HONG KONG—Chinese police opened fire during a clash over land use between villagers and employees of China's number two gold miner, killing two and wounding more than 20, a Hong Kong newspaper said on Tuesday.

Beijing, terrified of social unrest ahead of the Olympics in August, has cracked down on recent protests over the arbitrary use of land by powerful local interests.

Ming Pao cited unidentified sources as saying riot police in the southwestern province of Yunnan were sent in on Sunday after almost 100 villagers clashed with Zijin Mining workers.

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The villagers were angry with offers of compensation and relocations when Zijin was trying to buy up small mines in the area, the newspaper said.

An unidentified police official told the newspaper the shooting was in self-defence and that just one person was killed.

The paper quoted a Zijin Mining official as saying the company's investments in the area were in accordance with local rules and regulations. He was unaware of the exact situation in Yunnan.