China calls Xinjiang riot a plot against rule

* At least 3 die, vehicles burned, smashed in Urumqi

* Traffic banned to prevent further unrest

* City "basically under martial law" - resident

* Exile groups deny riot was a plot

By Chris Buckley

BEIJING, July 6 (Reuters) - China has called a riot that shook the capital of western Xinjiang region on Sunday a plot against its power, after at least three people died in the eruption of ethnic unrest and authorities launched a crackdown.

Hundreds of locals took to the streets of the regional capital, Urumqi, some burning and smashing vehicles and confronting police and anti-riot troops, following a protest there against government handling of a clash between Han Chinese and Uighur factory workers in far southern China in late June, when two Uighurs died. [ID:nHKG364598]

On Monday morning "the situation was under control", the state-run Xinhua news agency reported. There were no immediate reports of violence in other parts of Xinjiang.

Officials ordered traffic off the streets in parts of the city of 2.3 million residents -- 3,270 km (2,050 miles) west of Beijing -- to ensure there was no fresh unrest, Xinhua added.

"The city is basically under martial law," said Yang Jin, a dried fruit merchant in Urumqi contacted by telephone. "It would be wrong for anyone to say he wasn't afraid, but the situation looks calm for now."

The Chinese government blamed the riot on exiled Uighur groups demanding independence from Beijing, which they say is stifling their culture and exploiting their homeland's resources.

"The facts demonstrate this was controlled and instigated from abroad," an unnamed official said of the riot, according to Xinhua, which also said the "unrest was masterminded by the World Uyghur (also spelt Uighur) Congress led by Rebiya Kadeer".

"This was a crime of violence that was pre-meditated and organised."

Rebiya Kadeer is a Uighur businesswoman now in exile in the United States after years in jail, and accused of separatist activities. She did not answer calls for comment.

But exiled Uighur groups adamantly rejected the Chinese government claim of a plot. They said the riot was an outpouring of pent-up anger over government policies and Han Chinese dominance of economic opportunities.

"They're blaming us as a way to distract the Uighurs' attention from the discrimination and oppression that sparked this protest," said Dilxat Raxit, a spokesman for the World Uyghur Congress in exile in Sweden.

"It began as a peaceful assembly. There were thousands of people shouting to stop ethnic discrimination, demanding an explanation ... They are tired of suffering in silence."

The Chinese government's claims of conspiracy by pro-independence exiles echo the handling of rioting across Tibetan areas in March last year, which Beijing also called a plot hatched abroad.

The unrest underscores that Xinjiang, no less than Tibet, faces volatile ethnic tensions that have accompanied China's growing economic and political stake in its regions thousands of km from Beijing. [ID:nL5691632]

Xinjiang is the doorway to China's trade and energy ties with central Asia, and is itself rich in gas, minerals and farm produce. But many Uighurs say they see little of that wealth.

"The government is applying its ready-made template that all ethnic tension is caused by external plots," said Nicholas Bequelin, a China researcher for Human Rights Watch, a New York-based group, who has long studied Xinjiang.

"This incident could further polarise ethnic groups in Xinjiang ... The official reaction is going to be pretty much what we saw in Tibet -- more repression, tighter control."

NUMBER OF DEAD UNCLEAR

Chinese state television showed footage of rioters throwing rocks at police and overturning a police car, and smoke billowing from burning vehicles.

Late on Sunday, Xinhua had said "three ordinary people of the Han ethnic group" were killed. But its latest report on Monday merely said that "a number of innocent members of the public and one officer of the People's Armed Police were killed".

Alim Seytoff, general secretary of the Uyghur American Association, based in Washington D.C., said he believed Uighurs may also have died in the clashes, and police and officials were going through university dormitory rooms looking for students involved in the protest that gave way to the riot.

Seytoff emailed pictures showing hundreds of locals confronting police in Urumqi, armoured riot-control vehicles patrolling streets, wounded and bloodied civilians lying on streets, and ranks of anti-riot police with shields and clubs.

Almost half of Xinjiang's 20 million people are Uighurs. Many resent controls imposed by Beijing, and an inflow of Han Chinese migrants. The population of Urumqi is mostly Han Chinese, and the city is under tight police security even in normal times.

In the run-up to the 2008 Beijing Olympic Games, Xinjiang was hit by several deadly attacks authorities said were the work of militants.

But human rights groups and Uighur independence activists say Beijing exaggerates the militant threat to justify harsh controls restricting peaceful political demands. (Additional reporting by Benjamin Kang Lim; Editing by Jerry Norton)