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 yesterday, taking out the lower storeys of a hotel and a residential block.
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.
The 12-storey residential building, known as Yun Tsui, which also housed a restaurant, shops and a hostel, balanced precariously at an angle.
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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.
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.
The quake hit just before midnight (1550 GMT) around 21 kilometres (13 miles) northeast of Hualien, according to the United States Geological Survey.
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.
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.
Taiwan 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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