State media reported the Beidou started providing commercial services to civilians in the Asia Pacific region on Thursday, and was expected to provide global coverage by 2020.
Ran Chengqi, spokesman for the China Satellite Navigation Office, told the China Daily the system's performance was "comparable" to GPS.
"Signals from Beidou can be received in countries such as Australia," he said.
The paper said the Beidou, or compass, system comprised 16 navigation satellites and four experimental satellites.
Mr Ran added that the system would ultimately provide global navigation, positioning and timing services.
The start of commercial services comes a year after Beidou began a limited positioning service for China and adjacent areas.
China began building the network in 2000 to avoid relying on GPS.
"Having a satellite navigation system is of great strategic significance," the Global Times newspaper, which has links to the Communist Party, said in an editorial.
"China has a large market, where the Beidou system can benefit both the military and civilians.
"With increases in profit, the Beidou system will be able to eventually develop into a global navigation satellite system which can compete with GPS."
In a separate report, the paper said satellite navigation was seen as one of China's "strategic emerging industries".
Sun Jiadong, the system's chief engineer, told the Business Herald newspaper that as Beidou matured, it would erode GPS's current 95 per cent market share in China, the Global Times said.
National security use
Morris Jones, an independent space analyst based in Sydney, said that making significant inroads into that dominance anywhere outside China was unlikely.
"GPS is freely available, highly accessed and is well-known and trusted by the world at large," he said.
"It has brand recognition and has successfully fought off other challengers."
Mr Morris described any commercial benefits China gained as "icing on the cake" and that the main reason for developing Beidou was to protect its own national security given the possibility US-controlled GPS could be cut off.
"It's that possibility, that they could be denied access to GPS, that inspires other nations to develop their own system that would be free of control by the United States," he said.
"At a time of war, you do not want to be denied [access]."
The Global Times editorial, while trumpeting Beidou as "not a second-class product or a carbon-copy of GPS", still appeared to recognise its limitations, at least in the early stages.
"Some problems may be found in its operation because Beidou is a new system. Chinese consumers should... show tolerance toward the Beidou system," it said.
The system is the latest accomplishment in space technology for China, which aims to build a space station by the end of the decade and eventually send a manned mission to the Moon.
China sees the multi-billion-dollar program as a symbol of its rising global stature, growing technical expertise, and the Communist Party's success in turning around the fortunes of the once poverty-stricken nation.