An engine production facility as well as a research and development centre will built as part of the venture, with a main manufacturing plant expected by 2014.
The work can go ahead after the Chinese government approved a licence for the new partnership.
The company is looking to expand in the China's booming economy, with sales of Jaguars and Land Rover rising by 80 per cent in China so far this year.
More top news
Cuts and rising cost of adult social care will leave councils underfunded, warns Local Government Association.
The self-styled 'Gypsy King' now holds the WBA, WBO, IBF and IBO belts, after winning on points.
Very windy with gales