The newspaper hints that the move may be a way for the telecom to keep customers from unlocking the device and running it on rival China Telecom's W-CDMA 3G networks. China Mobile is currently working on rolling out a 3G network based on the TD-SDMA standard.
Removing the Wi-Fi and 3G radios would not be difficult for Apple, but it may dilute the experience and make it less appealing to customers.
"Apple shouldn't customize a model of iPhone for the mainland market, given that it only provides a standardized product to operators around the world," Frederick Wong, a BNP Paribas analyst, told the newspaper.
But releasing a limited iPhone 3G may still be in Apple's best interests, as the company has been eager to get its handset into large markets like Russia and China. For more than a year, Apple has been in talks with China to bring its handset to the country, as the Chinese wireless market is becoming an increasingly important one.
With 600 million subscribers, China Mobile is already the world's largest wireless carrier, and the country is still experiencing explosive mobile adoption rates. The majority of customers use entry-level phones, but these subscribers are quickly upgrading their handsets to sophisticated, multimedia-capable phones like BlackBerrys, and the iPhone.
According to In-Stat, there's an estimated 400,000 unlocked Apple handsets in the country already, as well as countless iPhone clones.
"Our customers like this kind of fashionable product," Wang Jianzhou, China Mobile's CEO, said about the iPhone at a conference last November.