China's quality control watchdog said late Saturday initial investigations had found the bead toys that were recalled in the United States contained toxic substance.

The toys, products of Australia-based Moose Enterprises, were  manufactured by the Wangqi Product Factory in China's southern city of Shenzhen, the General Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ) said.

The US Consumer Product Safety Commission on Thursday recalled the Chinese-made Aqua Dots sets as the beads contain an adhesive solvent called "1,4 butylene glycol" that simulates the drug gamma hydroxy butyrate if swallowed.

At least five children were reported to have fallen ill after swallowing the beads in the United States and in Australia, where the toy was sold under the name Bindeez.

The AQSIQ noted a Hong Kong firm, agent of Moose Enterprises, outsourced the toys production to Wangqi Product Factory. The English name of the Hong Kong firm is not yet available.

Investigations showed Wangqi Product Factory used the toxic "1, 4 butylene glycol" as softener in the production, and the product contained 14.5 percent of "1,4 butylene glycol".

The Shenzhen factory started to produce the bead toys after its trial products provided to the agent received no objection. Moose Enterprises provided the beads samples, the AQSIQ stated.

The packaging of the toys carried warnings including "swallowing can cause danger" and "no use for children under three", the investigations showed.

China has suspended exports of the children's bead toys and also the toy maker's export license, according to the AQSIQ.

The watchdog added it is asking the US side for detecting methods to help analyse and evaluate the potential harms the chemical can cause.