Local officials in Brazil's northeast Bahia state, where the BYD factory was being built, said this week they found more than 160 Chinese workers contracted by Jinjiang Construction Brazil Ltd. in "degrading" conditions, some presenting visible signs of skin damage.

Jinjiang denied its employees had been illegally enslaved, saying on Thursday that the accusations had "seriously damaged the dignity of Chinese people".

"Being inexplicably labelled as 'enslaved' has made our staff feel seriously insulted and that their human rights have been violated," it said on Weibo.

The contracting company shared images of a letter denying the poor working conditions and citing translation issues, which appeared to be signed by its local Chinese staff.

BYD's Brazilian subsidiary said on Monday it had "broken with immediate effect" its contract with the Jinjiang branch responsible for work on the site in Camacari.

Work on part of the site was also suspended by order of Bahia's public ministry for works (MPT).

Bahia's state ministry and other authorities have been conducting inspections since November that the MPT said identified "163 workers who appeared to be in slave-like conditions with the Jinjiang company providing services for BYD".

The MPT also described in a statement "an alarming situation of precariousness".

"In one of the accommodations, workers slept on beds without mattresses and had no wardrobes for their personal effects, which were mixed together with food supplies," it said.