The Lu Rong Yu collided with a Maltese freighter at 3:40 AM Beijing time, according to state broadcaster China Central Television.
Passing ships rescued two additional passengers who later died, the report said, adding that search and rescue operations are ongoing.
The cargo ship, which was under a Maltese flag, left the scene, according to China Radio International.
The incident occurs as China's aggressive pursuit of its territorial claims in the East and South China Sea has raised regional tensions.
Tokyo and Beijing both lay claim to small islands in the East China Sea.
In 2010, the Japanese coastguard arrested a Chinese trawler captain for allegedly ramming two of its patrol boats near the disputed territory.
