There were no casualties reported from the incident today, which was the first of its kind since the coastguard announced last month that it would pursue a "more aggressive" firearms policy with Chinese trawlers.
Disputes over illegal fishing have dogged relations between South Korea and China for years, and there have been numerous clashes between the coastguard and Chinese crew members.
Senior coastguard official Kim Jung-Shik said the order to fire came during a stand-off with some 30 Chinese fishing boats illegally operating near the South's Yellow Sea border with North Korea.
"I thought our officers would be in danger if I allowed any more resistance so we ended up using the crew service weapon," he was quoted as saying.
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Initial machine gun bursts were fired into the air, but the crew were later ordered to fire on the bows of the Chinese boats that were sailing directly at the coastguard vessels.
Two Chinese trawlers were seized in the clash.
Seoul has been asking Beijing to take a tougher stand on its vessels that have entered the South's waters in increasing numbers to satisfy growing demand at home for fresh seafood.
But in recent years, the small boats have given way to larger steel trawlers which engage in bottom trawling - dragging a large weighted net across the seabed that sweeps up everything in its path.
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