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
Twelve people have been killed and three injured after a pick-up truck and a church minibus crashed head-on in Texas.
Revenge porn offenders who attempt to magnify their targets' humiliation will face the toughest penalties under new sentencing proposals.
A remarkably mild night with misty low cloud on the hills of Scotland, Wales and north-west England and further rain in places.