The step came following a media expose of GM rice being available on sale at a supermarket in central China.
"The ministry will punish any companies or individuals that ignore regulations to grow or sell GM grains," Global Times quoted the agriculture ministry as saying in a statement. "There will be no tolerance for those violating practices."
In a report, China Central Television (CCTV) showed how GM rice, prohibited for commercial purpose in the country, was available for sale in the supermarket in Hubei province.
The channel commissioned tests on five packs of rice picked at random from the supermarket's shelves. Three of them were found to be containing a GM variety.
It was found that GM rice was being sold in Hunan, Anhui and Fujian provinces.