Nine Chinese citizens came under attack on Monday evening in Gebre Guracha, some 160 kilometres (100 miles) north of the capital, the embassy said in a statement.
"Unfortunately, one of them was shot and died," it said, giving no further information about the incident or the Chinese nationals.
While calm has largely returned to the northern Tigray region after two years of brutal war, fighting has continued elsewhere in Oromia, the largest and most populous region of Ethiopia that is haunted by a long-running insurgency.
The Oromo, Ethiopia's largest ethnic group, have long complained of marginalisation.
The rebel Oromo Liberation Army (OLA) has exploited this growing resentment to swell its ranks in its years-long battle with federal and regional forces.
But the region is beset with other ethnic fissures too, particularly between the Oromo and the Amhara, the country's second-largest ethnic grouping.
China said on Tuesday that "pernicious cases of armed attacks, kidnappings, and robberies" were rife in Oromia and bordering regions.
It called on its citizens to heighten their safety awareness and leave regions still beset by conflict.
"If you are already in a high-risk area, you should evacuate to a safe area immediately," it said.
Compared to the Tigray war, the conflict in Oromia has drawn scant international attention but still poses a threat to the stability of Africa's second most populous nation.
US Secretary of State Antony Blinken, in a call with Ethiopian Prime Minister Abiy Ahmed this month, voiced concern about the situation in Oromia.
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