Southern Metropolis Daily, a newspaper based in the delta, reports that abuses remain rampant in factories despite efforts by campaigners in China and abroad. The abuses might have become worse as wages have begun to rise in recent years, prompting businesses to seek new ways to cut costs. The newspaper was tipped off by residents living close to the street market. One local man, Mr Shao, said he had watched children being "sold like cabbages".

A reporter, posing as a clothing factory manager, was allowed to inspect would-be "employees" by patting their arms and stomachs. He agreed to pay them 3.5 yuan (about 50¢) an hour. Many had fake papers saying they were over 18; when asked, most were between 13 and 15. One was seven, another nine. The newspaper said many came from the same area of Sichuan — Liangshan county — where 76 children have been reported as missing since the Chinese New Year in February.

One of the most disturbing findings was that local officials seemed to be complicit. A foreman, who produced officially stamped documents concerning the children, said: "We have the complete right to manage them, by any means. You only need to sign a work agreement with us." The newspaper was told stories of hundreds of children being sent to electronics and toy factories across southern China.

Although run by the local government, Southern Metropolis Daily is encouraged to make money and breaks genuine stories to do so. Its staff have paid the price in the past, with a number being jailed on dubious bribery charges. On this occasion, some of the allegations have been confirmed by state mouthpieces, the China Daily and Xinhua news agency. The China Daily reported more than 1000 children were found toiling in factories in Dongguan. Police had so far rescued more than 100 children, the paper reported, as it carried a photo of a young girl crying after emerging from her place of work.

Authorities had set up a task force to rescue all the other children and prosecute those behind the illegal labour ring, local authorities were quoted as saying. In a similar case last year, hundreds of young men were found working as slave labour in a string of brick kilns across northern China. Lured with promises of high wages, they were locked up and, in some cases, beaten to death. That prompted the passing of a long-awaited labour law aimed at better protecting workers' rights.

Some of the foremen in the latest case have been arrested. TELEGRAPH, AFP KEY POINTS

■ Children sold as slave labour at 50 cents an hour. ■ Officials complicit in trade in children as young as seven.

■ Factories export electronics and toys.