Amateur footage captured by Gongyi citizens and posted on Chinese social media shows the nine-engine test stage igntiing and then, exceptionally, taking off.
Hold-down clamps and other structures are typically used to securely keep stages in place.
The stage is seen climbing into the sky before halting, apparently with its engines shutting off, and returning to Earth.
The stage impacted the ground around 50 seconds after it took off, apparently with much of its kerosene-liquid oxygen propellant remaining, causing a large explosion.
The Tianlong-3 first stage would likely fire for a number of minutes on an orbital flight.
Space Pioneer was conducting its test as a buildup to an orbital launch of the Tianlong-3, which is benchmarked against the SpaceX Falcon 9, in the coming months.
The company announced earlier this month that it has secured $207 million in new funding.
Shanghai-based digital newspaper The Paper reported Henan officials as saying there were no casualties reported.
Space Pioneer issued its own statement later, stating there was a structural failure at the connection between the rocket body and the test bench.
The rocket’s onboard computer automatically shut down the engines and the rocket fell 1.5 kilometers southwest. It reiterated earlier reports that no casualties were found.
The company said the test produced 820 tons of thrust.
