The battery plant, located just meters away from the Shangtao Village, went into operation in 2005.
"The pollution could have been around years as lead accumulates in the body over time," said Zhu Zhiwei, a doctor with the children's hospital affiliated to Zhejiang University, who is providing medical treatment to the poisoned children.
Production at the battery plant has halted while investigations continue. The plant will not resume operations until the pollution problem is solved.
Exposure to high levels of lead can damage the digestive, nervous, and reproductive systems of people.
Battery plants in China are often blamed for lead poisoning due to lax supervision.
In January, more than 200 children living near a battery plant in eastern Anhui Province showed elevated levels of lead in their blood, with 28 of them hospitalized.