"If China has its own space station, the astronauts on mission will carry out the regular activities of a CPC branch in space in the way we do on Earth, such as learning the party's policies and exchanging opinions on the party's decisions," Yang told delegates at the congress on Thursday.
"Like foreign astronauts having their beliefs, we believe in Communism, which is also a spiritual power," said Yang.
"We may not pray in the way our foreign counterparts do, but the common belief has made us more united in space, where there is no national boundary, to accomplish our missions."
According to Chinese state media, Communist party rules state that a grassroots organisation should be established where there are three or more party members.
All 14 members of China's astronaut squad are Communist party members.
China is only the third country after the US and Russia capable of putting humans into space and has used its space programme as a way of boosting national pride.
Yang became China's first astronaut in 2003, flying 18 times around the Earth aboard the Shenzhou V spacecraft.
Two years later, astronauts Fei Junlong and Nie Haisheng completed a five-day flight on the Shenzhou VI.
The next manned launch is scheduled for sometime in 2008, and will be the first to carry three astronauts.
There is speculation that the mission will see China's first space walk.
China has ambitious plans for manned space missions, including setting up a permanently manned space station and eventually a base on the moon.