China's e-commerce giant Alibaba will work with government agencies to eliminate counterfeit goods sold on the company's shopping websites, Alibaba CEO Jack Ma said on April 23.

The company will trace sellers supplying fake goods on the Internet and share the information with the Ministry of Public Security and other government bodies.

The authorities will then follow the clues given by Alibaba and track down people producing the counterfeits.

"If we fail to protect intellectual property, it may develop into a cancer for Alibaba," Ma said.

Alibaba saw transactions made on Taobao and Tmall—its two customer-to-customer and business-to-customer websites—exceed 1 trillion yuan ($161.8 billion) last year.

Taobao last year punished 950,000 members who violated its regulations on intellectual property.

"But we can't penalize people producing fakes. It's essential to work with the government," said Shao Xiaofeng, Alibaba's Chief Risk Officer.