Embryonic stem cells are seen by many scientists as the basis of treatments for many debilitating illnesses, from diabetes to Parkinson's disease. The research is published in the Chinese journal Cell Research Online – a day after scientists in the UK announced they had grown stem cells for the first time from spare human embryos left over from fertility treatment.
Both Britain and China are aiming to be world leaders in stem cell research.
But the journal Nature, which carries news of the Chinese research today, says some independent scientists doubt whether the Chinese "derived" cells can grow indefinitely in culture as effectively as human embryonic stem cells.
The fused human-rabbit cells were made by transfering the nuclei of adult human cells into rabbit eggs that had been emptied of their genetic material.
Although they cannot grow like a conventional embryo, the news is bound to ignite debate about the ethics of cross-species experiments.
Robin Lovell-Badge, head of genetics at the National Institute for Medical Research, said he was impressed by the Chinese research. "This is the first paper to show convincingly that you can get human reprogramming," he said.
Previous experiments have only generated animal stem cell lines from fused cells. Dr Sheng claims to have reprogrammed cells from the foreskin of adult men and the skin of a 60-year-old woman.
As well as doubts about the rabbit-human hybrid cells' growth, some biologists are sceptical about whether these stem cells will be stable enough to be an alternative to more conventionally derived human embryonic stem cells.