China has launched launch a rocket that will mark the first
The rocket is carrying an unmanned 8.5-ton module known as Heavenly Palace No.1.
In early November a spacecraft will attempt to dock with the module while both orbit the Earth at a speed of 17 thousand miles an hour.
The station will be completed in 2020, the same year the international space station is due to be scrapped.
It's been eight years since China first put a man in space, and three since the first Chinese space walk. The country's space programme - which costs up to £2bn a year - also includes ambitious plans to put a man on the Moon and land on Mars.
Some worry that China may also intend to militarise space. In 2007 the country carried out a Star Wars-style test, shooting down one of its own satellites with a ballistic missile.
China, however, says it is committed to "the peaceful development of outer space".
Experts say that the Chinese are relying on decades-old technology, roughly equivalent to American achievements in the mid-1960s. But the multi-million pound programme - known officially as Project 921 - has huge nationalistic appeal.
In Shanzaogou Village on the outskirts of Beijing, goat farmer Wang Yonglu and his wife live just above the poverty line.
"It's good for social development and good for us ordinary folk," he said. "When I heard about it on the news I felt very proud."