Boy using mobile phone at the Great Wall of China

China's own 3G technnology standard aims to avoid foreign development costs and could be worth billions of dollars in licensing fees to Chinese companies.

The new handsets will be compatible with existing 3G networks abroad.

China is the world's biggest mobile phone market with more than 300 million users, and is still growing fast.

Dual-mode phones

China jointly developed its own version of 3G, the so-called TD-SCDMA standard, with Germany's Siemens.

It is also testing other 3G technology before licences are issued.

Manufacturers will unveil phones using the new standard within "five to six months", Zhang Qi, an official at the telecoms regulator, told the China Daily.

The phones will be dual-mode, and will also be usable on 3G networks being rolled out elsewhere.

WCDMA, developed by Ericsson and Nokia, has been adopted by the likes of 3 and Vodafone in Europe while Qualcomm's CDMA2000 is widely used in the US.

Telecoms analysts, however, are still cautious ahead of any announcement from the mobile phone manufacturers themselves.

"The statements are coming from the government, not industry. Only when top Chinese equipment vendors start making noise about TD-SCDMA will I believe the standard will become a commercial possibility," said Craig Watts, an analyst at Beijing-based Norson Telecoms Consulting.

International competition

A spokesman for GSM Association, the global trade body, said the Chinese government is waiting for the Chinese technology to be ready before it issues 3G licences.

China may launch TD-SCDMA first, but all three standards could potentially co-exist in the future, he told BBC News Online.

The government's support of TD-SCDMA is a "strategic backing for the Chinese telecoms industry", he added.