The Ningxia regional department of public security has launched a manhunt for Ma Yongping, the suspected arsonist behind the incident in Ningxia Hui Autonomous Region.
The accident happened at around 7 a.m (local time) when the bus went up in flames near a furniture mall in Helan County's Yinchuan city.
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The site was cordoned off and the injured were receiving treatment in hospitals.
Such arson attacks have been carried out by disgruntled persons in China in the past.
According to police, Ma owns three cars. Police in Ningxia localities were checking for the suspect and the car plate numbers on various road and highway entrances and exits.
The bus, which belongs to state-owned Yinchuan Public Transport Co Ltd, was bound for the Yinchuan Railway Station.
Pictures on microblog Sina Weibo show the entire bus engulfed by fire and smoke.
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