Five bodies have been retrieved and at least 15 people rescued, including the captain and the ship's chief engineer - who have both been detained - according to state media reports.
Hours after the incident, which occurred on Monday night local time, the People's Daily reported that more passengers were still alive and inside the Eastern Star.
Images shown on state broadcaster CCTV showed rescuers lying on the upturned ship attempting to communicate with potential survivors inside.
The China Daily newspaper reported that a woman in her 60s was pulled
alive out of the water at 12.56pm local time (04:56 GMT) on Tuesday
following reports on CCTV that three people had been confirmed alive
inside the upturned ship.
Another man was later pulled alive from the water, the newspaper reported.
The Yangtze River navigation administration said the ship capsized
during a "cyclone" at Jianli in Hubei province. Chinese meteorological
officials have been tasked to study the weather conditions at the time
of the accident.
Seven people swam to the shore and alerted police after the shipwreck, CCTV reported.
Search and rescue operation
State media also reported that more than 2,100 soldiers and policemen
were taking part in search and rescue operations, which were
complicated by strong winds and heavy rain. More than 150 ships were
also involved.
Most of the passengers were said to be tourists aged between 50 and
80 years old, who were about to go to sleep as the vessel sank.
Xinhua said there were 405 Chinese passengers, five travel agency
workers and 47 crew members on board the ship that was en route from
Nanjing to Chongqing.
President Xi Jinping asked that no efforts be spared in search and
rescue operations, and Premier Li Keqiang travelled to the area.
Al Jazeera's Rob McBride, reporting from Hong Kong, said the accident
comes as more and more Chinese people are travelling within their own
country.
"People take vacations more and trips along the Yangtze River are one
of the more popular trips that people make," our correspondent said.
Source: Al Jazeera