A city-wide New Year's Eve celebration went up in smoke as thousands of residents who had gathered outside on the street released countless balloons into the sky, accidentally sparking explosions as some of them hit powerlines.

Phone footage shows an excited crowd gathered along a large pedestrian street in Wuhan, China, holding hundreds of hydrogen balloons on the night of December 31.

Then, as the clock struck midnight, they simultaneously released them into the sky as part of the festivities.

As the balloons soared into the sky, creating a beautiful spectacle, suddenly, there was a flash of fire, followed by two loud bangs. Panic ensued among the crowd as sparks flew all over.

Incredibly, no one was seriously injured, according to reports.

A young man named Xiao Feng later told local media he and his girlfriend were present during the incident.

He said: 'When I heard the first explosion, there was fire at the other end of the street, accompanied by a large cloud of smoke, and then another explosion followed.

'We initially thought it was fireworks, but later found out that the balloons had collided with high-voltage power lines.

'The crowd got a bit chaotic, but fortunately, there was no stampede.'

Another witness, who was not named, said: 'I and my cousin, in a moment of shock, luckily escaped without harm.

'We stood up from the ground and quickly left the scene. When I was home, I realised my knees were scraped. I'm grateful for my safety.'

Another girl, also not named, recounted: 'My friend and I were right under those high-voltage power lines.

'The first explosion almost scared my soul away. People were screaming and running frantically.

'My friend and I hid at the entrance of a nearby store, and then there was another explosion.'

And a nearby vendor added: 'On New Year's Eve, the entire street experienced a power outage.

'Fortunately, I used a portable power source for my stall, so mine was the only one with lights on, while other businesses were in distress.'

Hydrogen is sometimes used to fill up balloons as it makes them fly higher and further than helium. However, as it is flammable, it often poses a risk of explosion and fire.