The fire broke out at about 11.15am local time on Thursday, at the Qingdao Beihai shipyard during repair and inspection works, state-run Xinhua said.
Of the 42 people onboard, 12 were evacuated safely and five were injured and hospitalised.
The blaze was extinguished by early afternoon, state media said.
A picture of the scene released by Xinhua showed the vessel involved to be the Ocean Melody.
LSEG ship-tracking data identified it as a 20-year-old Liberia-flagged dry bulk carrier managed by Yuyangkunpeng Shanghai Shp Mgm, with Huili Shipping Co Ltd listed as its registered owner.
The vessel arrived at the Qingdao shipyard on August 31 and has remained there since, LSEG data showed.
Chinese President Xi Jinping called for intensified search and rescue efforts, a swift investigation and accountability measures, according to Xinhua.
The shipyard is controlled by state-owned China State Shipbuilding Corporation (CSSC), one of the world's largest shipbuilders.
CSSC describes itself as China's principal naval shipbuilder and the country's largest designer and builder of ships and offshore equipment.
A 2022 recruitment notice on the CSSC-owned Qingdao unit's website said the shipyard had annual shipbuilding capacity of 3 million deadweight tons and could repair 212 vessels a year.
