A New Year's stampede on Shanghai's historic waterfront killed at least 35 people and injured dozens more, with witnesses saying revellers had scrambled for fake money thrown from a building.

The disaster happened in a crowded square shortly before midnight late on Wednesday as people packed the Bund area to usher in 2015, according to a city government statement.

A photo on the website of the Shanghai Daily newspaper showed what appeared to be dead and injured people lying on the ground with crowds still in the background. State TV footage showed abandoned footwear littering the area and a line of police vans with sirens flashing.

While the cause of the crush was still under investigation, the official news agency Xinhua cited a witness as saying people had rushed to retrieve dollar-like notes thrown from a nearby window.

City officials said 35 people had been killed and 48 injured, 14 of them seriously.

"I felt I was suffocating," wrote one person on Sina Weibo, a Chinese equivalent of Twitter. "Some people with us will not come back."

The Bund, renowned for its pre-Chinese revolution architecture, is the former financial district of the country's commercial hub and now a popular tourist destination, packed with high-end restaurants and expensive boutiques.

By dawn there was little evidence of the disaster beyond a lone police van with flashing lights and rubbish discarded by celebrants. That is typical in China for major incident scenes, which authorities are quick to clear.

An elderly woman doing her morning exercises on the Bund said: "We offer sympathy for the dead and injured."

More than 20 police vehicles were outside the Shanghai Number One People's Hospital, one of at least three facilities where the injured were taken, and officers prevented people from entering.

The mother of an injured 12-year-old boy sat in a chair crying surrounded by relatives.

"We don't know what is happening but we can't get in to see him," said her older brother, declining to be named.

- Fake currency -

Fake currency has long been burned at Chinese funerals to ensure the dead have money in the afterlife, and nowadays is also frequently used as an advertising medium.

"We saw people scattering money from Bund 18," wrote one poster, referring to a shopping and entertainment complex.

Pictures posted online showed the slips of paper were a similar size, shape and colour as US currency, but emblazoned with the logo of M18, a nightclub in the building, and stamped "New Year 2015".

But other posters said the paper-throwing happened across a wide street from where the government said the main stampede occurred, and a witness told AFP his friend was injured as crowds going down the steps from the Bund trampled those people going up.

Chinese President Xi Jinping demanded an immediate investigation into the cause, Xinhua reported, and urged the prevention of such incidents in future.

State broadcaster China Central Television's main news channel prefaced its brief coverage of the stampede with Xi's response, and treated his New Year address as the day's top news item, replaying the speech several times.

- Fears of overcrowding -

Shanghainese have traditionally flocked to the Bund to celebrate the New Year, and more recently the district government overseeing the area has put on official celebrations.

This year's "countdown" reportedly included a light show, singing performances and finally fireworks.

A new location was chosen specifically due to concerns about overcrowding after nearly 300,000 people turned out to see in 2014, the Shanghai Daily newspaper said.

Most large gatherings in China are carefully controlled by authorities but the country has seen other incidents in which overcrowding has caused panic and deaths.

Last January 14 people including some children were killed and 10 injured in a stampede at a mosque where food was being distributed in Ningxia region.

In 1993, 20 people were killed and more than 70 injured as New Year's Eve revellers poured into a narrow street after midnight in Hong Kong, at the time still under British rule.

The Bund is opposite the Huangpu river from Pudong, the concentration of towering skyscrapers that epitomises Shanghai's role at the heart of China's economic boom.

But despite its position among China's most advanced cities it has not been immune from accidents and urban management problems.

In November 2010 a fire at a high-rise apartment building left 58 people dead, with some panicked residents attempting desperate jumps to safety.