The cargo ship had 15 people on board when it sank at around 4:30 am (2030 GMT Tuesday), 90 nautical miles (167 kilometres) east of Taizhou City in Zhejiang province, Xinhua said, citing local maritime authorities.
The 80-metre (262-foot) long freighter departed the Taiwanese port of Kaohsiung with 14 crew members from Myanmar and one Taiwanese national. Four people have been rescued so far, Xinhua said.
Taiwan's national rescue centre said in a statement that the authorities had dispatched coastguard vessels and aircraft to help with search and recovery operations for the Palau-registered ship.
An investigation is under way to determine the causes of the accident, Xinhua said.
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