The incident took place while 20 people were digging tunnels to allow the water to discharge safely from the lake formed during an earthquake in August.
"They were about to place dynamite to blow up the blockage, but suddenly water burst through and flooded the construction site," state-run Xinhua news agency quoted an official as saying.
10 workers escaped but as many others were washed away.
Four were rescued and are being treated at Qiaojia People's Hospital.
The lake is 15-kilometre long and covers an area of 49 square kilometres in Qiaojia and Ludian counties.
It was formed when landslides blocked the Niulan River in the quake in August quake that left over 600 people dead.
Hundreds of residents downstream of the lake have been evacuated given the possibility of the lake completely bursting its banks.
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