Celebrated author Mo Yan has become the first Chinese national to win the Nobel Prize for literature.

Announced by the Nobel committee in Sweden on Thursday, Yan was chosen as the 2012 recipient for works with qualities of "hallucinatory realism" that mixes folk tales, history and the contemporary.

"Through a mixture of fantasy and reality, historical and social perspectives, Mo Yan has created a world reminiscent in its complexity of those in the writings of William Faulkner and Gabriel Garcia Marquez, at the same time finding a departure point in old Chinese literature and in oral tradition," the Swedish Academy said.

Mo Yan whose real name is Guan Moye was born in 1955.

He has published novels, short stories and essays on various topics, and despite his social criticism is seen in his homeland as one of the foremost contemporary authors, the Nobel committee noted.

The backdrops for his various works have included the 1911 revolution that toppled China's last imperial dynasty, Japan's brutal wartime invasion, newly Communist China's failed land-reform policies of the 1950s and the madness of Mao Zedong's 1966-76 Cultural Revolution.

Touching on such eras means flirting with crossing the thin line that divides what is acceptable and what is politically taboo for the Communist Party.

His latest novel, 2009's "Frog", is considered his most daring yet, due to its searing depiction of China's "one child" population control policy and the local officials who ruthlessly implement it with forced abortions and sterilisations.

The newly crowned Nobel laureate has supported official policies on art and culture. These state that art and literature must serve the socialist cause and, by extension, not threaten Communist Party rule.

Last year, the literature prize went to Swedish poet Tomas Transtroemer.

The literature prize is the fourth and one of the most watched announcements this Nobel season, following the prizes for medicine, physics and chemistry earlier this week.

As tradition dictates, the laureates will receive their prizes at formal ceremonies in Stockholm and Oslo on December 10, the anniversary of the death of prize creator Alfred Nobel in 1896.