The video from the scene reportedly shows several buildings damaged and on fire with debris scattered around them. The rocket was launched from the Xichang Satellite Launching Centre in Sinuan Province.
It was transporting two new Chinese navigation satellites into orbit.
They were carried on a long march 3B rocket that took off at 8.55am Beijing time (12:55 GMT) last Saturday.
This part of the mission was successful, but it appears debris later fell on an inhabited area.
The first three Chinese launch sites were constructed inland meaning there has long been a danger of debris strikes.
This happens when the rocket boosters drop off in segments and fall back to Earth.
Rocket launch sites tend to be built near the coast so the rocket boosters fall into the sea.
Footage posted on Chinese social media site Wiebo, reportedly from the scene of the crash, shows a building on fire having apparently been hit by a rocket.
A number of buildings appear to be damaged, with debris from the rocket scattered around them.
“The residents within the calculated drop zones for spent stages and boosters are warned and these areas are, apparently, evacuated.
“The fact that we often see amateur footage of boosters falling from the sky supports the notion that they are warned and expecting to see a falling spent rocket stage.
“The notice instructs people to go to a safe zone ahead of launch, and not to approach wreckage if they find it, due to the harmful effects of the residual propellant.”
China has dramatically expanded its space programme in recent years.
The country is planning to put a human on the Moon by 2035.
America has also announced plans to recompense human trips to the Moom and is also plotting the first ever visit to Mars.
According to China’s Xinhua news agency the two Beidou satellites launched over the weekend are the 50th and 51st of their kind to enter space.
They will form part of the Beidou-3 system, a Chinese global positioning satellite system.
This is intended to replace the current Beidou system in the early to mid 2020s.
China, as well as a number of other countries, are said to be considering the construction of permanent human bases on the Moon.