The closures came amid a nationwide crackdown on shoddy and dangerous products launched in December that also uncovered use of recycled or expired food, the China Daily said.
Formaldehyde, illegal dyes and industrial wax were found being used to make candy, pickles, crackers and seafood, it said, citing Han Yi, an official with the General Administration of Quality Supervision, Inspection and Quarantine, which is responsible for food safety.
"These are not isolated cases," Han, director of the administration's quality control and inspection department, was quoted as saying.
Han's admission was significant because the administration has said in the past that safety violations were the work of a few rogue operators, a claim that is likely part of a strategy to protect China's billions of dollars of food exports.
In some parts of China, rich factory owners can often keep even official prying eyes out - often by buying them off, reports CBS News correspondent Barry Petersen.
International concerns over China's food safety problems ballooned this year after high levels of toxins and industrial chemicals were found in exported products.
Chinese-made toothpaste has been rejected by several countries in North and South America and Asia, while Chinese wheat gluten tainted with the chemical melamine was blamed for dog and cat deaths in North America. Other products turned away by U.S. inspectors include toxic monkfish, frozen eel and juice made with unsafe color additives.
Authorities in China have pushed for more stringent controls and increased publicity of their efforts to control the problem.
To avoid more problems, there is a new five-year plan from the country that grows half the world's vegetables. They plan on increasing inspections of exports, creating a faster recall system for bad products and blacklisting companies caught violating the new rules, reports Petersen.
Han said most of the offending manufacturers were small, unlicensed food plants with fewer than 10 employees, and all had been shut down. China Daily said 75 percent of China's estimated 1 million food processing plants are small and privately owned.
According to Han, the ongoing inspections are focusing on commonly consumed food such as meat, milk, beverages, soy sauce and cooking oil. Rural areas and the suburbs; where standards are likely less strict; are still considered key areas for inspectors, he said.
Meanwhile, another regulating agency, China's State Administration for Industry and Commerce, said it closed 152,000 unlicensed food manufacturers and retailers last year for making fake and low-quality products.