As Apple’s iPhone prepares for its debut in China later this year, competing handset maker Research in Motion is also pushing for its BlackBerry line to expand to 3G in the nation of over one billion.

In a new note to investors, research analyst Shaw Wu with Kaufman Bros. said while Apple has garnered a great deal of media coverage during its lengthy negotiations with China Mobile, RIM has quietly been working on its own deal with China Telecom. While the wireless carrier is the smallest of the “Big 3″ in China, Wu said he believes the provider is a good fit for RIM as it prepares to offer more devices in the market. He believes an announcement of a deal could be made as soon as February 2010.

Currently, China Mobile offers a few 2G BlackBerry devices, but the country as a whole has been reluctant to embrace RIM’s offerings because they are seen as “too secure,” and do not allow surveillance. This, of course, is a stark contrast from the U.S., where security concerns have made BlackBerry the default smartphone within the U.S. government.

“From our understanding, in the past, RIM has been reluctant to modify its security software just for China and frankly was stretched keeping up with robust demand in North America,” the report reads. “Now with China upgrading to 3G networks, with 700 million subscribers and with Apple entering, RIM simply cannot ignore the world’s largest wireless market.”

Wu said that sources suggest China Telecom is the frontrunner to carry new 3G BlackBerries. Reportedly, the handset maker is beta testing its localized hardware and working to make it work better with Chinese characters.

“On a technical level, we believe partnering with China Telecom makes a lot of sense in that the hardware should require very minor modification as it also runs the same QCOM CDMA technology used by Verizon,” Wu said.