The protest, which started on June 24, stemmed from the relocation of the state-owned Dongfang Turbine Company after its factory in neighbouring Mianzhu was toppled by the 8.2-magnitude earthquake in Sichuan in 2008.

The company chose Bajiaojing because it was less prone to quake risk. More than 173 hectares of farmland was acquired in 2008 and construction of the complex finished on May 12.

'Farmers are unhappy because they had demanded 260,000 yuan (HK$298,000) in compensation for each family, which is unreasonable because according to the land requisition law in our country, each family could only get 30,000 to 50,000 yuan,' the duty officer said.

He said 5,000 protesters had blocked Deyang's main road - a highway connecting the city and Sichuan's capital Chengdu - paralysing traffic for at least an hour.

The Hong Kong-based Information Centre for Human Rights and Democracy and internet users in Deyang said more than 300 protesters were injured after nearly 1,000 armed police and four armoured cars were sent to crack down on the protest.

The rights group said at least two police cars were destroyed and the local government had dispatched several fire trucks to wash away bloodstains on Monday morning.

It said about 200 villagers had been taken away by police and 1,000 armed police and the four armoured cars were still stationed in Bajiaojing because many farmers were camped outside the Dongfang Turbine factory.

An internet user who said he lived in Bajiaojing said thousands of farmers had lost their homes and jobs after the factory was moved.

'The 30,000 yuan compensation doesn't make sense because a new home costs at least 100,000 yuan,' the villager wrote in the Tianyan chat room. 'We went to protest after the government ignored our complaints.'