The Hanyi high-speed railway linking the provincial capital Wuhan and Yichang city is expected to open in May this year, and the collapsed section had already undergone test runs, Xinhua said.
It reported that a 300-metre (yard) section of the railway had collapsed on Friday afternoon, citing workers who said it was likely due to heavy rain that had fallen in the previous days.
Shares in China Railway Construction Corp. Ltd were down more than seven per cent in Hong Kong on Monday, with China Railway Group Ltd losing more than five per cent.
Xinhua later reported that the collapse was caused by excessive subsidence of the tracks into the ground supporting them, quoting maintenance workers. A total of 7.2 km of track was affected, they said.
"Last year, we reinforced part of the track, and this time we are pinning up the whole subsiding section," said a worker at the scene, according to Xinhua.
"We discovered the problem during the evaluation phase, and invited experts to reinforce the rails," said Wang Zujian, director of the leadership office of Hubei provincial railway construction.
The sinking was due to the soft, wet ground, Wang said.
A crash near the eastern city of Wenzhou in July last year -- China's worst rail accident since 2008 -- killed at least 40 people and prompted the government to slow investment in high-speed railway projects.
China's high-speed rail system opened to passengers only in 2007, but grew at breakneck speed thanks to huge state funding and is already the largest in the world, with 8,358 kilometres (5,193 miles) of track at the end of 2010.
In December 2010, the railways ministry announced that a Chinese high-speed train had reached a speed of 486 kilometres per hour, smashing the world record for an unmodified train.
But last March China's state auditor said construction companies and individuals had siphoned off 187 million yuan (around $30 million) in funds meant for a flagship new Beijing-Shanghai link that launched just before the crash.
Authorities decided to limit speeds on the high-speed network to 300 kph following the allegations of widespread, high-level graft in the rail sector, with fears that safety had been compromised.