HANOI (Reuters) - Up to 21 people were killed in Vietnam, a doctor said on Thursday, and a huge foreign steel project was set ablaze as anti-China riots spread to the centre of the country a day after arson and looting in the south.

The doctor at a hospital in central Ha Tinh province said five Vietnamese workers and 16 other people described as Chinese were killed on Wednesday night in rioting, one of the worst breakdowns in Sino-Vietnamese relations since the neighbors fought a brief border war in 1979.

"There were about a hundred people sent to the hospital last night. Many were Chinese. More are being sent to the hospital this morning," the doctor at Ha Tinh General Hospital told Reuters by phone.

Foreign Ministry spokesman Le Hai Binh confirmed one death in the clashes, and described media reports and accounts on social networking sites of higher casualties as "groundless".

China's state news agency Xinhua reported that at least two Chinese nationals had died and more than 100 were hospitalized.

Vietnamese Prime Minister Nguyen Tan Dung called on police and state and local authorities to restore order and ensure the safety of people and property in the affected areas.

"Appropriate measures should be taken immediately to help businesses stabilize quickly and return to normal production activities," he said in a statement, without elaborating.

The Planning and Investment Ministry blamed the clashes on "extremists" and warned that they could seriously affect the investment environment in Vietnam.

Formosa Plastics Group, Taiwan's biggest investor in Vietnam, said its upcoming steel plant in Ha Tinh was set on fire after fighting between its Vietnamese and Chinese workers. One Chinese worker was killed and 90 others injured, it said in a statement in Taipei.

It was not immediately clear if the casualties were among those admitted to the Ha Tinh hospital.

The plant is expected to be Southeast Asia's largest steel making facility when it is completed in 2017. No details of fire damage or financial losses were immediately available, the company said.

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The Ha Tinh industrial park, estimated to cost more than $20 billion, is more than half complete. When finished in 2020, it will have a port, a 2,100-MW power plant and six furnaces, Vietnamese media say.

MAINSTAY OF ECONOMY

Such industrial zones are the backbone of Vietnam's $138 billion economy. The country has 190 registered industrial parks employing about 2.1 million people. They manufactured products worth $38 billion in exports last year, or 30 percent of Vietnam's total export revenue.

The anti-China riots erupted in industrial zones in the south of the country on Tuesday after protests against Beijing placing an oil rig in a part of the South China Sea claimed by Hanoi.

The brunt of the violence has been borne by Taiwanese firms, mistaken by the rioters as being owned by mainland Chinese.

China expressed serious concern over the violence in Vietnam

and urged it to punish criminals and compensate victims. Foreign Ministry spokeswoman Hua Chunying suggested Hanoi had turned a blind eye to the protesters.

"The looting and stealing that has taken place at Chinese businesses and to Chinese people has a direct relationship with Vietnam's winking at and indulging law breakers there."

Although the two Communist neighbors have close economic and political ties, Vietnamese resentment against China runs deep, rooted in feelings of national pride and the struggle for independence after decades of war and more than 1,000 years of Chinese colonial rule that ended in the 10th century.

The dispute in the South China Sea has sparked anger on both sides. Dozens of vessels from the two countries are around the oil rig, and both sides have accused the other of intentional collisions, increasing the risk of a confrontation.

Vietnamese are also angered by what they call exploitation of its raw materials and resources by Chinese firms, and say although bilateral trade is over $50 billion annually, Chinese investment in Vietnam is only around $2.3 billion.

China faces similar accusation in other emerging markets, especially in Africa. Some 85 percent of China's exports from Africa are raw materials, such as oil and minerals, and Beijing has been accused of holding back the continent's economic development by ignoring the creation of local jobs and markets.

GETTING OUT

Thousands of Vietnamese set fire to foreign factories and rampaged through industrial zones in Binh Duong and Dong Nai provinces near Ho Chi Minh City on Tuesday, officials said. Protests continued on Wednesday.

Hundreds of Chinese working in the zones have fled, most to neighboring Cambodia and others by air.

"Yesterday more than 600 Chinese people from Vietnam crossed at Bavet international checkpoint into Cambodia," Cambodian National Police spokesman Kirt Chantharith told Reuters.

Bavet is on a highway stretching from Ho Chi Minh City, Vietnam's commercial centre, to Cambodia's capital, Phnom Penh.

At Ho Chi Minh City airport, scores of Chinese were arriving in large groups, queuing to grab tickets or get on the first flights to Malaysia, Cambodia, Taiwan, Singapore and China.

"People don't feel safe here, so we just want to get out of Vietnam," said Xu Wen Hong, who works for an iron and steel company and bought a one-way ticket to China.

"Even to Thailand and Cambodia. If there are no more tickets to China, they think just leaving Vietnam is enough.

"We're scared, of course. With all the factories burning, anyone would be scared in this situation."

In Binh Duong province alone, police said 460 companies had reported some damage to their plants, local media reported.

"More than 40 policemen were injured while on duty, mainly by bricks and stones thrown by extremists," the state-run Thanh Nien (Young People) newspaper said.

About 600 people were arrested for looting and inciting the crowd, the newspaper quoted Vo Thanh Duc, the police chief of Binh Duong province, as saying.

The United States has called on both sides for restraint.

Such disputes "need to be resolved through dialogue, not through intimidation," White House spokesman Jay Carney told a regular briefing. "We again urge dialogue in their resolution."

The U.S. State Department said it was monitoring events in Vietnam closely, and urged restraint from all parties, while adding: "We support the right of individuals to assemble peacefully to protest."

The crisis erupted soon after a week-long visit to Asia by President Barack Obama in late April in which he pledged that Washington would live up to its obligation to defend its allies in the region.

(Reporting by Nguyen Phuong Linh, Martin Petty, Phnom Penh Bureau, Rachel Armstrong in Singapore, Faith Hung in Taipei and Megha Rajagopalan in Beijing; Writing by Raju Gopalakrishnan; Editing by Mike Collett-White)