Chinese state media reports that the Tiangong-1 will be used as a testing site for a full-fledged space station that the country hopes to deploy by 2020.
"Tiangong - is, I think, primarily a technology test bed," said Joan Johnson-Freese, a U.S.-based expert on China's space program, to AFP.
Officials say that the station is intended for medical and scientific research. However, outside analysts believe that the orbiting space lab will also be a component of China's military expansion, with exact details of the space mission being unclear.
The Tiangong-1 will be launched sometime between September 27-30, with two spaceships scheduled to go on docking missions with the lab next year. Originally, China had planned to launch Tiangong 1's last year, but technical faults led to the launch being delayed.
However, the timing of the new launch could not be better timed, as it comes just before the Chinese National Day holiday.
The emergence of China in the space race is significant considering the declining influence of the US in outer space. The US recently decommissioned all of its space shuttles, with NASA now relying on Russian rockets to shuttle its astronauts to space and back.