Over 1600 people have been evacuated and relocated as water has inundated a large part of the area.
In a southeastern suburb of Hubei's capital Wuhan, the 3.7-km manmade embankment, separating Liangzi Lake and Niushan Lake, was destroyed with 27 tonnes of dynamite, state-run Xinhua news agency reported.
Liangzi is the second largest lake in Hubei, one of the regions worst-hit by the recent fatal bout of rain since mid-June, which has seen the water at the lake rise to 0.12 meters above the warning level.
Following the explosion, Niushan Lake merged into Liangzi, increasing the surface area of the latter by more than 100 square kilometers to about 370 square kilometers.
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A total of 1,658 people were evacuated for the explosion, they will be re-settled.
Zhu Peijiao, 51, was one of the residents to be resettled.
She had earned more than 100,000 yuan a year from her fish and crab farms.
"We lived on that for the past 30 years," she said.
"After we are relocated, we will have to find another source of income," Chen Xiexin, Communist Party of China chief with Jiangxia District, Wuhan, said that buildings for those displaced will be constructed in the district.
Niushan and Liangzi lakes were actually connectedbefore the 1970s.
The dike was built in 1979, splitting them into two separate bodies of water.
"We did that to support aquatic farms," said villager Luo Huixian, 84, who helped build the dike.
"But water quality decreased due to industry activity," he said.