Network provider China Unicom has begun to bear more of the cost of the Apple iPhone, in a bid to drive take up of the handset.
China Unicom is the country's second largest network provider and is the primary promoter of the iPhone in the Chinese market.
The launch of 3G networks led China Unicom to predict that it would have ten million new subscribers before 2011, but slow uptake has spurred it into action and resulted in the price cut which could lead to further retail wrangling from its rivals.
"China Unicom has been adding less than one million subscribers every month. They need to add more soon quickly because their competitors are not easing up," said analyst Victor Yip in an interview with Reuters.
China Mobile, Unicom's main rival, has outpaced it in terms of new subscribers, securing 4.3 million in the first three months of the year compared to the 2.1 million achieved by Unicom.
China Unicom will be investing nearly £500 million to subsidise the sale of the iPhone 3G in China. It is also broadening its smartphone line up with the LePhone from computer manufacturer Lenovo.
Last year, £14.2 billion was plunged into creating China's first 3G network.