The 50-year-old former academic surnamed Lu had "a set of recipes for producing methcathinone", a drug similar to methamphetamine, which he provided to dealers, China Business News (CBN) reported.
Lu "worked as a professor of chemistry at a university" in Xian, the capital of the northern province of Shaanxi, before teaming up with a drug manufacturer surnamed Chen in 2013, CBN cited police as saying.
Lu has been arrested along with 16 other people said to be involved with the lab, The official Xinhua news agency said.
Police detained Chen and six other people after finding 128 kilogrammes of methcathinone at a manufacturing facility in Shaanxi, along with 2,000 kilogrammes of ingredients for the drug, last May, the report added.
Chinese state media last week cited the government as saying the country has 14 million drug users, about one percent of the population, and their numbers had increased by an annual average of 36 percent in recent years.
Use of synthetic drugs, such as crystal meth and methcathinone, which can induce euphoric highs, are reported to be growing in rural areas.
A Chinese police raid on the house of two methcathinone dealers in 2011 uncovered a pile of 80 million yuan (about USD 13 million) in cash, reports said at the time.
