Sunday's attack raised the death toll from weekend violence in the Silk Road city of Kashgar in China's far west to 18.
Kashgar is in Xinijang region, which has been tense since nearly 200 people were killed in fighting between Uighurs and Han Chinese in 2009 in Urumqi, the regional capital.
Kashgar's city government said in a statement that an initial investigation showed members of the group behind Sunday's attack had trained in making explosives and firearms in neighbouring Pakistan in camps belonging to the East Turkestan Islamic Movement, a banned militant organization advocating independence for Xinjiang.
The statement on the city government's website did not offer any proof. China says the group is allied with al-Qaida.
There was no immediate comment from Pakistan. It is unlikely the allegation will drive a wedge in relations between the countries, which are close political allies.
On Sunday, the "group of armed terrorists" stormed into a restaurant in the Kashgar city centre, killing the owner and a waiter and setting the restaurant on fire, the city government said.
The attackers then ran out of the restaurant and stabbed civilians indiscriminately, leaving another four people dead and 12 injured, it said.
Police opened fire and shot dead four suspects at the scene, while another suspect died later in a hospital, it said.
Xinjiang has been beset by ethnic conflict and a sometimes-violent separatist movement by Uighurs, a largely Muslim ethnic group that sees Xinjiang as its homeland. Many Uighurs say they have been marginalized as more majority Han Chinese move into the region.
The statement called the latest violence a "premeditated terrorist attack."
Xinhua news agency said that the local government issued arrest warrants on Monday for two local ethnic Uighurs who allegedly fled the scene.
Sunday's violence followed a day of clashes in the same Silk Road city that killed seven people and injured 22.
It was unclear who started the clashes. But an overseas ethnic activist group said that it feared the violence could prompt a new crackdown on minority Uighurs lamed for previous violence in the region.
Dilxat Raxit, spokesman for the German-based World Uyghur Congress, which advocates a nonviolent approach, said that frustrations were forcing Uighurs to take to the streets.
"Uighurs have no peaceful way to oppose the Chinese government so some have taken to extreme measures. It is unthinkable but it is the reality, and Beijing should take responsibility to deal with these issues," he told The Associated Press from Sweden, where he is based.
China defends its treatment of minorities, saying all ethnic groups in the country are treated equally and that tens of billions of dollars in investment and aid have dramatically raised living standards.
The violence flared on Saturday night when a police official said two knife-wielding men hijacked a truck in Kashgar, rammed the vehicle into a crowd and got out attacking pedestrians.
People who came under attack retaliated, and one of the suspects was killed and the other caught, said the official from the Xinjiang regional public security bureau.
A total of seven people died and 22 were injured, she said. Xinhua said six bystanders and one suspect were killed.
The official said the attack was under investigation and the motive unclear. She refused to give her name, as is common with Chinese officials.
Police patrolled Kashgar on Monday but locals said it was a sight they were used to. There is usually a strong security presence in Xinjiang's main cities.
"I took a bus to work as usual this morning and saw police armed with rods patrolling on streets," said a woman at Hua'an International Travel Service, who only gave her surname, Zhao. "Seven or eight of them were in a group, but the police patrol the streets every day. I didn't see there was a big difference today."
Another woman, at Kashgar International Travel Service, said she saw a report about the violence on TV. "I have grown up in the city since I was a child and got to used to it," said the woman, surnamed Deng.
In another violent incident less than two weeks ago, police shot 14 rioters who attacked a police station and killed four people in Hotan city, 300 miles (500 kilometres) southeast of Kashgar, Xinhua said.
Xinjiang is China's Central Asian frontier, bordering Pakistan, Afghanistan, Russia and other countries. Kashgar was an important hub on the ancient route through which Chinese silk and other goods reached Europe.
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