The protein, extracted from rice plants containing human genes, could be used in hospitals to treat burns victims and help patients who have suffered severe blood loss.
The scientists behind the research claim it will provide a plentiful and safe alternative to products from human blood donations, which are in short supply due to falling numbers of donors, and get around the need to screen for diseases such as HIV and hepatitis.
Currently in the UK around 1.6 million pints of blood are needed every year but just four per cent of the eligible population donate.
Donated blood is separated into three components - red blood cells, platlets, which are used to aid blood clotting, and plasma, which is mainly made up of a protein called Human Serum Albumin and is given to patients suffering heavy blood loss.
By growing the genetically modified rice in fields, the researchers claim Human Serum Albumin could be mass produced for use in hospitals, reducing the need to purify it from blood donations.
Human Serum Albumin is the most abundant protein in human blood and performs important functions including carrying hormones and minerals around the body, mopping up harmful toxins from the blood stream and helping to regulate blood pressure.
Dr Daichang Yang, the scientist who led the research at Wuhan University in central China, said: "Human Serum Albumin is an important protein. The demand for it is estimated at more than 500 tons per year worldwide.
"Currently commercial production of HSA is primarily based on collected human plasma, which is limited in supply, but of high clinical demand.
"There is also an increasing public health concern with plasma derived HSA with its potential risk for transmission of blood-derived infectious pathogens such as hepatitis and HIV.
"The use of a rice seed bioreactor could provide an economical and safe approach for the production of non-animal derived compounds."
Dr Yang and his colleagues have developed a technique for inserting human genes into Asian rice using bacteria, turning the plants into biological "factories" that can produce proteins that are identical to those found in humans.
Their latest research, published in the scientific journal of the Proceedings of the National Academy of Sciences, showed that they had successfully inserted DNA for Human Serum Albumin and the resulting protein was chemically and physically identical to that found in blood.
Over successive generations they were able to increase the amount of Human Serum Albumin produced in the rice grains until it accounted for 10 per cent of the soluble protein produced in the rice seeds.
It comes just months after Chinese scientists announced they had genetically modified a herd of around 300 diary cows to produce milk with the same qualities as human breast milk, which sparked widespread concerns among animal welfare campaigners.
The latest work to introduce human genes into rice is likely to inflame opposition to GM technology further amid fears over the safety of genetically modified crops and alarm at combining human genes with those from other species.
Dr Yang said, however, that the protein produced by the genetically modified rice was identical to Human Serum Albumin found naturally in blood. Tests on rats also showed it did not produce any adverse reactions.
They also treated rats suffering from cirrhosis with the protein and showed it was effective at relieving the symptoms, much like the naturally occurring protein found in human blood.
Dr Yang is also hoping to use genetically modified rice plants to produce other proteins found in human blood, including haemoglobin, which gives blood its distinctive red colour and is carries oxygen around the body, and key proteins from the immune system such as immunoglobulin.
A patent application filed by Dr Yang and his colleagues revealed they hope to adapt the technique to produce a wide range of human proteins that can be used in medical treatments.
The team are also working on a strain of genetically modified rice that produces proteins that are similar to insulin for use in treating diabetes.
Gavin Murphy, a consultant in cardiac surgery at Bristol Royal Infirmary and a senior lecturer at the University of Bristol who studies the impact of blood transfusions on patients, described said the research had the potential to revolutionise the supply of blood products for use in hospital.
He said: "This is ground breaking stuff, but so far they have only validated it in rats. The real test will be to show it is safe in humans, can be purified and sterilised effectively.
"With this approach they will be able to grow these plants in fields and produce blood proteins on a huge scale that would really solve all of the supply issues we currently face."