The blast in Kunshan, a city in the province of Jiangsu near Shanghai, took place this morning inside a wheel hub polishing workshop owned by the Kunshan Zhongrong Metal Products Co Ltd, the city government said.
More than 260 workers were at the site when the explosion rocked the plant.
Local health authorities said most of the injured suffered burns and have been treated in hospitals in Kunshan and the nearby cities of Suzhou, Wuxi and Shanghai.
An initial probe indicated that the explosion might have been caused by "dust" which ignited inside the workshop, officials said.
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Photographs circulated on social networking sites showed charred bodies of victims on trucks or lying on the ground as black smoke billowed from the factory.
The blast left two huge holes in the factory's wall, with large equipment and pieces of broken glass scattered around.
A local radio reporter told Xinhua that she saw a patient, whose clothes and hair were completely burned off and his body "as dark as charcoal."
The plant specialised in postproduction preparation of aluminium car wheels before they are shipped to auto makers. On its website, Zhongrong says it formed in 1998 and describes itself as a subcontractor to one of the world's biggest car wheel makers, Hebei Province-based Citic Dicastal Wheel Manufacturing Co Dicastal.
A spokeswoman for General Motors said some of the wheels installed on its cars made in China have been processed by Zhongrong as a result of the US auto maker's association with Dicastal.