Vietnam has released dramatic footage showing a large Chinese ship chasing and ramming one of its fishing boats which then sank near an oil rig in contested waters.

The communist neighbours have traded accusations over the May 26 sinking incident, with Hanoi decrying an "inhuman act" by China, which blamed intrusion by the Vietnamese vessel.

The video images, shot from a nearby Vietnamese vessel, show a much larger Chinese ship racing after a small wooden Vietnamese fishing boat, ploughing into it and causing it to tip over and sink.

"Oh! They rammed and sank it," a man on the boat from which the footage was filmed can be heard shouting.

Vietnamese officials have said the 10 fishermen on board were rescued by nearby vessels after the incident, which occurred about 12 nautical miles southwest of the oil rig.

The heavily-damaged boat was towed to Vietnam's Ly Son island, off the coast of central Quang Ngai province, and a local official has suggested it be placed in a museum, the Tuoi Tre newspaper reported.

A local ship building expert, who inspected the vessel, said the scale of the damage showed "the attack is an intentional act that was aimed at killing Vietnamese fishermen," Nguyen Van Sy told Tuoi Tre.

It was the first ship reported sunk since the dispute flared in early May. The standoff has seen repeated skirmishes between scores of Chinese and Vietnamese vessels, including many fishing boats.

The confrontations have reportedly also included the use of water cannon.

- 'Brutally treated' -

Vietnam said Thursday that Chinese vessels guarding the oil rig had injured 12 people -- including the 10 on the sunken boat -- and damaged 24 Vietnamese law enforcement vessels since the standoff began in early May.

An additional 12 fishing vessels have been damaged, according to Ha Le, deputy head of Vietnam Fisheries Surveillance Department.

"They were prevented from fishing, threatened by Chinese vessels, had their equipment destroyed and the crews were brutally treated," he said.

Relations between Vietnam and China have plummeted over the oil rig's presence, which has worsened an increasingly heated dispute over territorial claims in the area.

The oil rig is positioned in the vicinity of the contested Paracel Islands, which are known as Hoang Sa in Vietnam and called Xisha by Beijing.

"Every day, China has between 30 and 137 boats around the oil rig, including six warships," said Ngo Ngoc Thu, the deputy commander of the Vietnam Coast Guard.

"Vietnamese ships are being restrained... and trying to avoid China's ramming," he said, adding that Vietnam had not been using water cannon against Chinese boats.

Tensions over the oil rig sparked violent anti-Chinese riots in Vietnam last month. Beijing says four Chinese citizens died in the unrest, while Vietnam says three Chinese died.

Vietnamese Prime Minister Nguyen Tan Dung has said China's placement of the rig in the contested area "seriously threatened peace".

China claims nearly all of the South China Sea, even waters approaching the coasts of its neighbours, and has become increasingly assertive in staking those claims.

Vietnam, the Philippines, Brunei, Malaysia and Taiwan have competing claims to parts of the sea.

In recent years China has begun aggressively patrolling contested waters, using fishing bans and patrol boats to keep foreign trawlers out, according to Vietnamese officials and fishermen.

Hanoi says hundreds of fishing boat crews have been arrested by Chinese authorities over the past few years.

Beijing for its part estimates that more than 11,000 Chinese fishermen experienced attacks, robberies or detention by foreign vessels between 1989 and 2010.