Riots spread from south the central part of Vietnam as crowds set fire to industrial parks, sparked by rig in disputed territory

At least 21 people were killed and nearly 100 injured in Vietnam on Thursday during violent protests against China in one of the deadliest confrontations between the two neighbours since 1979.

Crowds set fire to industrial parks and factories, hunted down Chinese workers and attacked police during the riots, which have spread from the south to the central part of the country following the start of the protests on Tuesday.

The violence has been sparked by the dispute concerning China stationing an oil rig in an area of the South China Sea claimed by Vietnam. The two nations have been fighting out a maritime battle over sovereignty and that battle has now seemingly come ashore.

Early Thursday morning a 1,000-strong mob stormed a giant Taiwanese steel mill in Ha Tinh province, central Vietnam, where they set buildings ablaze and chased out Chinese employees, according to a Taiwanese diplomat, Huang Chih-peng. He said both the head of the provincial government, and his security chief, were at the mill at the time of the riots, but did not "order tough-enough action".

Five Vietnamese workers, and 16 others described as Chinese, were killed during the rioting, a doctor at a hospital in Ha Tinh told Reuters. An additional 90 people were injured in the attack.

"There were about 100 people sent to the hospital last night. Many were Chinese. More are being sent to the hospital this morning," the doctor said.

The attack on the steel mill comes just two days after other mobs burned and looted scores of foreign-owned factories in south Vietnam, believing they were Chinese-run, though many were actually Taiwanese or South Korean.

No deaths were reported in those initial attacks, and the Vietnamese government has since tried to crack down on protesters. More than 600 have been arrested since Tuesday.

The protests have sparked an exodus of Chinese nationals, many of whom have fled to neighbouring countries or further.

More than 600 are believed to have gone to Cambodia, while scores gathered at Ho Chi Minh airport and bought one-way tickets to Malaysia, Taiwan, Singapore and China.

On Thursday, China's embassy in Vietnam urged the police to take "effective measures" to protect Chinese citizens' safety and legal rights. China's tourism administration urged Vietnam-bound tourists to carefully consider their plans, while Taiwan's ministry of foreign affairs was printing thousands of stickers saying "I am from Taiwan" in Vietnamese and English and distributing them to local Taiwanese business owners, to help them avoid the wrath of anti-China mobs.

Anti-Chinese sentiment, while never far below the surface in Vietnam, has hit a formidable peak since Beijing's deployment of the oil rig in disputed waters in the South China Sea on 1 May.

In an attempt to assert sovereignty Vietnam quickly sent a flotilla of ships to the area; these became involved in skirmishes with 80 Chinese boats sent to protect the oil rig. China accused the Vietnamese ships of ramming its vessels after the Chinese fleet deployed water cannon against the Vietnamese. On Wednesday China reportedly sent two amphibious ships equipped with anti-air missiles as further defence.

The Vietnamese government has issued stark warnings to the Chinese that this "aggression", which had to date been met with Vietnamese diplomacy, would turn ugly if it continued.

Vietnam would "make no concession to China's wrongful acts", Major General Nguyen Quang Dam, the coast guard commander, told local media. He said: "Their violent acts have posed serious threats to the lives of Vietnamese members of law enforcement."

An article in the English-language daily Vietnam News was just as blunt: "The Vietnamese people are angry. The nation is angry. We are telling the world that we are angry. We have every right to be angry. "

"Over thousands of years we have shown we never cease fighting aggressors. We are proud of our freedom-fighting forefathers, and resistance is in our blood. We are a small country, but we are not weak. We will stand as one, united in the cause of protecting our motherland's integrity."

China's foreign minister, Wang Yi, urged Vietnam "not to attempt to further complicate and aggravate the current maritime friction", according to the state-run Global Times newspaper.

The paper said that Wang told Indonesia's foreign affairs minister, Marty Natalegawa: "China's position on safeguarding its legitimate sovereign rights and interests is firm and clear and will not change." .

On Thursday night China's top military leader blamed the Obama administration's new focus on Asia for various disputes in the East and South China seas, saying "some neighbouring countries" are using it as an opportunity to provoke problems.

Speaking to reporters at the Pentagon, People's Liberation Army's chief of the general staff Gen Fang Fenghui also warned that the US must be objective about tensions between China and Vietnam or risk harming relations between Washington and Beijing. He defended China's deployment of an oil rig in the South China Sea and said Beijing has no intention of abandoning the drilling despite the protests it has spawned in Vietnam.

While China and Vietnam have considerable political and economic ties, anti-Chinese sentiment in Vietnam goes back more than 1,000 years to when it was a Chinese colony.

The quest for sovereignty and self-rule has long been a theme, as has what Vietnam sees as China's endless provocation over maritime boundaries around the Paracel and Spratly Islands in the South China Sea – an area that about 10 countries lay full, or partial, claim to – because of its rich oil and gas reserves.

The recent attacks on Vietnam's factories and industrial parks could damage the country's economy. Industrial zones, like the Ha Tinh area where the mill was set ablaze, generate a third of Vietnam's total export revenue, according to Reuters.

Vietnam's prime minister, Nguyen Tan Dung, issued a message Thursday urging Vietnamese authorities to protect foreign investors. Businesses are expected to receive payouts for incurred damages.

While it seems the Vietnamese and Chinese governments each want to downplay the severity of the situation – a leaked Chinese government circular obtained by the online China Digital Times urged media to "not report on any news" regarding the protests – the repercussions are most closely felt on the ground.

"People don't feel safe here," Xu Wen Hong, a Chinese national who works at one of Vietnam's iron and steel companies and bought a one-way ticket to China, told Reuters. "We just want to get out of Vietnam. We're scared, of course. With all the factories burning, anyone would be scared."