BEIJING -- Chinese police arrested two men on suspicion of contaminating milk used to produce baby formula with a toxic chemical, as the number of infants reported sickened by the bad milk powder jumped to 1,253 and authorities disclosed a second baby's death.

Ministry of Health officials said on Monday that two infants had died from kidney problems after ingesting milk powder contaminated with melamine, the same toxic industrial chemical linked to tainted dog food exported to the U.S. The milk powder was sold by Shijiazhuang Sanlu Group Co., one of China's biggest producers, which is 43%-owned by Fonterra Co-operative Group Ltd., of New Zealand.

The crisis raises questions about China's ability to regulate its products even after reforms enacted in the wake of tainted exports of pet food, toothpaste and drugs starting last year.

Government officials have announced a nationwide investigation. On Monday, local police in Sanlu's hometown of Shijiazhuang said they had arrested two brothers who had been selling three tons of contaminated milk a day to Sanlu, according to the state-run Xinhua news agency.

The brothers, surnamed Geng, ran a private operation collecting milk from farmers for resale. They allegedly began putting melamine in their milk late last year, after their milk was rejected by Sanlu "for failing to meet Sanlu's standards," Xinhua cited a police spokesman as saying. Xinhua didn't elaborate, but experts say nitrogen-rich melamine, used to make plastics and fertilizers, is sometimes illegally added to food products to boost their apparent protein levels.