Once in orbit, the satellite with use quantum technology to transmit keys from space to Earth.
These keys, state media says, are impossible to intercept or hack.
Any attempt to do so will cause the keys to self-destruct.
Xinhua says the satellite will allow for secure communications between Beijing and Urumqi, the capital of Xinjiang where the government says it is fighting an Islamist insurgency.
The launch is part of China’s ambitious space programme as it seeks to establish itself as a space power.
The U.S. has voiced concern about the country’s growing space capabilities, but China insists it is all for peaceful purposes.