China will invite private investment to build infrastructure on islands it controls in the disputed South China Sea and will start regular flights to one of them this year, state media says.
A US research institute, meanwhile, said China appeared to have stepped up construction work on artificial islands it has built in the South China Sea and was close to finishing two more military-length airstrips on them.
China claims almost all of the South China Sea, through which more than $US5 trillion ($A7.30 trillion) of maritime trade passes each year. The Philippines, Brunei, Vietnam, Malaysia and Taiwan have overlapping claims.
In 2012 China set up what it calls Sansha City, based on Woody Island in the Paracels, to administer its islands there.
Sansha's Deputy Mayor, Feng Wenhai, said the city would welcome private investment and "will initiate public-private partnership programmes", state news agency Xinhua said on Friday.
"The city will also push forward the planning and construction of a maritime medical rescue centre. Submarine optical cables will be laid and put into use this year, and wi-fi will cover all inhabited islands and reefs," Feng said.
The airport on Woody Island would also this year launch regular flights, Feng added, without elaborating.
China took full control of the Paracels in 1974 after a naval showdown with Vietnam.
Asked about China's investment plans, Gabrielle Price, a US State Department spokeswoman, said Washington continued to call on all claimants to halt land reclamation, construction of new facilities, and militarisation of outposts in the South China Sea.
Though China calls it a city, Sansha's permanent population is no more than a few thousand.
The Asia Maritime Transparency Initiative of Washington's Center for Strategic and International Studies think tank published satellite images on Friday showing airstrips on two other artificial islands - Mischief and Subi Reefs - close to completion.
It said the work was progressing faster than expected. While the strip at Fiery Cross had taken at least seven months to complete, that one on Mischief Reef was nearly finished after only three to four months, AMTI said in a report.
The construction included housing, cement plants, docking facilities, and an area of artificial turf that could be used for sports or as a parade ground, AMTI director Greg Poling said.
The work would be of particular concern to the Philippines, given the proximity of the strips to Philippine occupied features, the AMTI report said.
The United States, a treaty ally of the Philippines, has criticised Beijing's building of artificial islands in the Spratlys and has conducted sea and air patrols near them.