A powerful explosion at a hospital complex in northern China's Shanxi province has killed at least 17 people with up to a dozen more missing, state media and local police reported.

The incident happened at Yuanping city's Xuangang Coal Power Company's staff hospital around 2:25 am Monday (1825 GMT Sunday), with 17 bodies found by Monday afternoon and two people seriously injured, China Central Television reported.

The explosion occurred in a garage at the hospital and damaged buildings within one square kilometre (0.4 square miles) "to various degrees", Xinhua news agency and police said, without giving a reason for the blast.

A doctor at the hospital, who declined to give his name, said a two-storey building which housed the garage and a small residential quarters was "completely flattened".

One end of a five-storey residential building for hospital staff was also completely destroyed, he said.

Some of the windows of the main hospital building, which has a capacity of 300 patients, were smashed but the structure appeared not to suffer major damage, the doctor and another staff member told AFP.

Television footage showed most of the windows of the red-brick staff building were smashed with rubble scattered across the street.

"I heard a loud bang," said the doctor who lives in the staff quarters about 500 metres away from the garage. "Many windows in my building were smashed."

The doctor said the blast made a hole of between two and three metres (6.6 and 9.9 feet) in the ground.

A policeman at the Xuanlan township, where the hospital is located, said at least 15 people had been killed and about a dozen people may still be buried in the rubble.

"We estimate that the death toll could reach 30," said the policeman, who declined to give his name.

The cause of the blast was still under investigation, China Central Television and Xinhua news agency said.

China's leaders have shown increasing concern recently for the state of the nation's run-down health care system, especially in rural areas.

Health Minister Gao Qiang said in February that China's healthcare expenditures as a percentage of gross domestic product was only about 5.5 percent in 2004.

"This percentage is not only far lower than developed countries, it is also lower than a majority of the developing countries," Gao said.

Premier Wen Jiabao announced during the nation's annual parliament session last month that the government would spend 20 billion yuan (2.5 billion dollars) over the next five years on upgrading hospital buildings and equipment.