A total of 426 dairy producers will be shut down and another 107 will have to suspend operations following a quality watchdog inspection.

Just over half of the producers inspected had authorized licenses and these were granted permission to continue operations, a senior quality inspection official said.

Li Yuanping, spokesman for the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), the industry watchdog, said at a news conference in Beijing on Saturday that 643 dairy producers, 55 percent of 1,176 nationally registered, passed the AQSIQ inspection.

Of the remaining 533 that failed to meet requirements, 426 face permanent closure, while 107 were told to suspend operations until they carried out improvements, Li said.

In response to a call to ensure the safety of dairy products from the State Council, China's cabinet, the AQSIQ issued a regulation in November requiring dairy companies to reapply for production licenses by the end of March or face suspension.

In 2008, baby formula tainted with melamine and industrial chemicals killed at least six infants and more than 300,000 children suffered kidney ailments.

The scandal led to growing concerns over the quality of dairy produce, in particular baby formula. As recently as February, there were media reports that dairy products containing leather-hydrolyzed protein, a banned additive, were still being sold in markets.

"The local bureaus are working on revoking production licenses for the 426 that are disqualified," Li said, adding that suspended producers are in danger of permanent closure if they did not carry out urgent improvements.

The AQSIQ has demanded that its local bureaus enhance supervision. "Any unlicensed production center will face harsher punishment in future," Li said.

Most of the infant formula producers, 114 out of 145, passed the inspection, he said.