China is on the verge of launching its own desktop operating system in hopes of easing dependence on foreign companies like Microsoft.

China wants to replace all overseas operating systems with a homegrown one - the first of its kind - in the next two years. Officials say the China Operating System will be ready to launch in October.

Goverment news agency Xinhua first broke the news after Ni Guangnan of the Chinese Academy of Engineering told the People's Post and the Ministry of Industry and Information Technology (MIIT)-run Telecommunications News that the new OS will first embrace PCs and later foray into the smartphone sector. This development threatens the existence of Windows by Microsoft on PCs, and Android by Google. In the smartphone sector, iOS by Apple could be affected by this change.

Reports of a China Operating System (COS) first came to light in January this year. Xinhua reports the project has already suffered some issues, including lack of funding and conflicting ideas by the developers.

In addition, China's Android development efforts appear to be in flux due to the lack of "independent intellectual property rights," which calls for the government's intervention to lead future work, Guangnan said.

"Our key to success lies in an environment that can help us compete with Google, Apple and Microsoft," he added.

China is in the midst of investigations into foreign-based companies citing anti-monopoly business practices. In March 2012, Google, which leads the country's smartphone OS sector, was accused of having too much control over the industry, which discriminated against local companies, Reuters reported.