The Japanese and US authorities have been monitoring the vessel, a Ming-class diesel-powered hunter-killer submarine. It was not clear whether there were any casualties, the newspaper said.Update: here
The incident occurred on Thursday in international waters about halfway between Taiwan and Hainan. It was not known if the submarine surfaced of its own accord.
Three or four Chinese warships were spotted around the site of the incident, and another Chinese submarine was detected, which suggests that the incident may have occurred during a military exercise, the Yomiuri said.
The Yomiuri Shimbun daily reported that a Chinese Type 035 Ming-class submarine had to surface and was guarded by four Chinese navy vessels.(Italics added)
The submarine was soon towed back to its base in Hainan Province by a fifth Chinese vessel.
The location of the incident is noteworthy because Taiwan, China, Vietnam, the Philippines and other countries have overlapping territorial claims in the area.
The Yomiuri Shimbun quoted anonymous sources from the Japanese and US militaries and said that the submarine might have caught fire.
Probably more than you wanted to know about the "Ming" (Type 035) class here.