HANOI/BEIJING (Reuters) - Vietnam and China traded accusations on Tuesday over the sinking of a Vietnamese fishing boat not far from where China has placed an oil rig in the disputed South China Sea, as tensions fester between the two countries over the giant drilling platform.
Hanoi said some 40 Chinese fishing boats had surrounded the Vietnamese craft before one of them rammed it and it sank. Vietnamese fishing boats operating nearby rescued the 10 fishermen on board, the government and the coastguard said.
China's official Xinhua news agency, citing a government source, said the vessel capsized after "harassing and colliding with" a Chinese fishing boat.
Scores of Vietnamese and Chinese ships, including coastguard vessels, have continued to square off around the rig despite a series of collisions earlier this month after the platform was towed to the site.
Each side have blamed the other over those incidents. Until Monday, no ship had sunk.
The incident took place around 17 nautical miles from the rig, which is drilling between the Paracel islands occupied by China and the Vietnamese coast. China calls them the Xisha islands.
"A Vietnamese boat from the central city of Da Nang was deliberately encircled by 40 fishing vessels from China before it was attacked by a Chinese ship," the head of Vietnam's coastguard, Nguyen Quang Dam, told Reuters by telephone.
Xinhua said: "Crew aboard the boat were saved after their ship jostled a fishing boat from Dongfang City in southern China's Hainan province and overturned in the waters near China's Xisha Islands."
Vietnam has said the Haiyang Shiyou 981 rig is in its 200-nautical mile exclusive economic zone and on its continental shelf. China says it is operating within its waters.
The rig is 240 km (150 miles) off Vietnam's coast and 330 km (206 miles) from the southern coast of China's Hainan island.
The $1 billion deepwater rig is owned by state-run China National Offshore Oil Company Group, parent of flagship unit CNOOC Ltd.
Vietnamese Prime Minister Nguyen Tan Dung last week said his government was considering taking legal action against China following the deployment of the rig.
That drew an angry response from China.
Earlier this month, mobs angered over the rig attacked mostly Taiwanese factories in Vietnam. Many of the rioters mistook Taiwanese companies to be owned by mainland Chinese. At least four workers were killed.
China claims about 90 percent of the South China Sea, displaying its reach on official maps with a so-called nine-dash line that stretches deep into the maritime heart of Southeast Asia. The Philippines, Vietnam, Malaysia, Brunei and Taiwan also have claims to parts of the potentially energy-rich waters.
(Reporting by Nguyen Phuong Linh in HANOI and Michael Martina and Hui Li in BEIJING; Writing by Dean Yates; Editing by Ron Popeski)