The satellite will orbit the moon, but the next step in China's space program will be to develop a craft that can touch down on the lunar surface, Xinhua news agency reported, citing Ye Peijian, the satellite's designer.

"After the lunar flight, China will carry out soft landing exploration and inspection missions on the moon," he said according to Xinhua.

"A basic space flight engineering system, including one for moon soft landing probes and moon surface inspectors, should be established," he said.

Keenly aware of the military, scientific and commercial benefits of space know-how, China has been aggressively pursuing space exploration for decades and has taken great leaps forward.

The emerging space power carried out its maiden manned flight in October 2003 and plans to launch its next manned space mission this year with two astronauts circling the Earth for five to six days.

Since China's space program was set up in 1992, it has grown to employ tens of thousands of scientific, manufacturing and planning personnel in more than 3,000 centres.

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