The Baiyangdian lakes, a two-hour drive south of Beijing, made national headlines for their stinking water and a mass death of fish this spring.

The State Environmental Protection Administration (SEPA) concluded that a glut of paper mills and a lack of waste treatment in nearby towns were largely to blame, the Communist Party's mouthpiece, the People's Daily, said on Friday.

Seven local environment officials and town heads were sacked or asked to resign for the "serious damage" that caused losses of 9 million yuan (US$1.1 million), while another official was disciplined, the paper said.

On Thursday, two people were injured in an explosion at a chemical plant on the Songhua River, which passes through Harbin, the capital of Heilongjiang province, the Beijing News said on Friday.

It did not say if any chemicals flowed into the river. A November blast at a petrochemical plant in neighbouring Jilin province poured 100 tonnes of a toxic benzene compound into the river and forced taps in Harbin to be cut off for days.

Xie Zhenhua, the head of SEPA at the time, resigned after the spill seeped into Russia, making it an international incident.

China vowed last month to invest more than US$1 billion over the next five years to clean up the chronically polluted Songhua, and SEPA this week ordered safety overhauls at 20 chemical and petrochemical plants located near rivers.

China's dazzling industrial growth has transformed a poverty-stricken country into one of the world's top five economies in less than three decades, but a cost has been increasingly serious water and air pollution.