The Chinese police have "targeted" a suspect in the blast at the entrance of a kindergarten in east China's Fengzian County, as the death toll in the explosion climbed to eight, the state media reported on Friday.
One of the injured died at the hospital later, it said.
Calling it a "criminal offence", the police have "targeted" the suspect, the report said, without providing further details.
The blast occurred around 4:48 PM (local time) on Thursday. Two persons were killed on the spot, and another six died later in a hospital. The condition of eight among the injured remained critical, doctors said.
More than 10 senior doctors from Nanjing and Wuxi cities of Jiangsu have rushed to the site of the blast.
The provincial government has ordered checks of possible safety risks at the production site, the Xinhua report said.
A witness told Hong Kong-based South China Morning Post that the blast came just minutes before the end-of-day bell rang.
"Many people might be dead," he said.
Another shop owner near the kindergarten, who refused to be identified, told the Post that the blast happened a few minutes before the kindergarten opened its doors to allow parents go inside the school.
"The parents were all queueing up at the school gate at the time," the shop owner said.
Because the explosion happened just outside the school grounds, the pupils waiting inside classrooms would probably have been shielded from injury, he said.
The shop owner said his daughter also attended the school yesterday and was later taken home safely by her grandfather.
Many cooked food stalls operated outside the kindergarten and a gas cylinder might have caused the explosion, he said.
It is the latest tragedy to strike a kindergarten in China in recent weeks.
A school bus packed with kindergarten pupils erupted in flames inside a tunnel in eastern Shandong province on May 9, killing 11 children, a teacher and the driver.
Officials later said the fire was intentionally set by the driver, who was angry at losing overtime wages.
In January, a man armed with a kitchen knife stabbed and wounded 11 children at a kindergarten in southern Guangxi Zhuang autonomous region.