Authorities said they could not verify how many residents were still missing after the 6.4-magnitude quake which hit the eastern port city late Tuesday, taking out the lower storeys of a hotel and a residential block.
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Hualien is one of Taiwan's most popular tourist hubs as it lies on the picturesque east coast rail line and near to the popular Taroko Gorge.
Five more buildings including a hospital were also damaged in the city, where roads were ripped apart and strewn with rubble.
Rescuers using cranes and ladders lifted people to safety from the hotel and apartment block throughout the night and continued their search for anyone trapped as day dawned.
The 12-storey residential building, known as Yun Tsui, which also housed a restaurant, shops and a hostel, balanced precariously at an angle.
One resident who lives nearby told AFP how he watched the block collapse.
"I saw the first floor sink into the ground. Then it sunk and tilted further and the fourth floor became the first floor," said Lu Chih-son, 35, who saw 20 people rescued from the building.
"My family were unhurt, but a neighbour was injured in the head and is bleeding. We dare not go back home now. There are many aftershocks and we are worried the house is damaged," he told AFP.
Frequent aftershocks left some residents stranded in the open as they feared going back into buildings. Authorities said 830 people were in shelters Wednesday morning.
Officials also said 214 people had been injured in the quake, with 117 people rescued from damaged buildings so far.
The severely damaged Marshal Hotel crumpled into the ground as its bottom storeys disappeared.
"The lower floors sunk into the ground and I saw panicked tourists being rescued from the hotel," resident Blue Hsu told AFP.
Quake anniversary
The quake hit just before midnight (1550 GMT) around 21 kilometres (13 miles) northeast of Hualien, according to the United States Geological Survey.
It followed almost 100 smaller tremors to have hit the area in the last three days and comes exactly two years since a quake of the same magnitude struck the southern Taiwanese city of Tainan, killing more than 100 people.
Most of the deaths from the February 2016 earthquake were from the 16-storey Wei-kuan apartment complex, which toppled on its side and buried many residents in the rubble.
It was the only high-rise in Tainan to crumble completely in the quake, which came two days before Lunar New Year, when many people were visiting relatives for the biggest celebration of the Chinese calendar.
The safety of the building was called into question immediately after the disaster, when metal cans and foam were found to have been used as fillers in the concrete and residents said there had been cracks in the structure.
Five people were found guilty and sentenced to five years imprisonment over the disaster, including the developer and two architects, with prosecutors saying they "cut corners" that affected the building's structural integrity.
jpegMpeg4-1280x720Taiwan lies near the junction of two tectonic plates and is regularly hit by earthquakes.
The island's worst tremor in recent decades was a 7.6 magnitude quake in September 1999 that killed around 2,400 people.
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