China launched the world's first quantum satellite last August, to help establish "hack proof" communications, a development the Pentagon has called a "notable advance".
The official Xinhua news agency said the latest experiment was published in the journal Nature on Thursday, where reviewers called it a "milestone".
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"That, for instance, can meet the demand of making an absolute safe phone call or transmitting a large amount of bank data," Pan said.
Any attempt to eavesdrop on the quantum channel would introduce detectable disturbances to the system, Pan said.
"Once intercepted or measured, the quantum state of the key will change, and the information being intercepted will self-destruct," Xinhua said.
The news agency said there were "enormous prospects" for applying this new generation of communications in defense and finance.
China still lags behind the United States and Russia in space technology, although President Xi Jinping has prioritised advancing its space program, citing national security and defense.
China insists its space programme is for peaceful purposes, but the US Defense Department has highlighted its increasing space capabilities, saying it was pursuing activities aimed at preventing adversaries from using space-based assets in a crisis.
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