Health authorities in southern China are urging residents not to panic after a man who contracted the bird flu virus died at the weekend, the official Xinhua news agency said Monday.

The man, surnamed Chen, died on Saturday in Shenzhen -- a boomtown that borders Hong Kong where thousands of chickens have already been culled after three birds tested positive for the H5N1 avian influenza virus in mid-December.

The Shenzhen Disease Control Centre confirmed that Chen, a bus driver, had contracted H5N1 from poultry, but they were still trying to find out where he acquired the virus.

Chen is China's first reported human case of the deadly disease in 18 months.

"The virus cannot spread among people" and "there is no need for Shenzhen citizens to panic," Xinhua said, citing a statement from the centre.

Chen developed a fever on December 21 and was taken to hospital four days later, and diagnosed with severe pneumonia, the health department in Shenzhen, a city of more than 10 million people, said in an earlier statement.

The 39-year-old had apparently had no direct contact with poultry in the month before he was taken ill, nor had he left the city, the department said.

The H5N1 virus is fatal in humans in about 60 percent of cases.

However, it does not pass easily among humans, and the World Health Organization says it has never identified a "sustained human-to-human spread" of the virus since it re-emerged in 2003.

Chinese and Hong Kong authorities have been working closely together since December 21 after live poultry supplies were suspended to the glitzy financial hub following the discovery of infected birds.

Authorities in Hong Kong have raised the bird flu alert level to "serious" since they discovered infected chickens, resulting in major disruptions to poultry supplies over the busy Christmas period.

China is considered one of the nations most at risk of bird flu epidemics because it has the world's biggest poultry population and many chickens in rural areas are kept close to humans.