The research makes them leading contenders in the race towards human cloning.
The scientists say they have harvested 'stem cells' from human embryos that were cloned from eggs donated by patients at a fertility clinic.
Work on stem cells, the body's mother cells that can develop into any kind of tissue, may herald a medical revolution. They could be used to produce perfectly-matched 'spare part' tissues for transplant - avoiding the risk of rejection as the cells are taken from the patient's own body
Experts predict that treatments for Alzheimer's, Parkinson's and diabetes could be available within three years.
China's relaxed attitude to cloning has led to huge amounts of money being spent on research. But the breakthrough at Xiangya medical college, in the southeastern city of Changsha, will prompt fears that it could go a step further and produce a cloned human baby.
A handful of teams around the world say they are working on implanting a cloned embryo into a woman, despite widespread revulsion.
The Xiangya team say they have been cloning embryos for two years, with five per cent surviving long enough to have their stem cells harvested.
Last year, scientists in Massachusetts claimed to have produced the world's first human embryos for medical research. But their best-developed embryos stopped growing after three days.
Details of the Chinese claims are sketchy. Experts will be sceptical until they appear in a Western scientific journal.