The bloody brawl at Tonghua Iron and Steel Group, in which one person was killed, began after former workers spread false rumors about the steel giant's takeover by Jianlong Steel Holding Company, an official said.

Wang Xidong, vice director of the Jilin province State-owned Assets Supervision and Administration Commission, said the takeover caused many to feel insecure and led to rumors about what Jianlong, a private company based in Beijing, would do to the State giant.

"(Some ex-workers) exploited the profound sentiment that former employees have for the State-owned company. They made use of those people who do not have sufficient understanding of the current situation and the vision of Tonghua's future, the large amount of money to fund the restructuring, and its legacy problems," Wang said.