That China has plans for a space station is not much of a surprise--the nation's space tech has been steadily advancing since its first satellite Dong Fang Hong 1 launched in 1970. But the fact that it's planning to launch the first module of a space station as soon as next year is interesting news, and suggests that China's pushing ahead with its plans for space much swifter than might have been thought.
State media reported on the plans yesterday, and revealed the Tiangong-1 vehicle ("Heavenly Palace-1") will be launched towards the end of 2010. It's a largely automated facility, designed to provide a "safe room" for chinese astronauts to "live and conduct scientific research in zero gravity." Those astronauts will be sent to the module in 2011 aboard a Shenzou-8 rocket system. Since the 8.5-ton Tiangong-1 is automated, it's the very first step to master before building a larger orbital facility--and seems much akin to the first ever space station, Salyut 1, that the USSR launched in 1971 and which led to the larger Mir facility.
The Long March series of rockets had their origins the the Chinese ICBM program, and the latest versions are sophisticated cryogenic-fueled rockets with good reliability (zero crashes since 1996). China began a human spaceflight program in the nineties, in a highly-secret project codenamed 921. The program took some time to mature, with the first successful Chinese astronaut going aloft in October 2003 in a Shenzou 5 capsule with a design based on an evolved Soyuz capsule, and with Yang Liwei wearing a suit that copied Russian designs down to the stitching detail.
A two-man mission, Shenzou 6, went aloft in October 2005, and this mission gives the first clues about China's Space Station plans--it stayed in orbit for five days. Long enough for the astronauts to change out of their new space suits into lighter clothing, eat hot food, sleep in a sleeping bag, and move from the capsule into a small orbital facility that contained a space toilet. While in orbit they carried out scientific experiments, though the absolute details of what they researched have remained secret. Shenzou 7 followed on September 25 last year with a three-man crew, and included the first space walk for a Chinese astronaut.
Though the Chinese space program is more open than, say, the Soviet space program, it's not as publicly-accessible as the U.S.'s space operations. The announcement of the Chinese space station plans so far ahead of time may be an attempt to demystify what China is up to. The secrecy about the exact experiments on Shenzou 6 led to suggestions of military research--and that's a bad thing, as China's actively pushing the commercial angle of its launch facilities.