This article is more than 6 years old

This article is more than 6 years old

Nearly 1,000 Chinese citizens have fled Vietnam by sea, as Hanoi stifled fresh protests over a territorial dispute and foreign investors counted the cost of last week's riots.

The passenger ship Wuzhishan left the central Vietnamese port of Vung Ang with 989 evacuees on board, China's official news agency Xinhua reported. It was the first of four Chinese ships, each with a capacity of about 1,000, sent to Vietnam, Xinhua said, with a further two on standby.

Relations between the communist neighbours have plummeted after Beijing sent a deep-water drilling rig into contested waters in the South China Sea this month.

Two Chinese nationals were killed and about 140 injured last week when mobs torched or otherwise damaged hundreds of foreign-owned businesses in Vietnam.

More than 3,000 Chinese have already returned home from Vietnam by sea and air, reports said at the weekend.

Authorities deployed hundreds of security personnel on Sunday to quell the violence and more than 300 suspected perpetrators faced prosecution, Vietnamese officials said.

Hanoi was calm on Monday and there were no reports of any further disturbances in Vietnam, with authorities scaling back the heavy security presence that had blocked access to the Chinese embassy and other key points in the city.

Activist groups have said several of their members were detained as they sought to demonstrate. Their status was unknown on Monday.

Hanoi initially lauded "patriotic" displays by its citizens, but backpedalled after the violence – which affected a number of non-Chinese facilities – badly stained the country's image as a safe destination for sorely needed foreign investment.

Vietnam offers abundant cheap labour and secured $21.6bn (£12.8bn) in foreign direct investment last year, up from $16.3bn in 2012, according to government figures.

"This will definitely have a big impact on the country's image, which so far had been seen as foreign investor-friendly," said a foreign diplomat who spoke on condition of anonymity. "These actions went way beyond what is acceptable in terms of basic law and order."

Economist Nguyen Quang A said the government must move swiftly and decisively to restore confidence among foreign investors already complaining about corruption, bureaucracy, a lack of legal and regulatory transparency and other issues.

"The government has done some things, but it's not enough," said Quang A. Authorities have pledged to help enterprises rebuild and restore their operations.

An editorial in the state-run China Daily newspaper on Monday raised the prospect of long-term economic damage to Vietnam due to the protests. "If investors are not confident a government can guarantee a secure investment environment, they will understandably hesitate over making the decision to invest," it said. "To stay or not to stay is now the question for those who already have factories in the south-east Asian country."

China's foreign ministry has appealed to citizens to avoid travelling to Vietnam and several major Chinese travel agencies have suspended their Vietnam tours, Xinhua reported.

"We have also suspended some of our bilateral exchanges," the foreign ministry spokeswoman Hua Chunying told reporters at a regular briefing on Monday. "We will consider taking further actions in accordance with the development of the situation."

In 2012, Japanese nationals, businesses and diplomatic missions were targeted in violent protests that erupted in several Chinese cities after Tokyo nationalised disputed islands in the East China Sea. Beijing was criticised for allowing the protests, which the Japanese government estimated caused damage worth more than $100m.