The Ming class submarines are based on ageing designs
The 70 Chinese submariners killed in a recent accident appear to have died of suffocation, according to a Hong Kong newspaper with close ties to Beijing.
An article in Wen Wei Po quoted investigators as saying there were no traces of an explosion on board the submarine, or signs of flooding.
The newspaper report said rescuers found all crew members still at their posts, suggesting there had been no warning of the "mechanical difficulties" which the official Chinese media said caused the accident.
China has released few details about the accident, prompting speculation that it may have been caused by a malfunctioning of the vessel's diesel engines, which sucked oxygen from the interior during descent.
The accident on board the Ming class submarine 361 led to calls from China's President Hu Jintao for the navy's faster modernisation.
Mr Hu sent condolences to the families of the sailors who died, describing the accident as "a great loss to the navy of the People's Liberation Army".
But he added: "We should turn our mourning into strength and learn from the accident, in order to advance the capacity of our national defence and speed up the modernisation drive of the PLA."
The call comes against a backdrop of increasing in Chinese military spending in recent years.
The year 2001-2 saw its annual military budget raised by more than 17% to about $17bn - or up to $20bn according to intelligence reports.
There was a further rise of 10% in 2003 and more increases are scheduled until 2006.
BBC defence correspondent Jonathan Marcus says that while the Ming class boats are entirely obsolete by modern standards, they are a relatively inexpensive option for patrol and coastal defence duties.
But essentially they are a modernised version of an old Soviet design, itself based on late-World War II German U-boats.
Echoes of Kursk tragedy
It remains unclear why none of the crew were able to escape, why the boat was recovered so quickly, and exactly when and where the accident took place.
It is the worst submarine accident since August 2000, when the Russian nuclear-powered Kursk sank with its 118 crew in the Barents Sea.
The Chinese submarine did not sink during the accident, and has now been towed to an unnamed port.
The Chinese navy was reportedly negotiating with Russia last year to buy eight 636 Kilo class vessels, equipped with anti-ship missile systems, in a $1.6bn deal.
According to reports, China's own submarine manufacturing programme is in difficulty, particularly its efforts to develop the Song class guided-missile submarine.
Jane's Defence Weekly says the first Song started sea trials in 1995, but proved a failure.
China's navy has also reportedly experienced operating problems because of inadequate crew training.