As of now, there has been no confirmed announcement that China has developed a fully functioning method to extract water from lunar soil. However, China has been actively involved in lunar exploration, particularly with its Chang’e program, which has sent multiple missions to the Moon.
One of the key objectives for lunar missions, including China’s, is to understand and potentially utilize resources available on the Moon, such as water ice. Water on the Moon could be extracted from lunar regolith (soil), which is thought to contain trace amounts of water, particularly in permanently shadowed regions near the poles.
China’s Chang’e 5 mission, which successfully brought back lunar samples in December 2020, could help scientists, including Chinese researchers, better understand the composition of the lunar soil and the potential for water extraction. Water on the Moon could be critical for future long-term lunar habitation and could be used for drinking, creating oxygen, or even producing rocket fuel.
China has expressed plans for a Moon base and long-term lunar exploration, and the development of technologies to extract water from the lunar surface could be a key part of those ambitions. However, any such technology would likely still be in the experimental or developmental stages at this point, with global research in this area still ongoing by various space agencies, including NASA and other space-faring nations.