China has said one of its patrol boats acted reasonably in a confrontation with a Vietnamese fishing boat last week in disputed waters in the South China Sea.
The foreign ministry said it was "legitimate" for China to take action.
Vietnam accuses the Chinese vessel of firing on the fishing boat near the Paracel islands, setting it alight.
Both countries claim the islands, which have been controlled by China since a short war with South Vietnam in 1974.
Chinese Foreign Ministry spokesman Hong Lei said: "It is necessary and legitimate for China to take action against a Vietnamese shipping boat that has entered China's waters for illegal activity.
"No damage was caused to the fishing boat from Vietnam at the time," he added, without saying what action the Chinese vessel had taken.
Vietnam has lodged a formal complaint with the Chinese embassy in Hanoi. In a statement released late on Monday, the foreign ministry said the "very serious incident" took place on 20 March.
"Vietnam strongly protests, urging China to investigate and seriously deal with the wrongful and inhumane act, and compensate Vietnamese fishermen for their loss," foreign ministry spokesman Luong Thanh Nghi said.
The news of the incident adds to already tense anti-China sentiment in Vietnam, reports the BBC's Nga Pham in Hanoi, but was not met with surprise.
Earlier this month, two Vietnamese fishing boats were chased out of disputed waters by Chinese marine surveillance ships, local reports said. Vietnamese officials have also reported increased patrolling by China in recent months.
But the use of firearms, if confirmed, points to a more forceful approach from Beijing in protecting what it calls China's sovereign waters, our correspondent says.
In recent years tensions over territorial claims have been rising in the South China Sea, amid a more assertive stance from China.
China claims a U-shaped swathe of the sea that extends well into what UNCLOS (UN Convention on the Law of the Sea) recognises as the 200-mile-from-shore Exclusive Economic Zones of other claimants.
As well as Vietnam, the Philippines, Brunei, Malaysia and Taiwan have overlapping claims with China.
Last year, the Philippines and China engaged in a lengthy stand-off over another disputed area, the Scarborough shoal, in a spat that left diplomatic ties very strained.
Both the Philippines and Vietnam have sought to raise the issue through the Asean regional bloc, but claim Chinese pressure has forced the topic off the agenda.