Authorities in Shanghai have ordered schoolchildren indoors and halted all construction as China's financial hub suffered one its worst bouts of air pollution.

Visibility was reduced to a few dozen metres, while flights were delayed and the city's spectacular skyline was obscured.

The financial district was shrouded in a yellow haze, and noticeably fewer people walked the city's streets. Vehicle traffic also was thinner, as authorities pulled 30% of government vehicles from the roads. They also banned fireworks and public sporting events.

"I feel like I'm living in clouds of smog," said Zheng Qiaoyun, a local resident who kept her six-month-old son at home. "I have a headache, I'm coughing, and it's hard to breathe on my way to my office."

Shanghai's concentration of tiny, harmful PM 2.5 particles reached 602.5 micrograms per cubic metre on Friday, an extremely hazardous level that was the highest since the city began recording such data last December. That compares with the World Health Organisation's safety guideline of 25 micrograms.

The dirty air that has gripped Shanghai and its neighbouring provinces for days is attributed to coal burning, car exhausts, factory pollution and weather patterns, and is a stark reminder that pollution is a serious challenge in China.

Beijing, the capital, has seen extremely heavy smog several times over the past year. In the far north-eastern city of Harbin, some monitoring sites reported PM 2.5 rates up to 1,000 micrograms per cubic metre in October, when the winter heating season kicked off.

The environmental group Greenpeace said slow-moving and low-hanging air masses had carried factory emissions from Jiangsu, Anhui and Shandong provinces to Shanghai. But it said the root problem lies with the excessive industrial emissions in the region, including Zhejiang province to the south.