China has revised parts of its intellectual property laws, allowing its drugmakers to make cheap copies of medicines still under patent protection.
The move is outlined in documents posted on the State Intellectual Property Office website.
India made a asimilar move in March to effectively end the monopoly on an expensive cancer drug made by Bayer AG.
China previously signalled interest in the idea when the State Intellectual Property Office invited foreign experts to Beijing to show officials there how to prepare the legal grounds for issuing compulsory licences.
China is a vital growth market at a time when sales in Western countries are flagging.
The amended Chinese patent law allows Beijing to issue compulsory licences to eligible companies to produce generic versions of patented drugs during state emergencies, or unusual circumstances, or in the interests of the public.
Eligible drugmakers can also ask to export these medicines to other countries, including members of the World Trade Organisation.