Chinese officials said they killed seven members of the Uighur ethnic group in the restive western region of Xinjiang in order to free two hostages - an account the Uighurs disputed.

The hostages - local villagers looking for their lost sheep in the rural county of Pishan outside of Hotan city– were kidnapped by a group of Uighurs on Wednesday night, said Hou Hanmin, a spokeswoman for the chief of the regional information office in Xinjiang.

The operation to rescue them left one police officer dead and wounded another, he said.

However, Dilxat Raxit, a spokesman for the Stockholm-based World Uighur Congress, said the shooting did not stem from a rescue operation.

Police opened fire when locals clashed with officers during a demonstration outside the police bureau, he said. The Uighurs were protesting a recent security crackdown in Hotan city.