The Ministry of Public Security released results of a three-month crackdown on food safety violators, saying in a statement that authorities investigated more than 380 cases and arrested 904 suspects.
Among those arrested were 63 people who allegedly ran an operation in Shanghai and the coastal city of Wuxi that bought fox, mink, rat and other meat that had not been tested for quality and safety, processed it with additives like gelatin and passed it off as lamb.
The meat was sold to farmers' markets in Jiangsu province and Shanghai, it said.
Despite years of food scandals from milk contaminated with an industrial chemical to the use of industrial dyes in eggs China has been unable to clean up its food supply chain.
The announcement came as China's top court on Friday issued guidelines calling for harsher punishment for making and selling unsafe food products in the latest response to tainted food scandals that have angered the public.
The Supreme People's Court said the guidelines will list as crimes specific acts such as the sale of food excessively laced with chemicals or made from animals that have died from disease or unknown causes.
China's penal code, which forbids unsafe and poisonous food, does not specify what acts are considered in violation of the law.
Adulterating baby food so that it severely lacks nutrition is also punishable as a crime under the guidelines. Negligent government food inspectors are also targeted for criminal punishment.
The supreme court said 2,088 people have been prosecuted in 2010-2012 in 1,533 food safety cases. It said the number of such cases has grown exponentially in the past several years. For example, Chinese courts prosecuted 861 cases of poisonous food in 2012, compared to 80 cases in 2010.
"The situation is really grave and has indeed caused great harm to the people," Pei Xianding, a supreme court judge, told a news conference.
"We cannot tolerate it any longer. We must punish the criminals severely, or we cannot answer to our people," Pei said.