The incident happened in Changsha City, capital of central China's Hunan province, when a street peddler killed another with a knife after a heated dispute.
He then started attacking innocent bystanders, killing two people and injuring two others, Changsha police said. The two injured bystanders later died in a hospital.
Policemen, who rushed to the scene, shot and killed the attacker, it said.
The police has cordoned off the area and a nearby school has been closed.
China remains nervous after a stabbing incident at a railway station in Kunming on 1 March left 33 people dead and 143 wounded.
China has blamed the Kunming attack on militants from the restive Xinjiang region where the native Muslim Uygur community is opposed to settlements of people from the majority Hans from the rest of the country.
Chinese government attributed the attacks being carried out by East Turkistan Islamic Movement (ETIM), an al-Qaeda backed militant group fighting for the independence of Xinjiang.
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