Up to three people were killed, scores injured and up to 100 detained in Qidong, said rights watchdog Chinese Human Rights Defenders after tens of thousands of protesters clashed with police, overturned cars and ransacked government offices.

The rioters were angry over a planned pipeline running 100 kilometres (62 miles) from the Oji Paper plant to release waste water into the sea close to Qidong, which is near Shanghai.

The Japanese firm said in a statement Monday that it was "concerned about the protest demonstration" but called allegations the pipeline would dump toxins into local waterways "totally groundless".

"There are some reports that discharged water would contain carcinogens but that is totally groundless," it said.

"We are controlling water quality in a responsible manner by purifying water enough to satisfy China's national standards."

Amid the violence, local Chinese officials announced that the project would be "permanently cancelled".

Oji Paper had not invested in the planned pipeline, said a company spokesman in Tokyo. Its plant was not operating Monday, he added, and the firm was considering whether to resume operations Tuesday.

Protests against ecological degradation have increased in China, where three decades of rapid and unfettered industrial expansion have taken their toll on the environment.