China said Wednesday that seven people killed in a hostage rescue operation in the restive Xinjiang region had been trying to leave the country to wage "holy war" -- a claim disputed by an exile group.

The incident last week was the latest reported confrontation in the region -- home to roughly nine million mostly Muslim Uighurs who have long bristled under Chinese rule -- since three deadly attacks in July left dozens dead.

The Xinjiang government said "terrorists" kidnapped two people on December 28 in the northwestern region's Pishan county, adding police shot dead seven suspects and arrested four others. One officer was killed and the hostages freed.

"The relevant people wanted to cross the border for the purposes of so-called holy war," foreign ministry spokesman Hong Lei told reporters, adding they kidnapped two herdsmen on the way.

He said police were alerted and the stand-off ensued. Hong did not say whether the suspects were Uighurs.

But Dilxat Raxit, spokesman for the World Uighur Congress, an exile group, said the incident was a conflict between regular Uighurs and policemen prompted by mounting discontent over a crackdown and religious repression in the area.

"Of the seven who were shot, two were women. Authorities said they arrested four people, and my information is the youngest is seven and the eldest is seventeen," he told AFP.

"I also know that some people who were beaten and are now in hospital are minors," he said, adding at least 35 people have been arrested in Pishan after the incident.

Xinjiang -- a resource-rich region that borders eight countries -- has been the scene of sporadic bouts of violence, much of which has been blamed by Beijing on the "three forces" of extremism, separatism and terrorism.

Last week, the official Xinhua news agency said there was "a surge in religious extremism in the Muslim ethnic Uighur-denominated area (Pishan) that borders the Kashmir region controlled by Pakistan and India".

But some experts doubt terror cells operate in Xinjiang, where Turkic-speaking Uighurs practise a moderate form of Islam.

They say the violence stems from discontent among Uighurs, many of whom accuse authorities of religious and political oppression, and resent the influx of the majority Han Chinese into Xinjiang.