(Corrects paragraph 6 to make clear that Maotai is 53 percent alcohol by volume (ABV), deletes reference to "proof")

BEIJING, May 14 (Reuters) - The water purity of a river tapped to make China's national liquor is being threatened by uncontrolled building of other drinks factories along its banks, the official Xinhua news agency reported on Monday.

Kweichow Moutai, maker of the fiery Maotai drink served at Chinese state banquets and used to toast guests ranging from Margaret Thatcher to Kim Il-sung, draws water for the brew from the Chishui River in remote southwest Guizhou province.

But authorities are investigating how 39 illegal alcoholic drinks plants have sprung up by the river, polluting both the air and water, Xinhua said.

"It seriously threatens the environmental security of the Chishui River and the production base of Maotai," it added.

The illegal factories have been fined and ordered to close, the report said.

The drink -- made from mountain water, sorghum and grain and measuring 53 percent alcohol by volume (ABV) -- is steeped in Communist lore. It traces its origins back two millennia, but more recently Maotai became the drink of choice for generations of Communist Chinese leaders.

It was used to toast the founding of the People's Republic on Oct. 1, 1949. Premier Zhou Enlai welcomed U.S. President Nixon with Maotai during his groundbreaking trip to China in 1972.

It was on Zhou's instructions that all industry was banned from 100 km (60 miles) upstream of the Chishui River site used to make Maotai in order to preserve its purity.

"But following the daily rise in frequency of human activity, the ecological problems of the special ecosystem of the Chishui River have become more and more pronounced," Xinhua said.

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