Police in central China have shut down a hacker training operation that openly recruited thousands of members online and provided them with cyberattack lessons and malicious software.
The crackdown comes amid growing concern that China is a centre for a global explosion of internet crimes.
The internet company Google said last month its email accounts were hacked from China in an assault that also hit at least 20 other companies.
Police in Hubei province arrested three people suspected of running the hacker site known as the Black Hawk Safety Net, which disseminated website hacking techniques and Trojan software, the China Daily newspaper said.
Trojans, which can allow outside access to a computer when implanted, are used by hackers to illegally control computers.
Black Hawk Safety Net recruited more than 12,000 paying subscribers and collected more than 7 million yuan ($1.18 million) in membership fees, while another 170,000 people had signed up for free membership, the paper said.
The report said police seized nine servers, five computers and a car, and shut down all websites involved. Authorities also froze 1.7 million yuan in assets.
Google threatened last month to pull out of China unless the government relented on censorship, an ultimatum that came after the search giant said it had uncovered a computer attack that tried to plunder its software coding and the email accounts of human rights activists protesting Chinese policies.
Government officials have defended China’s online censorship and denied involvement in internet attacks, saying the country is the biggest victim of web attacks.
The Ministry of Industry and Information Technology said hackers tampered with more than 42,000 websites last year.