The network is said to be part of the Chinese 5G mobile internet rollout, with the first firms given contracts to begin development work in the city of Chongqing.
Details are vague over exactly what the network will cover, or how it will work, but the aim is to fill gaps in terrestrial communications and serve rural areas.
Reports suggest that this renewed push comes amid concern from China over an international rush for frequencies, that allow data to flow from Earth to space.
Any moves China makes in space raises concerns among security experts, including what uses there might be for a global constellation of Earth-facing satellites.
China has sparked fresh spying fears over plans for 'megaconstellation' of up to 13,000 satellites operating in low Earth orbit, similar to SpaceX Starlink. Stock image
Having a satellite internet constellation is considered a top level project for the Chinese government, and could see it provide communications services around the world, not just in China, competing with western operators.
A megaconstellation is made up of hundreds to thousands of satellites that work together to cover all areas of the Earth, most operating a few hundred miles above the surface of the planet, to deliver internet services.
SpaceX Starlink is the most developed, with nearly 2,000 satellites in operation, but Amazon plans to launch thousands, and the European Union is exploring its options.
This new development will see a communications base station built in Chongqing, according to Chinese state media publication, Science and Technology Daily.
The network is said to be part of the Chinese 5G mobile internet rollout, with the first firms given contracts to begin development work in the city of Chongqing. Stock image
There are an estimated 170 million pieces of so-called 'space junk' - left behind after missions that can be as big as spent rocket stages or as small as paint flakes - in orbit alongside some US$700 billion (£555bn) of space infrastructure.
But only 27,000 are tracked, and with the fragments able to travel at speeds above 16,777 mph (27,000kmh), even tiny pieces could seriously damage or destroy satellites.
However, traditional gripping methods don't work in space, as suction cups do not function in a vacuum and temperatures are too cold for substances like tape and glue.
Grippers based around magnets are useless because most of the debris in orbit around Earth is not magnetic.
Most proposed solutions, including debris harpoons, either require or cause forceful interaction with the debris, which could push those objects in unintended, unpredictable directions.
Scientists point to two events that have badly worsened the problem of space junk.
The first was in February 2009, when an Iridium telecoms satellite and Kosmos-2251, a Russian military satellite, accidentally collided.
The second was in January 2007, when China tested an anti-satellite weapon on an old Fengyun weather satellite.
Experts also pointed to two sites that have become worryingly cluttered.
One is low Earth orbit which is used by satnav satellites, the ISS, China's manned missions and the Hubble telescope, among others.
The other is in geostationary orbit, and is used by communications, weather and surveillance satellites that must maintain a fixed position relative to Earth.
Companies awarded the contract to build the satellite centre in Chongqing, say the city offers a range of strategic advantages, including workforce and economy.
One of these companies, Commsat, says international competition for frequency, as well as resources in low Earth orbit, are driving the development.
There is also currently limited data processing capacity within China, and for a global network China would also need to deploy ground stations worldwide.
First details of this megaconstellation were released late in 2020, when the government applied to the International Telecommunication Union for spectrum allocation - for two low Earth orbit satellite constellations.
These had been named 'GW' and totalled 12,992