A fifth Dutch passenger and two Chinese balloon operators were injured in the accident near Yangshuo in the Guangxi region, the official Xinhua News Agency said. The scenic town is a popular destination for backpackers.
Xinhua said the balloon flew for about an hour and was descending when a fuel tank leak caused it to catch fire about 490 feet (150 meters) above ground. It said police confirmed that two couples were killed.
The crash occurred about 20 miles (30 kilometers) south of Yangshuo in the farming village of De'an, China Central Television said in a report that showed residents gathered on a hillside, apparently trying to see the crash site.
The three survivors' injuries were not life-threatening, CCTV said. Xinhua said the two pilots were in a hospital, while the fifth Dutch passenger was recovering in a hotel.
A press officer with the Dutch Embassy in Beijing said the consulate in the southern city of Guangzhou has sent staff to the scene. She was not immediately able to confirm the death toll or other details and asked that her name not be used, in line with embassy policy.
Xinhua said the balloon belonged to the Dongguan Meixiang Aviation Club, based in neighboring Guangdong province, and had received an aviation license in September 2008.
Yangshuo balloon tours cost about 800 yuan ($117) per person and have become a regular feature on tourist itineraries.
Ad Mayer, a spokesman for the Ministry of Foreign Affairs in the Hague, said the group was believed to be on a tour of China arranged by Djoser, a Leiden-based travel company.
Calls to local authorities in De'an and Yangshuo rang unanswered.