The Japanese carmaker says it plans to invest a total of 3.56bn yuan ($560m; £350m) to expand its operations.
The new assembly line will have an initial capacity of 120,000 units per year, which will be doubled over time.
The move comes as global carmakers have been looking to tap into the Chinese market, the biggest in the world.
Honda said it would enhance its research and development capabilities in China “to further strengthen its operation to deliver new products which focus on Chinese customers”.
The new car assembly line is expected to become operational by 2014 and will increase Honda’s total production capacity in China to 600,000 cars a year.
China’s economic growth in recent years has seen income levels rise in the country resulting in growing demand for cars.