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Xinjiang province has had high levels of security since riots in 2009 (file photo)
The Xinhua news agency reported that rioters killed 10 people, while police shot dead two of the rioters.
The report gives no detail as to what might have triggered the violence.
Security has been high in the north-western province since riots in 2009 in the capital Urumqi between the Muslim Uighurs, who are the largest ethnic group, and Han Chinese migrants.
Nearly 200 people were killed in that unrest, most of them Han, according to officials.
Uighur grievances
Tuesday's violence took place in a market in Yecheng county, according to Xinhua, which says police are still hunting some of the rioters.
Almost half of Xinjiang's residents are Uighurs, Turkic-speaking Muslims with cultural and ethnic links to Central Asia.
Many complain that large-scale migration of Han Chinese workers from the east has cost them jobs and is eroding their culture.
China has invested heavily in Xinjiang and the region's rich oil and gas deposits are vital to its booming economy.
Uighur allegations of discrimination and marginalisation have been behind anti-Han and separatist sentiment in Xinjiang since the 1990s.
Further violence broke out in July 2011 and left 32 people dead.
A hostage-taking incident in December led to the death of seven kidnappers - part of a "terror gang," according to Chinese state media.
China claims it faces an organised terrorist threat from radical Muslims in Xinjiang, but Uighur activists say citizens are angry at Beijing's heavy-handed rule in the region.
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