The babies were allegedly sold for between 800 and 4000 yuan ($100 and $495) each, some to foreigners, the official Xinhua News Agency said on Friday.
Baby girls ranging in age from a few days to several months were kidnapped from the southern province of Guangdong and sold via middle men to two welfare organisations in neighbouring Hunan province, Xinhua said in an article posted on its website.
Police investigating reports of baby smuggling arrested two of the suspected traffickers at the Hengyang Railway Station on 18 November, as they were delivering three infants, Xinhua said.
The arrests led police to 14 other suspects, including seven officials from welfare groups in the Hunan cities of Hengyang and Qidong, it said, citing Xiao Haibo, deputy director with Hengyang Public Security Bureau.
Hengyang and Qidong are about 990km southwest of Shanghai.
Xinhua said that the ring, which has allegedly been in operation for two years, sold some of the girls to foreign adopters, without giving details.
An investigation was underway to track down where the babies came from and their current whereabouts, it said.
The report did not give the names of the welfare organizations.
China has an active black market in babies and young women, who are bought or abducted and sold to couples who want another child, a future bride for a son or a household servant.
In August, a court in the southern province of Fujian sentenced two men to death for heading gangs that bought 82 children from their parents and sold them to families in Singapore.