Reports regarding backdoor surveillance tools used by Microsoft triggered the development of the unnamed OS.
After showdown with US based tech titans like Microsoft, Google and Apple, China is reportedly developing a homegrown operating system that is being designed to break the monopoly set by Microsoft in the Chinese operating system market.
According to Chinese news agency Xinhua, China has set up an OS development alliance in March headed by Ni Guangnan from the Chinese Academy of Engineering.
The unnamed OS is planned to be offered to desktops first in October and later to smartphones.
Ni Guangnan was quoted by People's Post and Telecommunications News saying: "China has more than a dozen mobile OS developers with no independent intellectual property rights because their research is based on Android."
Ni added: "Some Chinese OS already existed, but there was a large gap between China's technology and that of developed countries."
The move comes after China launched an investigation against Microsoft claiming the Windows maker breached the countries anti-trust rules and banned the procurement of Windows 8 for Government purposes.
China also has concerns regarding the growing popularity of Android in its mobile OS market, and with the new OS the country wants to recapture the domestic market.
This is not the first time China is planning to launch its own OS, previously an OS named Red Flag Linux was created with the help of the Chinese Ministry of Information in 2000, but the OS never took off.
It is being reported that China might be restoring the Red Flag Linux OS, or it might be creating a new one to compete against foreign operating systems.