Officials said more than 20,000 people had been hired to work on the project, which will feature 300,000 entries at about 1,000 words each.
Unlike Wikipedia, it will be created by selected scholars from state-run universities rather than being openly editable by volunteers.
Wikipedia is available in China, but some of its content it blocked.
The Encyclopaedia of China "is not a book, but a Great Wall of culture", Yang Muzhi, the editor-in-chief of the project, who chairs the Book and Periodicals Distribution Association of China, said in an update earlier in April.