Sunday's blast involved a container of scrap metal that exploded in the outdoor yard of a metal-molding plant in a bonded area in the city of Kunshan, causing the plant to catch fire, the local government said on its official Weibo account.
"The cause of the incident is being investigated," it said of the blast, which also injured five people, one of them severely.
Plant owner Kunshan Waffer Technology Corp Ltd, a Taiwan-based maker of magnesium alloy injection molding products and aluminum alloy die castings, was not immediately available for comment.
The company was fined last May by the Kunshan environmental protection bureau for violating water pollution rules, according to state-owned newspaper the Beijing News.
Kunshan, about 70 km west of Shanghai, is home to more than 1,000 technology companies and manufacturers, including many Taiwanese firms.