Counterterrorism policemen conducts a training in Hami, Xinjiang Uygur autonomous region, June 29, 2014. [Photo/IC]

Police in Wenzhou city of East China's Zhejiang province arrested two men on Friday morning while busting a terrorist gang that they say has been active locally.

The two men were arrested at 5 am, said the brief report, posted on state broacaster China Central Television's microblog.

Police seized explosives and knives, as well as other weapons, from the pair, and the case remains under investigation.

Provincial, city and county-level officials set up a task force to deal with the issue, it added. Wenzhou is known as one of the country's manufacturing powerhouses.

The report did not identify the suspects nor say where they were from.

China has grappled with a string of violent knife and bomb attacks over the past two years.

Last week the government said that police in the northeastern city of Shenyang had shot dead three knife-wielding Uygur militants.