A group of armed men attacked as many as 300 migrant construction workers who were striking over unpaid wages, Chinese media reports.
At least one person is reported to be fighting for his life and six others were injured in the clashes in Heyuan city, in Guangdong province.
China's construction minister has ordered an immediate investigation, Xinhua news agency reports.
China has faced a number of recent cases involving alleged worker abuse.
More than 500 people were recently freed after they were found to have been working in appalling conditions at illegal brick factories in the north of the country.
Amnesty International warned in March that a lack of rights for China's tens of millions of migrant workers was creating an underclass in the country.
Nearly 300 workers went on strike last Friday after they had gone four months without wages while working on the construction site of a hydropower station at Heyuan, local media reported.
They were said to be demanding their salaries from the Fuyuan energy firm when as many as 300 armed men arrived at the site.
"The first batch of about 50 gangsters came with spades in their hands, and the second batch had axes, steel pipes and sabres, and there were more behind them," migrant worker Liu Gangqing was quoted by the Chongqing Morning Post as saying.
Local police were reported to have arrested four Fuyuan employees, while hospital officials said one person was close to the death following the incident.
Fuyuan Group chairman Miu Shouliang denied, in an interview with the newspaper, that wages had not been paid, but would not discuss the attack.
A city government spokesperson played down the numbers involved in the incident, saying it totalled around 30 workers and company staff.