The West Midlands-based luxury carmaker agreed a “milestone” deal with Chery Automobile and will build a plant near Shanghai, which is due to open in 2015.
JLR said any cars produced would be in addition to its existing output, and it had no intention of moving its manufacturing base out of Britain.
Sales of JLR models in China have risen by 80% so far this year.
The company, owned by India’s Tata Motors, began talks with Chery months ago, but had been awaiting approval.
A joint statement released by the Chinese and British companies said: “We are delighted to have reached this milestone, achieved thanks to the understanding and foresight of the Chinese authorities and we want to thank them for recognising the potential of our joint venture in the fast-growing Chinese market.
With China now a crucial market for JLR, building vehicles in the country means it can avoid import duties.