Beijing (CNN) -- China's first space laboratory module launched Thursday, according to state-run media, an important milestone in China's plan to build a space station.

China's Xinhua news agency showed a picture of President Hu Jintao watching the launch of Tiangong-1 at Beijing Aerospace Control Center along with Communist Party officials.

Tiangong means "heavenly palace" in Chinese. It lifted off from the Jiuquan Satellite Launch Centre in Gansu Province, northwest China.

The module was on a carrier rocket, called the Long March 2F T1.

The 8.5-ton lab module is part of an experiment to test space rendezvous and docking capabilities, essential for the operation of a manned space platform.

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Wu Ping, spokesperson for the China Manned Space Engineering Project, told a press conference before the launch that the effective volume of the experiment module is about 15 cubic meters, which could potentially accommodate three astronauts.

Tiangong-1 was originally scheduled to launch at the end of August but was postponed after the failure of another satellite launch.

When the module successfully enters its low Earth orbit, an unmanned spacecraft -- Shenzhou-8 -- will be sent into space to dock with it.

The two spacecraft will fly for about 12 days after the first docking, before conducting another docking test at an appropriate time in flight, Xinhua reported.

After the two tests, the Shenzhou-8 will return to Earth and the Tiangong-1 will rise to its original orbit to wait for the next docking test.

China sent its first astronaut into space in 2003, the first stage in a "three-step" strategy to develop its manned engineering project.

The launch of Tiangong-1 is the second step. If successful, it will be followed by the last phase: to build a permanent space lab that will allow astronauts to conduct long-term space experiments.

"It is of great significance for the realization of the three-step Strategy of China Manned Space Engineering Project and the promotion of sustainable development of manned space flight." said Wu.

According to Xinhua, Beijing hopes to build a space station by around 2020.

China is not part of the project that maintains the International Space Station (ISS), which currently orbits the Earth conducting experiments in a range of fields, from physics to astronomy.

The ISS is a joint venture between NASA, Russia's RKA space agency, Japan's Aerospace Exploration Agency, the European Space Agency and the Canadian CSA.