People are being treated after they were injured in a stampede in Shanghai's riverfront during New Year celebrations STR/AFP/Getty

New Year celebrations in Shanghai turned into a midnight mayhem that left around 35 people dead in a stampede, when people rushed to pick fake money thrown from a building.

The stampede in Chen Yi Square took place in front of a building overlooking the famed Bund waterfront facing Huangpu River, according to Shanghai government sources.

The official Xinhua news agency said many of the injured were students.

An investigation has been initiated into the incident, reports Reuters.

Ironically, dawn on Thursday saw revellers on their way home even as workers were clearing the trash strewn, with little sign of the midnight mayhem.

Witnesses said fake money was thrown from a bar above the street as part of New Year's Eve celebrations.

Another witness, describing the chaos at the scene said: "There were just too many people and [they had] nowhere to escape."

Photographs on China's twitter version Weibo, showed rescue workers trying to resuscitate victims while ambulances were positioned nearby.

As people waited for news of relatives at a hospital, many expressed frustration with police for holding back information for six hours.

Authorities had recently cancelled an annual 3D laser show on the Bund that attracts as many as 300,000 people.

Family members clash with security personnel outside a hospital in Shanghai treating people injured in a stampede during New Year celebrations STR/AFP/Getty