Shanghai warns against 'panic' as Covid cases mount

China is experiencing its worst Covid-19 outbreak since the start of the pandemic more than two years ago, with Shanghai posting record-high case counts as the highly transmissible Omicron variant frustrates authorities.

China's biggest city on Wednesday reported 981 cases -- all but four of them asymptomatic -- a number that dwarfs any previous daily tally in the city and which is nearly one-fifth of the day's national total.

Shanghai has responded to the outbreak with targeted residential lockdowns in areas with confirmed cases or close contacts rather than a city-wide lockdown, aiming to minimise disruption.

But as case counts rise, so has public anxiety, with residents taking to social media to express fears of further lockdowns across the city of roughly 25 million people.

Citizens have complained of unclear government messaging and voiced anxiety over images of expanding test sites and the announcement this week that some indoor arenas had been converted into mass-quarantine sites.

"We hope that everyone will not believe or spread rumours, and especially do not maliciously spread rumours that cause panic in society," Wu Jinglei, head of Shanghai's health commission said at a daily briefing.

Those spreading rumours would "bear legal responsibility," he added.

"Everyone is working hard to keep the city safe."

Stores have bustled as consumers stock up, and social media images circulated late Tuesday showed crowds of shoppers converging on outdoor vegetable markets. The images could not be independently verified.