The Jiaolong undersea craft -- named after a mythical sea dragon -- reached 4,027 metres with three people aboard during the dive in the northern Pacific Ocean, China's State Oceanic Administration said in a statement.
"The success of this test dive has laid a solid foundation for completing the mission of diving to 5,000 metres," it said. The craft will attempt to surpass 5,000 metres in another dive on Friday.
Chinese technical capabilities have grown by leaps and bounds in recent decades, exemplified by a fast-growing space programme that in 2005 made China just the third nation to conduct manned space flight.
The Jiaolong's undersea range theoretically gives China access to nearly all of the world's deep-sea areas, Chinese officials have said in the past.
The craft is designed to reach a maximum depth of 7,000 metres and in a dive last year it made China only the fifth country to go deeper than the 3,500-metre mark, according to previous Chinese reports.
The deepest dive ever conducted was by the US Navy, which reached the bottom of the Mariana Trench -- the deepest point in the world's oceans at 11,000 metres -- in 1960 in a manned undersea craft.
China has said its development of submersible technology is aimed at scientific research and the peaceful exploration and use of natural resources.
The country has pushed hard in recent years to obtain oil, minerals and other natural resources needed to fuel its growth.
Copyright AFP (Agence France-Presse), 2011