"It appears it was a cold-blooded murder. We are pursuing the perpetrators and we will see to it that it doesn't happen again"
Meles Zenawi, Ethiopian prime minister
The Ogaden National Liberation Front, a group of ethnic Somalis fighting for independence and linked to Ethiopia's rival Eritrea, has claimed responsibility for the pre-dawn raid.
The attack occurred in Abole, a small town about 120 kilometers from the Ogaden regional capital Jijiga, close to the Somali border.
Zenawi said: "I have heard that something like a massacre has happened involving not only Chinese but also Ethiopians who were involved in road building programs in the region.
"It appears it was a cold-blooded murder. We are pursuing the perpetrators and we will see to it that it doesn't happen again."
He said there would be an investigation to ensure "that those who were involved in this despicable crime pay in full for what they did".
The latest separatist attack comes just a month after rebels seeking autonomy in the Afar region kidnapped five Europeans and eight Ethiopians.
China's oil companies began investing in Africa in the late 1990s, after double-digit economic growth outstripped supplies from Chinese domestic oilfields.