Authorities in east China said Sunday work on a chemical plant would be halted after thousands of locals clashed with police during a protest over fears the factory would pollute the region.

In the latest environmental unrest to erupt in China, police at Ningbo city in Zhejiang province fired tear gas to disperse demonstrators Saturday night after six days of protests over the project, protesters and online reports said.

"Following research with investors, Ningbo city has decided: (1) not to go ahead with the PX (chemical factory) project and (2) to halt advance work on the chemical refining project," the government of Ningbo's Zhenhai said on its website.

The announcement came after police and demonstrators clashed in riots on Saturday night, while up to a thousand protesters gathered at the Zhenhai government Sunday and marched through the district, protesters said.

"In recent days some unreasonable activities such as illegal gatherings and rioting have occurred, seriously impairing the normal work and life of the people and severely impacting overall development and stability," said an earlier statement on the Zhenhai government website.

At an emergency meeting late Saturday local Communist Party officials ordered police to "maintain stability in accordance with law", rhetoric that often signals a heavy-handed crackdown.

Photos posted on the www.molihua.org website, which monitors social unrest, showed protesters facing off against thousands of riot police as security forces streamed into Ningbo's Zhenhai district where the 55.9 billion yuan ($8.9 billion) plant is to be located.

Rioting erupted amid rumours that police had beaten to death a local college student -- a rumour police immediately denied.

"Those people circulating fabricated rumours that 'police have beaten to death a college student' have had an odious social impact," Zhenhai police said in a posting on their microblog site.

"Following investigation it was found that a certain woman had spread the rumour, (she) will be dealt with in accordance with law. The police warn citizens not to believe rumours and not to spread them."

Hong Kong media reports said numerous vehicles including police cars were overturned and several policemen injured when protesters attacked a Zhenhai police station with rocks and bricks.

Government officials and police in Zhenhai refused to comment on the unrest when contacted by AFP, nor would they say if protests were continuing Sunday.

According to one local in Zhenhai, who declined to be named, protesters gathered at the gates of the district government Sunday morning and then began a peaceful protest march through the district.

"There were around 1,000 people at the district government when I arrived this morning," the local said.

"Around 10:30 (0200 GMT), the protesters began dispersing from the government offices and started marching through Zhenhai district."

The march continued peacefully Sunday afternoon under heavy police monitoring, he added.

The unrest began on Monday last week when some 200 Zhenhai residents blocked traffic before dispersing, the local government and state media said at the time.

Environmental pollution and perceived health threats are sparking protests across China, fuelled by social media which allows organisers to publicise their causes and rally others despite tight controls in the one-party state.

Earlier this month police clashed with residents over four days in Yinggehai town in the southern province of Hainan over the construction of a coal-fired power station.

Earlier this year in the southwestern province of Sichuan, hundreds of protesters clashed with police over a planned metals plant in Shifang city. They forced the project to be scrapped.