According to a local official, the estimated economic loss is at 100 million yuan ($16.5 million). The fire has been extinguished at 13:30, according to China Daily.

No casualties have been reported and the cause of the fire is being investigated.

Local officials said the fire started from a little shop near the center of the old town. Police received the report at 1:27 am and 2,000 firefighters rushed to the rescue.

As of 11.30 am, the fire has been brought under control, according to People's Daily. However there is still danger of flare-ups.

Firefighters from Lijiang and Dali had arrived during the night to support the battle against the blaze.

They had their work cut out not only because the wooden structures in the town were extremely flammable, but also because water had frozen in the pipes due to the cold, hindering rescue.

Dukezong, meaning "town of the moon" in Tibetan was built 1,300 years ago and became an important landmark on the South Silk Road. It is now one of the most renowned resorts in Shangri-la, known for its well-preserved ancient Tibetan dwellings.