Organ transplantation in has long been criticized as profit-driven and unethical, with critics arguing death row inmates may feel pressured to become donors, violating personal, religious or cultural beliefs.
The World Health Organization and international human rights groups welcomed the new system, saying it was in line with best practices in other countries and would likely help meet the needs of all patients.
The move is China's latest step to better regulate organ transplants. Medical officials agreed in 2007 not to transplant organs from prisoners or others in custody, except into members of their immediate families.
But in a rare disclosure about an industry often criticized for being opaque, the China Daily newspaper said Wednesday that more than 65 percent of organ donors come from death row.
Though the figure could not be confirmed with the government, Vice Health Minister Huang Jiefu has publicly acknowledged in recent years that most organs used for transplants are taken from executed prisoners, though only with prior consent.
Condemned prisoners are "definitely not a proper source for organ transplants," the China Daily quoted Huang as saying.
With the new donor system, launched Tuesday, the Health Ministry and Red Cross Society of China want to reduce that proportion by encouraging the normally hesitant general public to donate organs after they die.
WHO's top transplantation official in Geneva, Dr. Luc Noel, praised the Chinese move, saying: "We're eager to see the results and are very supportive."
Noel said a few other countries occasionally extract organs from executed prisoners, though he did not specify which. China's "reliance on organs from executed convicts was certainly not an option that could withstand time" and opened the way for abuses, he said.
Nicholas Bequelin, Asia researcher for New York-based Human Rights Watch, said China's dependence on death row inmates for organs was so high because there has been no system in place for organ donations.
"All organ transplants had to come from somewhere," Bequelin said, noting the practice was riddled with problems. "If you're a prisoner and you're about to be executed, you do not have a real choice, especially in a system ... (that) is completely untransparent and notorious for abuses against prisoners, as the Chinese system is."
The new donor system will link potential donors with recipients and make public a waiting list of patients to increase transparency and fairness in allocating organs.
The system was initially being launched in 10 provinces and cities, including Shanghai, Tianjin and Xiamen and will eventually be rolled out across the country.
Voluntary donations remain far below demand, partly because of cultural biases against organ removal before burial. Only about 130 people have pledged to donate their organs since 2003, the China Daily said, citing research by Chen Zhonghua, an organ transplant expert with Tongji Hospital in Shanghai. Chen declined to comment when contacted.
The Health Ministry said it could not provide more information on the new donor system. The Red Cross Society of China would not take questions by phone and did not immediately respond to a faxed request for comment.