Police have questioned 78 people suspected of being involved in a baby milk powder contamination scandal, said Shijiazhuang Vice Mayor Zhao Xinchao on Friday.
The city is where the formula was being manufactured by Sanlu Group.
Zhao didn't disclose identities of these people but Sanlu told Xinhua those being questioned include dairy farmers and milk dealers.
The company would not tell Xinhua if its own employees are being investigated.
Sanlu, one of China's leading dairy producers, admitted its powdered milk products were contaminated with melamine following news reports that dozens of babies became sick with kidney stones after consuming the Sanlu brand of baby milk powder.
The suspects added water to the milk they sold to Sanlu to make more money. They also added melamine so that the diluted milk could still meet standards, said investigators.
Health experts said melamine is a chemical raw material. Ingestion can lead to reproductive damage, or bladder or kidney stones.
A thermosetting plastic, melamine has an appearance similar to milk powder. It is widely used in manufacturing fabrics, glues, housewares and flame retardants.
"The substance gives the appearance of a high nitrogen level, which is an index to measure the protein content in food," a health expert told Xinhua. He declined to be named.
Exposure to melamine can lead to stone formation in the urinarytract of the human body. One baby in the Gansu province died as result kidney stones. At least 50 cases have been reported in Gansu and there are also many in several other provinces.
Zhao vowed to spare no efforts to save the sick babies.
Sanlu has sealed off 2,176 tonnes of contaminated milk powder and recalled 8,210 tonnes from the market. There are still 700 tonnes to be recalled. All the contaminated formula was produced before Aug. 6 of this year.
Supermarkets in some provinces started to pull Sanlu milk powder off shelves.
The withdrawal came after both the health authority and Sanlu confirmed the milk was contaminated with a melamine.
Dong Yuguo, spokesman for Wal-Mart China, said on Friday the company had received notices to stop selling the formula.
Wal-Mart now has 109 stores in China.
Chen Bo, national communications manager of Carrefour China, also confirmed it had sent out an urgent notice Friday morning to all 118 of its stores to pull the product off shelves.
China's quality watchdog, the Administration of Quality Supervision, Inspection and Quarantine, has also sent a team to Sanlu to investigate the cause of the contamination. Meanwhile, itis also doing a nationwide check of other company's baby milk powder products.
China's Health Ministry said on Friday that it has launched a nationwide investigation into contaminated Sanlu baby milk formula. All local health agencies are to report cases of infants with kidney stones immediately.
Lu Yuan, a urologist with the No. 1 Hospital of the Chinese People's Liberation Army, said kidney stones could bring serious problems to the baby's brains, hearts, lungs, kidneys and livers.
Lu's hospital, based in Lanzhou, capital of the Gansu Province, has received 14 such infant patients, six have already been cured and eight are still being treated.
"Most of the babies looked worn-out and had a fever when they arrived at the hospital. Some didn't produce any urine for two to three days and were in very serious condition," Lu said.
The Health Ministry has issued a treatment plan on its official website (www.moh.gov.cn) to help local hospitals deal with such sick babies.
The Health Ministry said those responsible for the contaminated milk will face "heavy punishment".
It urged the public to immediately stop consuming the Sanlu milk powder formula and go to a doctor if they find babies having difficulty in urinating.