With eight fishermen on board, the Vietnamese fishing vessel was fishing near the Paracel Islands on Thursday when it was rammed and sunk by the Chinese vessel, Vietnam's foreign ministry said in a statement posted on Saturday's government website.
All of the fishermen were caught alive by the Chinese vessel and transferred to two other nearby Vietnamese fishing vessels, the Vietnam Fisheries Society said in a statement posted on its website.
For years, Vietnam and China have been involved in a conflict over the potentially energy-rich stretch of sea, which Vietnam has dubbed the East Sea.
The Vietnamese boat reached the area illegally for fishing and refused to leave, Chinese coast guard said late Friday.
The boat collided with a Chinese patrol vessel and sank after performing several risky maneuvers, the Chinese coastguard said.
The incident is marking the second time a Vietnamese fishing vessel has reportedly been sunk by a Chinese vessel near the China-controlled Paracels in less than a year.