The Xinhua report said: "Police said the needles were modified with a spring and a tailfin at the rear so they could be shot like a dart."
The investigation into the gang began in September when police were tipped off by a postal worker who came across a suspicious package which leaked with strange, pungent smelling fluids.
They discovered 200 syringes in the package, and arrested the man who it was being delivered to in Huainan city, in Anhui.
Police then arrested two accomplices who shot the dogs in local streets, before finding a ton of frozen dogs at a nearby cold storage, according to Anhui.net, a news portal which is run by the local government. The men had frozen the meat and had planned to sell it in the winter.
Police also raided the gang's workshop in central China's Hubei Province, where they arrested another five men who were making the syringes.
They also discovered at the site 4kg of the chemical powder, 10,000 needles and 100,000 yuan ($21,500) cash, Xinhua said.
Wendy Higgins, from the Humane Society International, said: "The use of poison to catch dogs for the meat trade is a cruelty that very often sees people's beloved pets targeted, and the animals involved can suffer enormously.
"The dog meat trade in China is organised, large scale and facilitated by crime, with as many as 20 million dogs and four million cats killed every year, so stopping the gangs involved is a major step in the right direction."
Police across China are searching for the syringes so that they can be confiscated. Dog meat has been consumed by humans in China and other Asian countries for centuries.
However, it is eaten by a small minority of Chinese only on rare occasions, and the animal is now widely considered a popular pet.
Additional reporting by Christine Wei
