After reports of an on-again, off-again relationship between Apple and China's state-run telco, a government-owned business paper is reporting talks are going well.

Nearly 800,000 iPhones have already been sneaked into the country and are believed to be in use, according to analyst estimates.

The 21st Century Business Herald cited sources that claim the talks are likely to be completed soon, although neither China Mobile nor Apple would comment on the reports.

The situation between the two companies began to improve in June when Apple dropped its demands for revenue sharing. This was helped by CEO Steve Jobs, who appears intent on getting the device in the country by the end of this year.

China Mobile CEO Wang Jianzhou added fuel to to the fire with comments made to reporters at ITU Telecom Asia 2008. "Steve Jobs and I hope the iPhone will enter China as soon as possible," he said. "We are discussing this issue but we do not have an agreement."

Wang had been a critic of Apple's previous business model, which called for the company to get a portion of service revenues in any deal.

A deal with China Mobile would double the iPhone 3G's reach in one fell swoop. Right now, the device is available to 606.5 million potential customers. Adding China Mobile would extend that reach to 1.2 billion, or about 18% of the world's population.