Government departments lack the resources to protect endangered species of sharks and local authorities often turn a blind eye to illegal trading in the animals if it benefits the economy, an official at the Ministry of Agriculture's Bureau of Fisheries said.
But the official, who declined to give his name, said the bureau had neither the money nor the manpower to enforce laws protecting endangered species.
A Hong Kong-based conservation group claimed this week that a company in the seaside town of Puqi in Zhejiang province was running the world's largest shark abattoir, processing hundreds of endangered specimens a year for products such as health supplements and meat for restaurants.
The fisheries bureau official said there were no shark-fishing boats on the mainland and if any of the three species were caught, the catch had to be reported.
More species of shark - oceanic whitetip, porbeagle and three species of hammerhead sharks - will be added to the protected list in September, stretching the fisheries' enforcement arm further.
"Fisheries' law enforcement is not like the police. The enforcement arm is weaker than other departments," he said. "There's not enough money, not enough people."
He said illegal, unreported and unregulated fishing was not unique to China, but countries such as the United States and Australia had more resources to enforce the law. The official also said local fishery bureaus did not have incentives to protect endangered sharks.
"Local departments should balance local economic development and the protection of endangered species, but they will emphasise economic development," he said.
A Hong Kong photographer went to Puqi three years ago and uploaded pictures on to the internet of shark-processing factories.
The graphic images shocked the public and journalists flocked to the town, where 90 per cent of the country's sharks are alleged to be processed.
The Yueqing Ocean and Fisheries Bureau, which oversees Puqi, could not be reached for comment.