Another 210 people were injured in the disaster in Shuangyu, on the outskirts of the eastern city of Wenzhou.
The accident is likely to raise fresh questions over the rapid roll-out of China's high-speed rail network, one of the world's biggest.
Hours after the accident, Xinhua said the government had launched an "urgent overhaul" of national rail safety, which had been the subject of widespread concern even before Saturday's crash.
China has ploughed huge sums of money into its high-speed rail network, which covered 8,358 kilometres by the end of 2010 and is expected to exceed 13,000 kilometres by 2012 and 16,000 kilometres (10,000 miles) by 2020.
A new ê33 billion high-speed track linking Beijing and Shanghai opened to passengers on June 30 -- a year ahead of schedule and a day before celebrations to mark the 90th birthday of China's Communist party.
The new link halved the travel time between Beijing and Shanghai, but it has suffered delays caused by power outages, sparking a slew of criticism, and ticket sales have been slow.
The railway ministry said it had launched an investigation into the causes of Saturday's accident, the worst to hit the country's rapidly expanding high-speed rail network since it first opened to passengers in 2007.
An initial investigation has blamed "equipment failure caused by lightning strike", the ministry said in a statement.
Xinhua reported that two foreigners were among those killed in the crash, which local people said happened during a violent thunderstorm.
"I went to the scene as soon as I could and I saw lots of injured people.
One man and woman were covered in blood, I don't know whether they survived," a
54-year-old man in Shangyu who asked not to be named said.
Some high-speed services have been suspended as a result of the accident, but reports from the scene said workers had quickly cleared away much of the wreckage from the tracks and appeared to be fixing electricity cables.
The ministry said it hoped to reopen the line by 1000 GMT Sunday. Passengers on the two trains, which were carrying around 1,400 people between them, reported violent shaking and said many survivors were initially trapped in the wreckage.
"The train was supposed to stop for one minute, but actually stayed for 25 minutes," a passenger surnamed Zhou told Xinhua. "After it moved, we heard a 'bang' and it felt like an earthquake."
Another, unnamed survivor, aged 40, told the news agency he had been trapped in a carriage with more than 60 other passengers after the crash.
"We were trapped in the coach for more than one hour before five of us broke the window and crawled out," he said. The five rescued another two passengers, but one died shortly afterwards, the man said.
Hundreds of millions of Chinese depend on the country's railways and any problems generate tremendous public interest in a country where, despite a three-decade economic boom, air travel remains beyond the means of most people.
The high cost of the new network has sparked fears over corruption, and China's state auditor has said construction companies and individuals last year siphoned off 187 million yuan (ê29 million) from the Beijing-Shanghai project.
The revelation followed the sacking of former railways minister Liu Zhijun in February, who allegedly took more than 800 million yuan in kickbacks over several years on contracts linked to China's high-speed network.
In April, the railway ministry said trains would run between 250 and 300 kilometres per hour on the new Beijing-Shanghai link, which is designed for a maximum speed of 380 kph, for safety reasons.
Saturday's rail accident was the worst since April 2008, when 72 people were killed and more than 400 injured when one train derailed and another collided with it in the eastern province of Shandong.
That accident raised transport safety concerns for the Beijing Olympics just months later.