THOUSANDS of protesters went on the rampage through a hospital in south-western China after the death of a young boy whose guardians could not afford to pay for treatment costing more than 600 yuan ($A100).

The riot, which led to clashes with security personnel and the burning of several police cars, highlighted public frustrations over a health system that was once free but is now a symbol of the growing inequality between rich and poor in an increasingly market-oriented economy.

The Hong Kong-based Information Centre for Human Rights and Democracy said 2000 protesters tore through the Guangan City No. 2 People's Hospital in Sichuan province on Friday, smashed windows and equipment and forced doctors to stop work.

About 100 armed police broke up the crowd, injuring 10 people and detaining five.

The disturbance was sparked by reports that the young boy died in the hospital's care on Tuesday after his grandfather could not pay medical costs.

The boy had swallowed farm chemicals in a soft drink bottle. Doctors told the grandfather to go home and collect more money for treatment. While he was away, the boy died.

The Guangan municipal government cleared the hospital of wrongdoing, saying doctors provided appropriate emergency care for the boy before the issue of fees arose. In a statement carried by the official Xinhua news agency, the local authorities said the grandfather paid 123 yuan to the hospital, instead of the full 639 yuan charge, after the boy had died.

Residents took to the streets to try to make the hospital take responsibility for the death. Police roadblocks were set up around Guangan and security was stepped up.

China's provinces have been hit by unrest in recent years. Most disturbances have been prompted by land seizures, corruption and the destruction of the environment. But rising health care costs are high on the list of rural grievances.

Since the start of market reforms in 1979, the Government's share of health care costs has fallen from 54 per cent to 17 per cent.

In the countryside, only 20 to 30 per cent of China's 800 million farmers have insurance because the old rural collectives, which used to spread health care costs among members, were abolished in the early 1980s.

As a result, studies have shown that illness is the main reason people fall into poverty, cited in 40 per cent of cases.

According to the World Health Organisation, China ranks 188 out of 191 nations for equality of financial access to health care. This is of increasing concern to the central Government. Last year, the state's Development Research Centre said the market-oriented medical reforms introduced since 1979 had failed.

GUARDIAN