China Vietnam oil rig
Two Vietnamese Marine Guard ships flank a Chinese coast guard vessel (C) on the South China Sea, about 210 km (130 miles) offshore of Vietnam in this file photo.Reuters

A Vietnamese fishing boat sank after being rammed by a Chinese vessel in a disputed zone in the South China Sea near an oil drilling platform belonging to China, intensifying tensions between the two countries.

The DNa 90152 fishing boat was encircled by 40 Chinese vessels one of which slammed the boat before overturning it, according to Vietnam's coast guard.

All the 10 fishermen were rescued.

"I confirm that the fishing vessel was rammed," Vietnam Regional Maritime Search and Rescue Coordination Centre told AFP.

"The 10 fishermen on board are on land now. They are safe. The ship sank."

China's official Xinhua news agency said the Vietnamese vessel "capsized after harassing and colliding with a Chinese fishing boat".

The area, first claimed by China in the 1940s and believed to be rich in oil and natural gas, has been a traditional fishing ground for many countries in the region.

Vietnam witnessed anti-Chinese riots two weeks ago when China announced that it was shifting its Haiyang Shiyou 981 drilling platform to the disputed waters, about 130 miles from the Vietnamese shore.

Three Chinese nationals were killed in the riots and hundreds of factories were torched, after which China sent ships to Vietnam to evacuate Chinese citizens. China has asked Vietnam to prosecute the guilty, and two arrests have been made so far, but China demands more action from its neighbour.

"We do not think the punishment is enough," Chinese Foreign Ministry spokesman Qin Gang said at a press conference.

China accuses Vietnam of sending its vessels to disrupt the drilling activity in the area.

Vietnam in turn charges China with using its ships to ram Vietnamese vessels apart from employing water cannons.

China claims that the rig falls within its territory and that it has drilled in the region for years, but the neighbouring south-east Asian countries contest the assertion.

The Philippines has already filed an arbitration suit against China at the international court in the Hague, and Vietnam intends to join it in the legal battle.

Japan has called for both the nations to exercise restraint.

"It's important that relevant countries abstain from unilateral actions that raise tensions and that the countries act cool-headedly, observing international laws," said Yoshihide Suga, government spokesman and chief cabinet secretary.