the scene. Beijing said the Vietnamese boat was trying to get close to the oil rig, rammed into one of its vessels, and then sank. The crew was rescued.
The clash occurred about 18 miles from the oil rig that China deployed on 1 May in waters that both nations claim.
The rig deployment had infuriated Hanoi and set off violent anti-China protests that further soured ties between the neighbouring countries, which have close economic relations.
Vietnam sent patrol ships to confront the rig, and China has deployed scores of vessels to protect it. The two sides have been involved in a tense standoff, with vessels occasionally colliding with each other.
China and Vietnam have long sparred over who owns what in the oil and gas-rich waters.
Incidents between fishing crews are common, but Monday’s incident was the first time a Vietnamese boat had been sunk, said Tran Van Linh, president of the Fisheries Association in the central port city of Danang.
He said: “I call this an act of attempted murder because the Chinese sank a Vietnamese fishing boat and then ran away.
“We vehemently protest this perverse, brutal and inhumane action by Chinese side.”
Mr Linh said about 40 Chinese steel vessels surrounded a group of smaller, wooden Vietnamese fishing ships on Monday afternoon. One then rammed into the Vietnamese ship, he said, tossing ten fishermen into the water and sinking the boat. The fishermen were picked up by the other Vietnamese boats and there were no injuries.
In Beijing, the government said a Vietnamese fishing boat had forced its way into the area around the oil rig and rammed into a Chinese fishing boat.
Foreign ministry spokesman Qin Gang said: “The fact that this incident happened at all shows that Vietnam’s illegitimate and illegal harassment and sabotage against China’s regular operations are futile and will only hurt their own interests.”
Since 1 May, Vietnam has accused China of ramming into or firing water cannon at Vietnamese vessels trying to get close to the rig, damaging several boats and injuring crews. They have released video footage of some of the incidents. China accuses Vietnam of doing the same.
China claims nearly all of the South China Sea as its own, bringing it into conflict with its smaller neighbours, including Vietnam and the Philippines.
In recent years it has been more assertive in pressing its claims in the waters and resisting attempts to negotiate.
Philippine president Benigno Aquino III said yesterday his country was watching developments. He said: “We’re trying to learn the right lessons and our armed forces and coastguard and other concerned agencies are looking at the possible scenarios and what should be our appropriate response.”
The United States, which also has concerns about China’s rising military might, called the rig deployment “provocative”.