At least two people have died in the wave of violence directed at Chinese businesses, led by protesters who say that Asian shops overcharge for their goods and demand that they be taken over by locals.

The protests and looting have hit several towns in recent days. The National newspaper said on Tuesday that police fired more than 50 shots into the air in the town of Mount Hagen on Monday after a crowd of hundreds refused to disperse.

'It is our sincere hope that the PNG government will take effective measures to prevent such incidents from recurring,' a spokesperson at the Chinese embassy said.

Prime Minister Michael Somare's office told AFP that the police were on top of the situation in the resource-rich island nation, which lies off Australia's northeastern tip. 'The police have got things under control now,' a spokesman said, adding that the government was expected to issue a statement shortly.

Mr Somare is on a visit to Japan but his deputy Puka Temu had expressed 'grave concern' about the looting, she said.

The trouble was sparked by a protest march last week in the capital Port Moresby, where demonstrators complained of the number of Asians, especially Chinese, moving into business in PNG, she said.

Protesters brought business to a standstill in Goroka township on Monday, while police also had to fire in the air to prevent the looting of Asian-owned shops in Kundiawa town.

'There is a feeling of anxiety and frustration, a feeling of being left out and being ignored by a government working in total isolation of its people,' opposition leader Mekere Morauta told the Post-Courier newspaper. 'The government is allowing unskilled foreigners who cannot even speak one word of English taking on the forms of business that only Papua New Guineans should be allowed to own and operate.'

The violence against the traders followed a rampage by local mine workers on May 8 at a major Chinese-run nickel mine in which several Chinese staff were injured and vehicles and equipment ruined. -- AFP