They are hailing it as a possible breakthrough in their efforts to save one of the world's most endangered species.
Only about 1,000 pandas live in the wild, with another 100 in zoos. They are notoriously reluctant to reproduce, and experts have warned that the animal could be extinct within 25 years.
The state-run Xinhua news agency said researchers from the Chinese Academy of Sciences introduced genetic material from a dead female panda into the egg cells of a white rabbit.
The resulting embryo was nurtured over 10 months and scientists are now trying to implant it in a host animal's uterus.
Dolly-inspired programme
For many years, the Chinese authorities have been seeking ways of saving the species, but pandas produced through artificial insemination have often died young.
The successful cloning of Dolly the sheep in Britain in 1996, using cells from an adult animal, prompted China's Academy of Sciences to launch an official project to clone a giant panda.
The man in charge of the project, Professor Chen Dayuan, told the BBC at the time that he was hopeful of success within three to five years.
The Xinhua news agency quotes the Professor as saying his team now believes they will not need so long.
Human embryos
Last Thursday, further details were announced in the US of the first human embryo clones.
The intention behind the work, say researchers at Advanced Cell Technology, is not to make identical people but to create embryonic stem cells.
These cells have the potential to become any type of tissue in the body.
Scientists believe these stem cells will eventually lead to powerful new treatments for a host of medical conditions, including diabetes and Parkinson's Disease.